It is a well-known fact that Colombia is a country with a strong economy and is considered to be one of the safest investments within Latin America. The nation gets more international fame among both local and international entrepreneurs because of its increasing economic growth, attractive business climate and range of commercial opportunities. Additionally, commercial activity and trade levels in Colombia have considerably increased thanks to a vast network of free trade agreements and its strategic geographic location, with access to both the Pacific and Atlantic Oceans. The overall economy of Colombia today benefits from various natural and agricultural resources, ranging from cattle and coffee to oil and emeralds, as well as an exploding tourism industry, which continues to grow year-on-year. These features make Colombia a great and thriving destination for international expansion and investment.

However, many business owners face challenges while trying to navigate the local labour laws of Colombia. One of the most challenging jobs is engaging and hiring local staff lawfully, which can be a huge headache for those without a comprehensive knowledge of the Colombia labour market and/or employment law. Working with a PEO provider in Colombia is a great method of expansion for companies who are new to market and have a limited understanding of employment law and regulationin Colombia. It is always important to consider the different methods that companies can engage and hire staff in a foreign country such as Colombia.

A Professional Employer Organization (PEO), also known as a ‘employer of record’ is a company that brings the required tools to support companies with their market entry. It allows companies tofind, engage andhire local employees with having a local company. Companies work with PEO service providers to engage in commercial activity without the hassle of forming and maintaining a local legal entity, which can often be expensive, time consuming and complicated.

Reasons to work with PEO Service Provider

The reasons to work with a PEO service provider will vary from one employer to another. PEOs can handle the various administrative and HR headaches of employing local staff. The PEO provider will ensure full legal compliance. Today, many SMEs are choosing to work with a local PEO provider given the range of benefits that come with this type of commercial relationship. Some PEO services include, but are not limited to the following:

• PEO solutionsfree up your valuable time and resources, allowing you toconcentrate on other important business tasks.
• Once a contract is successfully signed between a PEO and your business, it will distribute a segment of the legal responsibilities to the PEO, freeing you from unnecessary legal burden.
• The PEO has the responsibility of handling tax filing, payroll administration, provision of advantages,in addition to offering solutions relating to other HR functions.
• The only responsibility of your company is to continue with your daily business operations and to manage and direct the employees properly.

Things to know about staff selection

The labour market in Colombia is fully regulated, has a large and skilled worker pool and is dedicated to protecting the rights of employees. If you are an employer, you need to meet various legislative requirements according to Colombia law.In fact, compliance with the Colombian employment and lab our regulations is both time-consuming and costly, all the more reason to work with a qualified PEO provider in Colombia.

• Employment Contracts

The employment contracts in Colombia are classified into 4 types including short-term, fixed term, undefined length, and for a particular task. The duration and type of employment contract will vary from one employee to the next, affording you flexibility to best meet your needs.

• Foreign Workers

These individuals are subject to the same rules and regulations as Colombian workers. They must come with an official written employment contract from their employer and also have to have the appropriate working visa.

• Working Hours

By law, the maximum number of hours an employee can work in Colombia is forty-eight hours (48) per week. This can be spread out between Monday to Friday or Monday to Saturday. Working hours can be flexible, but must be between 06:00 and 22:00 local time.

• Vacation Time

All local employees have the right to 15 days of paid holiday per year, half of which can be exchanged for pay with permission from the Ministry of Social Protection and Health.

• Minimum Wage

The minimum wage is negotiated yearly between the government and local trade unions. In 2018, the minimum monthly wage was COP $781,242 (approximately USD $260).

• Pensions and social security

The contribution is 15% of the monthly salary. Employers contribute three quarters of the payments and the employee covers the remaining quarter.

• Maternity and Paternity leave

All women are entitled to 12 weeks of maternity leave, which can be started 2 weeks before the birth of the child. The cost is covered by the Social Security System and can also be used in the case of adoption (for a child younger than seven years old). This also applies for a single father who adopts a child. It should be noted that it is illegal to fire a woman due to a pregnancy in Colombia.Fathers are afforded 4 days of paid leave if he is contributing to the Social Security System. If both parents are contributing to Social Security, then the father is entitled to 8 days of paid leave. In either case, the father must have contributed more than 100 weeks to Social Security System.

• Healthcare

Employers are required to pay 12.5% of their staff’s salaries to a healthcare security fund.

For companies expanding to Colombia or looking to hire Colombian employees, working with a qualified PEO provider can be a great option. It helps mitigate much of the legal burden associated with employing foreign employees, and supports a more efficient route to market for a growing global company. It also frees up much of your valuable time allowing you to focus on what is important to you and your business.