Employer of Record in Colombia (EOR in Colombia)

Hire Globally, Pay Locally, Expand Effortlessly

Colombia, a country experiencing significant economic growth, presents attractive opportunities for businesses looking to invest in South America. However, understanding its complex labor and tax laws is crucial for successful operations. An Employer of Record (EOR) in Colombia can provide the necessary expertise and support.

Want to have a Team in Colombia TODAY?

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We prefer to let others grow their business.

Want to Have a Team in Colombia TODAY?

Show me how to grow my business now!

We prefer to let others grow their business.

The 3-Step Process to Business Expansion with an EOR in Colombia

Step 1 – Comprehensive Planning & Assessment

Your partnership with a Colombian EOR, such as INS Global, starts with a thorough consultation to understand your business objectives. This involves determining the workforce needed, defining their roles, and setting a timeline for expansion. The EOR tailors its services to meet your unique needs, ensuring a smooth integration process in Colombia.

Step 2 – Streamlined Setup, Recruitment & Onboarding

Whether you’re forming a new team in Colombia or relocating existing staff, the EOR handles all legal and regulatory requirements. This includes managing visas, work permits, payroll, contract administration, and ensuring compliance with Colombian labor laws. As your legal employer in Colombia, EORs remove the need to establish a local entity, saving both time and money.

Step 3 – Continuous HR Management & Compliance

Once your employees are active in Colombia, the EOR manages ongoing HR and payroll functions. This includes salary processing, managing employee benefits, and ensuring compliance with health insurance and social security contributions. The EOR acts as the HR intermediary between you and your Colombian team, handling administrative tasks and addressing employee concerns so you can focus on growing your business confidently.

Benefits of Partnering with a Colombian EOR

Fast Market Entry

A Colombian EOR allows you to rapidly enter the Colombian market without the need to establish a local legal entity, facilitating a quicker expansion process.

Legal and Regulatory Compliance

The EOR ensures your business adheres to Colombia’s labor laws, including those related to employment contracts, taxes, and employee benefits, minimizing the risk of legal issues.

Talent Acquisition and Management

The EOR aids in recruiting and managing local employees, providing access to top talent in Colombia while handling all employment-related matters.

Cost Savings

Partnering with a Colombian EOR helps you avoid the expenses associated with setting up and operating a local entity. The EOR manages payroll, benefits, and HR tasks, allowing you to allocate resources to growth initiatives.

Operational Flexibility

A Colombian EOR provides the flexibility to scale your business operations as needed without the complexities of establishing a permanent local entity, offering greater adaptability to market changes.

Testimonial

Manuel Ramos

TERAO ASIA

Managing Director

We think INS Global is a good solution about starting business in new and complex markets. Understanding the market doesn’t mean you need to set up a company immediately.

 5/5

EOR vs. Company Incorporation in Colombia: Making the Right Choice

While establishing a subsidiary in Colombia is a traditional method for local expansion, using an EOR offers several key benefits:

Speed – With an EOR like INS Global, the setup process in Colombia is accelerated, allowing you to commence operations and hire employees much faster than company incorporation, which can be lengthy. An EOR can have your team operational within weeks or even days.
Compliance – Both EORs and subsidiaries must adhere to Colombian tax laws and labor regulations. EORs are equipped with the expertise to handle these complexities and ensure ongoing compliance, reducing the risk of legal issues.
Cost – For smaller teams or temporary projects, EOR services are often more cost-effective than establishing a subsidiary, as they avoid the high upfront incorporation expenses and ongoing administrative costs. For larger companies, EORs provide streamlined solutions that integrate new markets into multi-country payroll systems efficiently.
Control – While incorporation offers full control over HR, finances, and operations, EORs provide similar control over your workforce while reducing administrative responsibilities and liability.

Important Considerations for Choosing the Best Employer of Record in Colombia

Selecting the right EOR in Colombia is crucial for successful market entry. Keep these key factors in mind:

Experience and Market Reputation – Search for a Colombian EOR with a proven track record and strong market credibility, like INS Global. Client testimonials and industry accolades are reliable indicators of trustworthiness.
Complete Service Suite – Confirm that the EOR provides all necessary services or can customize offerings to fit your needs, including visa and work permit assistance, payroll management, tax compliance, and navigating Colombia’s labor regulations.
Scalability and Flexibility – Opt for an EOR that can expand its services as your business grows. Their team should be capable of managing a growing workforce and adapting to new business demands.
Clear Communication and Transparency – Choose an EOR known for maintaining transparent and consistent communication. They should keep you informed about legal updates, upcoming deadlines, and any potential issues, offering a dedicated contact and online tools for easy access to essential information.
Competitive and Clear Costing – Compare the pricing models of various EOR providers. Ensure their fees are clear, competitive, and free from hidden charges. Third-party advice can help you secure the best value for your EOR in Colombia.

