Colombia is known for the Sierra Nevada de Santa Marta as well as the Andes range and the capital, Bogota. Although it is a growing area to do business, Colombia employment laws...
Read MoreColombia is known for the Sierra Nevada de Santa Marta as well as the Andes range and the capital, Bogota. Although it is a growing area to do business, Colombia employment laws strongly favor employees. When you set up Colombia payroll, you'll need to have a strong understanding of these laws before you hire workers, add them to the payroll, and start operating your subsidiary.
Reading Time: 2 minutes
Colombia is known for the Sierra Nevada de Santa Marta as well as the Andes range and the capital, Bogota. Although it is a growing area to do business, Colombia employment laws strongly favor employees. When you set up Colombia payroll, you’ll need to have a strong understanding of these laws before you hire workers, add them to the payroll, and start operating your subsidiary.
Colombia has a variety of taxation rules you need to follow when setting up payroll. For example, employers are required to make social security payments that include:
You’ll also need to contribute 12% of an employee’s salary to a pension program. On top of that, Colombia uses a progressive income tax system expressed in Tax Value Units (UVT). Employees with a taxable income over 4,100 UVT will hit the maximum tax rate of 33%.
Four main options are available to set up Colombia payroll. Not every Colombia payroll option is right for your subsidiary, so it’s essential to weigh the pros and cons of each:
Before you can set up your Colombia payroll, you’ll need some personal information from your employees such as their passport, proof of health insurance coverage, and bank statements. Each employee also has tax registration requirements before you can add them to your payroll. Every worker needs an employment contract, social security registration, public health coverage registration, severance fund registration, and workers insurance.
Before your employee starts, it’s best practice to draft a strong employment contract with all entitlement and termination terms. An employment contract can be terminated by either the employee or the employer even without proven just cause. Severance pay is compulsory in Colombia, and employees get one month’s salary for every year they worked.
You don’t have to learn how to set up your Colombia payroll alone. Globalization Partners is a trusted Colombia payroll outsourcing option. We will help you pay your employees and will act as the Employer of Record to take the liability off your plate. Contact us today to learn more.
If you’re ready to grow your business, or you have questions about a specific country, complete the form. One of our experts will be in touch shortly.
