ColombiaColombia has become the quiet favorite of US startups hiring in Latin America: Bogota and Medellin have real engineering density, salaries are lower than Brazil or Mexico for comparable seniority, and the timezone matches US Eastern exactly. The thing that surprises founders is the prima de servicios, a mandatory extra month of salary paid in two installments (June and December), sitting on top of a separate severance fund called cesantias that you fund every year whether or not anyone leaves.
Here's what you actually need to know.
Quick facts
| Colombia | |
|---|---|
| Currency | Colombian Peso (COP) |
| Standard work week | 42 hours (reduced from 44 in July 2026) |
| Payroll frequency | Monthly (semi-monthly also common) |
| Employer statutory cost | ~30-35% on top of gross salary |
| Minimum wage | COP 1,750,905/month |
| Probation | Up to 2 months |
| Notice period | 15 days |
| 13th month pay | Mandatory prima, paid in June and December |
| Employees paid in | COP, required by law |
First decision: contractor or employee?
Colombian engineers are used to working for foreign clients as independent contractors (prestacion de servicios), and for a genuinely independent senior developer that's a normal way to start.
The misclassification line is the same as everywhere: fixed hours, exclusivity, and direct management make someone an employee under Colombian labor law no matter what the contract says, and reclassification means back social security, prima, cesantias, and vacation, with penalties. Colombia's recent labor reform also pushed indefinite-term employment as the default, so the direction of travel is toward formality. If someone is core to the team, convert them through an employer of record (EOR) or your own Colombian entity before diligence does it for you.
Paying contractors in Colombia
The compliance side is simple:
- Collect a W-8BEN before the first payment, so you generally don't issue a 1099. Confirm your setup with your accountant.
- Sign a real contract with scope, rate, IP assignment, and termination terms, drafted for Colombian law. Colombian contractors handle their own social security contributions; a clause acknowledging that is standard.
- Pay in USD or COP, their choice. Contractors can invoice in USD. Bank wires into Colombia cost $25-45 each, bury an FX spread in the rate, and take days to land.
Shor pays Colombian contractors over local rails, same-day, in COP or USD, with a flat disclosed 2% FX margin and a $19/month per-contractor fee. Contracts, W-8BEN collection, and invoicing are built in.
Hiring full-time employees
Employer-side statutory costs on top of gross salary:
| Contribution | Rate (employer side) | Notes |
|---|---|---|
| Health (EPS) | 8.5% | Employee contributes 4%; exemptions exist at some salary levels |
| Pension (AFP) | 12% | Employee contributes 4% |
| ARL (labor risk) | 2% | Rate depends on occupational risk classification |
| Caja de Compensacion | 4% | Family compensation fund |
| Prima de servicios | 8.33% | One month's salary per year, paid June and December |
| Cesantias | 8.33% | Annual deposit into the employee's severance fund |
| Interest on cesantias | 1% | Statutory interest paid to the employee |
Headline employer load: roughly 30-35% on top of gross salary. The prima, cesantias, and cesantias interest together are the prestaciones sociales, and they're what make a Colombian offer cost meaningfully more than the gross number. Statutory rates change, and some contributions carry exemptions depending on salary level, so confirm the exact model with your accountant.
The 2026 change to know: Colombia's phased work week reduction (Law 2101 and the 2025 labor reform) hit its final step in July 2026, taking the standard week from 44 to 42 hours with no reduction in salary or benefits. The reform also moved the start of the night shift to 7 p.m. and is stepping up Sunday and holiday surcharges. If a provider is still calculating overtime off a 44-hour base, that's now wrong.
Employees must be paid in COP.
Leave and benefits
- Annual leave: 15 days
- Sick leave: up to 180 days at 66% pay, largely covered through the health system
- Maternity leave: 18 weeks at full pay, state-funded
- Paternity leave: 14 days, paid
- Public holidays: ~18 days, one of the highest counts in the world
Beyond statute, competitive offers in Colombia commonly add a private health upgrade, meal vouchers, a transport allowance, and education or internet subsidies.
Ending employment
Colombia is not at-will:
- Notice: 15 days
- Cesantias: the severance fund you've been depositing annually is the employee's regardless of how they leave
- Indemnizacion: dismissal without just cause triggers an additional indemnity that scales with salary level and tenure
- Final settlement: accrued salary, proportional prima and cesantias, and vacation payout
Process discipline matters; documentation gaps are what turn a routine exit into a claim. Consult before terminating.
Documents we'll collect from your employee at onboarding
Cedula (national ID), the employee's EPS (health) and AFP (pension fund) selections, and a Colombian bank account for salary. Statutory setup covers EPS, AFP, ARL, and Caja de Compensacion enrollment.
What it costs through Shor
- Contractors: $19/month each, same-day COP or USD payouts
- Full-time employees (EOR): $299/month each, social security, prima, cesantias, and filings handled
- Your own Colombian entity: we run payroll on top of it for less than EOR, in the same dashboard
No setup fees, no annual lock-in, and the FX margin is a flat disclosed 2%. The pricing calculator shows the full Colombia math including every statutory line.
Next steps, depending on where you are: the EOR pricing comparison puts published provider prices side by side, and EOR vs. your own entity has the breakeven math for when a local entity starts to win. To see Colombia against the rest of our coverage, the reference tables compare employer costs, notice periods, and public holidays across every country here. Already with another provider? Switching EOR providers covers the traps worth planning around.
FAQ
Can I pay Colombian employees in USD? No. Salary must be paid in COP to a Colombian bank account. Contractors, however, can invoice in USD.
What is the prima de servicios? A mandatory extra month of salary per year, paid in two installments: half by June 30 and half in December. It's separate from vacation and separate from cesantias. Budget it as part of base cost, roughly 8.33% of salary per month.
How fast can someone start? Contractors: same day, once the contract is signed and the W-8BEN is in. Employees via EOR: typically 14-21 business days, driven by EPS, pension, ARL, and compensation fund registrations.
What does an employer of record in Colombia cost? With Shor, $299/month per employee, plus the statutory employer contributions (roughly 30-35% of gross salary) that any employer in Colombia pays. Deel and Remote charge $599-699/month for the same coverage.