Colombia Labor Law Overview

Contracts – In Colombia, employment contracts are mandated by the Labor Code and must be written for all employees. These contracts can be for an indefinite period, a fixed term, or specific tasks and must clearly state the job responsibilities, salary, working hours, and conditions for termination. Indefinite-term contracts are most common, offering greater job stability. Employers must adhere to the national minimum wage, which, as of 2023, is COP 1,160,000 per month. Contracts ensure clarity and protection for both employers and employees, and the Labor Code emphasizes fair treatment and the fulfillment of agreed-upon terms.
Probationary Periods – Colombian labor law allows probationary periods of up to 2 months for indefinite-term contracts and a proportional period for fixed-term contracts, not exceeding 20% of the contract duration. During this period, either party can terminate the employment without providing a reason or severance pay, although basic labor rights and benefits must still be honored.
Working Hours – The standard workweek in Colombia is 48 hours, typically distributed over six days, with a maximum of eight hours per day. The Labor Code allows for flexible arrangements, provided they do not exceed this weekly limit. Overtime is compensated at 125% of the regular hourly rate for daytime hours and 175% for nighttime hours. Recent reforms have encouraged more flexible and reduced working hours to promote work-life balance. Despite these efforts, many workers, especially in informal sectors, often face longer hours without adequate compensation, highlighting ongoing challenges in labor law enforcement.
Paid Leave – Colombian labor law provides various forms of paid leave, including annual leave, sick leave, and maternity leave. Employees are entitled to 15 days of paid annual leave after completing their first year of service. Sick leave is covered by the social security system, with employers responsible for the first 2 days and the remaining days paid by the health insurance system, covering up to 180 days. Maternity leave is 18 weeks, fully paid, with job protection. Additionally, fathers are entitled to 8 days of paternity leave. Public holidays are also observed, with around 18 days per year, one of the highest in Latin America.
Social Insurance – Colombia’s social insurance system is managed by several entities, including the General System of Social Security in Health (SGSSS) and the General System of Pensions. Employers and employees contribute to these systems, with contributions of approximately 12.5% of the salary for health insurance and 16% for pensions. The system covers healthcare, pensions, occupational hazards, and unemployment benefits. As of 2023, about 60% of the workforce is covered by social security, though informal employment remains a significant challenge. The social insurance system is essential for providing healthcare, financial security in retirement, and protection against workplace risks.
Severance Pay – Severance pay in Colombia, regulated by the Labor Code, is mandatory for employees who are dismissed without just cause. The amount is generally equivalent to 1 month’s salary for each year of service for indefinite-term contracts. For fixed-term contracts, severance pay depends on the remaining term of the contract. Additionally, employees are entitled to a severance fund (Cesantías), which employers must pay annually, equivalent to a month’s salary per year of service, to be used in case of unemployment or for specific purposes like education or home buying. Severance pay and the Cesantías system provide crucial financial support for workers transitioning between jobs or facing unemployment.

Managing these challenges can consume a lot of time and requires keeping up with legal changes. Partnering with an EOR in Colombia provides a local legal partner who ensures your business stays compliant with labor laws and protects you from any potential risks.

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FAQs

How does an EOR support market entry in Colombia?

An EOR in Colombia takes charge of all the necessary legal, HR, and compliance tasks, enabling businesses to quickly enter the Colombian market without establishing a local entity.

What financial benefits does using an EOR in Colombia offer?

Using an EOR in Colombia is often more cost-effective than setting up a local subsidiary, as it eliminates the need for incorporation and reduces ongoing administrative expenses.

Can an EOR manage visa and work permit processes in Colombia?

Yes, a Colombian EOR handles the entire visa and work permit application process, ensuring compliance with local immigration laws and requirements.

Which types of businesses benefit most from EOR services in Colombia?

EOR services in Colombia are advantageous for companies of all sizes, especially those seeking rapid market entry, cost reductions, and decreased administrative burdens.

How does an EOR ensure compliance with Colombian labor laws?

EORs in Colombia employ local experts who stay updated on regulatory changes, ensuring your business adheres to Colombian labor laws and regulations.

What control do I retain over my employees when using an EOR in Colombia?

Although the Colombian EOR is the legal employer, you retain considerable control over day-to-day management and operational decisions regarding your employees.

Employer of Record in Colombia (EOR in Colombia)

Hire Globally, Pay Locally, Expand Effortlessly

The 3-Step Process to Business Expansion with an EOR in Colombia