www.doingbusinessincolombia.com
EMAIL info@doingbusinessincolombia.com
TEL +57-305-461-9162
One of the most common questions we received when doing business in Colombia is why as US employer in Colombia I have to pay benefits to Colombian workers.
Well, Colombia Statutory social benefits are provided to employees who receive an ordinary salary. However, Colombian employees who earn an all-inclusive salary do not receive these benefits, as they are already included in their all-inclusive salary package.
One of these benefits is the Transportation Aid, also known as «Auxilio de transporte» in Spanish. This is a monthly aid provided by the employer to employees who earn up to two monthly minimum salaries. It is meant to cover transportation expenses. The monthly transportation aid is determined by the National Government every year in January.
Another benefit is the Dress and Footwear allowance, known as «Calzado y vestido de labor» in Spanish. Employers are required to provide employees who earn up to two Monthly Minimum Legal Salaries with one pair of shoes and one labor dress three times a year. This benefit is provided in kind and cannot be replaced with a cash payment.
Severance Payment, also known as «Cesantía» in Spanish, is another social benefit. It corresponds to one monthly salary per year, or a proportional amount based on the time worked. Employers must deposit the severance payment before 15 February of the following year into a severance fund chosen by the employee. The base for calculating the severance payment is the last salary received by the employee unless it has varied in the last three months. In that case, the average of salaries earned during the last year worked is considered. The severance payment represents a monthly cost of 8.33% of the employee’s salary.
Employees are also entitled to receive interest over their severance payment, known as «Intereses sobre cesantía» in Spanish. The annual interest rate is 12%, or a proportionate amount if the employee worked for less than 12 months. The interest is calculated based on the amount received as severance payment during the previous year. This benefit represents a monthly cost of 1% of the employee’s salary.
Lastly, there is the Legal Bonus, or «Prima de servicios» in Spanish. This is a monthly salary payment that is paid in two installments. Employees receive 15 days of salary on the last day of June and the remaining 15 days of salary during the first twenty days of December. The amount is based on the average of the salary payments received during the semester. The Legal Bonus represents a monthly cost of 8.33% of the employee’s salary.
If you have questions, please contact us for further consultation.
www.doingbusinessincolombia.com
EMAIL info@doingbusinessincolombia.com
TEL +57-305-461-9162
