Employer of Record in Colombia: 2026 Cost and Compliance Guide

Colombia is one of Latin America's main nearshore hiring markets for US and European companies, with a large pool of software, customer-support and finance talent in Bogotá and Medellín, and time zones that overlap with North America.

Employer costs are higher than the headline social security rates suggest. On top of pension, occupational-risk insurance and the family compensation fund, employers pay a service bonus (prima) and set aside severance savings (cesantías) with interest, each worth about a month's salary a year. Health and two payroll levies are waived for most employees earning under ten minimum wages.

An Employer of Record (EOR) can employ your hire under a Colombian contract and run payroll, so you don't need to set up a company first. Figures link to official sources. We do not test or use the providers listed; see our methodology.

An Employer of Record is a company with a Colombian entity that employs staff on behalf of foreign businesses. It issues the employment contract, runs payroll, files social security through the PILA system, pays the prima and deposits cesantías, and handles termination under the Código Sustantivo del Trabajo.

You direct the employee's work; the EOR carries the formal employer obligations and invoices you monthly.

Colombia distinguishes indefinite-term and fixed-term contracts, and the type decides what a termination costs. Most EOR hires are on indefinite contracts.

Colombian employment cost has three layers: gross salary, employer contributions and statutory benefits (pension, occupational risk, the family compensation fund, prima and cesantías, and for higher earners health, SENA and ICBF) and the EOR fee.

Health (8.5%), SENA (2%) and ICBF (3%) are waived for employees earning less than ten minimum wages a month, for employers that pay income tax. Choose the salary band in the estimator.

Annual cost at example salaries

What these figures include and exclude

• Tables assume a salary under ten minimum wages a month (so health, SENA and ICBF are waived) and occupational risk class I. Above that threshold, add 13.5%.
• Employees earning up to two minimum wages also receive a monthly transport allowance, which counts toward prima and cesantías.
• Paid vacation (15 working days a year) is part of salary, not an extra cost, as long as it is taken.
• Senior hires earning at least 13 minimum wages can be paid an integral salary, which folds the prima, cesantías and their interest into the salary; contributions are then due on 70% of it.
• Employee pension (4%) and health (4%) contributions and income tax are deducted from the employee's pay and are not employer costs.

Estimate your own cost

Enter a salary to see the estimated annual cost, including mandatory employer contributions and an EOR fee. Change the fee to match the quotes you receive.

Employment is governed by the Código Sustantivo del Trabajo, as amended by the 2025 labour reform. Key rules below.

Working hours

The maximum working week is falling under Law 2101 of 2021: 44 hours from July 2025 and 42 hours from July 2026, spread over five or six days.[2]Verify

Overtime and night work

Daytime overtime is paid at 125% and night overtime at 175%. Night work, paid at a 35% premium, starts at 7 pm under the 2025 labour reform.[2]Verify

Sundays and holidays

Work on Sundays and public holidays carries a surcharge that is rising under the 2025 reform: 80% from July 2025, 90% from July 2026 and 100% from July 2027.[2]Verify

Paid vacation

15 working days of paid vacation for each year of service, which can be accumulated for up to two years.[2]Verify

Public holidays

18 public holidays a year; most fall on Mondays under the 'Ley Emiliani'.[2]Verify

Sick leave

Paid at two-thirds of salary: the employer pays the first two days and the health insurer (EPS) from day three.[2]Verify

Maternity and paternity leave

18 weeks of paid maternity leave and 2 weeks of paid paternity leave, paid through the health system.[2]Verify

Termination without just cause

Indefinite contracts can be ended without cause by paying an indemnity: for salaries under 10 minimum wages, 30 days' salary for the first year and 20 days for each further year; for 10 minimum wages or more, 20 days and 15 days. Fixed-term contracts owe the salary for the rest of the term.[2]Verify

Final settlement

On any termination the employer must pay pending salary, the accrued prima, cesantías and their interest, and untaken vacation.[2]Verify

These EOR providers publish information about employing in Colombia. Prices are their own published starting rates in USD, from our pricing tracker. Quote-only providers are marked.

In Colombia, ask whether the provider uses its own Colombian entity, how it handles the prima and cesantías on invoices, and whether it offers integral salary contracts for senior hires.

For each provider's products, pricing model and fit signals, see the EOR provider directory.

The usual alternative is a simplified stock company (Sociedad por Acciones Simplificada, SAS), registered with the local chamber of commerce and with DIAN for a tax ID (RUT). Foreign capital invested in it must be registered with the central bank (Banco de la República).

Ongoing costs include accounting (a statutory auditor above certain size thresholds), monthly tax and payroll filings, and electronic invoicing. The corporate income tax rate is 35%.

For a step-by-step version of this calculation, see EOR vs local entity: a break-even framework.

1. 1

   Define the role and salaryDay 0

   Agree a monthly salary and check whether it is above ten minimum wages (health, SENA and ICBF then apply) or above 13 (an integral salary becomes possible).

2. 2

   Choose the contract typeDay 0–2

   Indefinite or fixed-term; the type decides termination costs. A trial period of up to two months is allowed if agreed in writing.

3. 3

   Compare itemised quotes1–3 days

   Request Colombian quotes covering the fee, deposit, social security, prima, cesantías and interest, and offboarding. Use the estimator to sanity-check totals.

4. 4

   Sign the service agreement

   Review liability for termination indemnities, IP assignment and data protection terms.

5. 5

   Employment contract and affiliationsDays

   The EOR issues a Spanish-language contract and affiliates the employee to a pension fund, health insurer (EPS), ARL, family compensation fund and severance fund.

6. 6

   Ongoing administrationMonthly

   Monthly payroll and PILA social security filings, the prima in June and December, cesantías by 14 February and their interest in January.

Rates and rules on this page are based on the following official sources. Numbers in brackets in the tables above link to these entries.

1. 1
   Ministerio del Trabajo

   Ministry of Labour (Colombia)

   Minimum wage decree and labour rules.

2. 2
   Código Sustantivo del Trabajo

   Secretaría del Senado (Colombia)

   Labour code: hours, vacation, prima, cesantías, termination indemnities.

3. 3
   Estatuto Tributario

   Secretaría del Senado (Colombia)

   Tax code: art. 114-1 exemption from health, SENA and ICBF; art. 240 corporate tax rate.

4. 4
   Unidad de Gestión Pensional y Parafiscales (UGPP)

   UGPP

   Social security and payroll levy contributions.

5. 5
   DIAN

   Dirección de Impuestos y Aduanas Nacionales

   Tax registration (RUT) and corporate income tax.

6. 6
   Banco de la República

   Banco de la República (Colombia)

   Registration of foreign investment.

Colombia's employer costs are moderate in social security but substantial in statutory benefits: for most hires, pension, occupational risk, the family fund, prima, cesantías and interest add roughly 35% to salary. Through an EOR, plan for roughly 1.4–1.5× gross salary in total, or more above ten minimum wages.

The Colombia-specific issues are the shrinking working week, rising Sunday and night surcharges under the 2025 reform, and termination indemnities on indefinite contracts.

If you're building a nearshore team, compare an EOR against your own SAS early with our EOR vs local entity guide. For the region, see Mexico and Brazil.