Colombia – Major Labor Reform Enacted

Overview of Key Changes and Impacts for Foreign Employers/Multinationals 

Increased Labor Costs

Several provisions are expected to raise the cost of employment:

• Night Shift Surcharge: The start of the night shift has been moved from 9:00 p.m. to 7:00 p.m., increasing the number of hours subject to night shift surcharge (recargo nocturno).  The night shift surcharge amounts to 35 percent of the employee’s regular hourly wage.  Each employee who works between 7:00 p.m. and 6:00 a.m. is entitled to an additional 35 percent of their regular hourly pay for each hour worked during this period.
• Sunday and Holiday Surcharge: The surcharge for work on Sundays and public holidays will gradually increase from 75 percent to 100 percent, reaching 100 percent by 2027.  The surcharge is calculated based on the employee’s regular hourly wage and must be paid by the employer to each employee who performs work on a Sunday or public holiday.
• Apprenticeship Contracts: Apprentices are now considered workers under fixed-term contracts, which implies full remuneration and social security contributions, increasing the financial burden on employers.
• Mandatory Disability Hiring Quotas: Employers are now required to meet minimum hiring quotas for individuals with disabilities.  This measure, while promoting inclusion, may result in additional recruitment, training, and accommodation costs for companies.

Changes to Employment Contracts

• Indefinite-Term Contracts as the Default: The reform establishes indefinite-term contracts (Contrato a término indefinido)² as the general rule.  Fixed-term and service contracts are now subject to stricter conditions and limitations.
• Restrictions on Renewals: Fixed-term contracts cannot be renewed indefinitely and must be justified by the nature of the work.  The maximum duration, including renewals, is limited to four years.
• Restrictions in Supply of Personnel: The reform restricts the transfer of workers through certain temporary services companies.  In Colombia, only authorized temporary services companies may supply personnel, and the Employer of Record (EOR) model is not allowed.

Authorization Work Overtime and Leave Policies

• New Leave Entitlements: Workers are now entitled to paid leave for medical appointments and school-related responsibilities, among others, potentially raising costs for employers.
• No Ministry Approval for Overtime: Employers no longer need prior approval from the Ministry of Labor (Ministerio de Trabajo) to authorize overtime – which should lessen administration for such employers – but they must maintain accurate records.

Digital Platform Workers

• Workers providing services through digital delivery platforms may now be classified as either workers or independent contractors, depending on the nature of the relationship.  This classification affects how social security contributions are calculated and paid.

Inclusion and Compliance Requirements

• Anti-Discrimination Policies: Companies are required to implement internal policies to prevent workplace harassment and discrimination, which should help enhance worker retention and workers’ safety and right of redress, but could mean additional administration, at least initially, for employers.
• Stronger Disciplinary Procedures: While disciplinary processes are streamlined, employers must still ascertain due process when applying sanctions to workers.

Implementation Timeline

Some of the provisions established in the reform will be implemented gradually; some provisions will take effect immediately and others will be phased in over the next two years.  For example, provisions that will be implemented gradually include the new definition of night work (starting at 7:00 p.m.), which will come into effect six months after the law is enacted.  The Sunday and public holiday surcharge will increase progressively: 80 percent as of July 1, 2025; 90 percent as of July 1, 2026; and 100 percent as of July 1, 2027.  Additionally, the mandatory hiring of persons with disabilities will take effect starting in July of next year.

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