How to hire in Colombia from the US (2026): contracts, costs and labor law

There are three, and the choice decides who the legal employer is. With your own Colombian company you hire employees directly; with a temporary-staffing company, the agency employs the people it sends you; with independent contractors nobody is an employee, as long as the work really is independent.

A foreign company that carries on permanent business in Colombia must open a branch under the Commercial Code,[10] and for income tax a fixed place of business, or a dependent agent who habitually concludes contracts for the company, creates a permanent establishment.[11] Whether a few remote employees alone trigger either is a question for local counsel before you employ people directly without a Colombian entity.

Colombian law regulates two ways for a provider to staff your work with its own employees. The first is a temporary-staffing company (empresa de servicios temporales, EST), which needs an operating authorization from the Ministry of Labor[7] and may supply workers only for occasional or transitional work, to replace staff on leave, or for production peaks and seasonal increases for up to six months, extendable once for six more.[7] Since the 2025 labor reform, a user company that goes beyond those cases can be declared the true employer, with the agency treated as a mere intermediary, and serious breaches can cost the agency its license.[4]

The second is an independent contractor in the sense of article 34 of the labor code: a company that does the work for a price, assumes the risks and uses its own means with technical and managerial autonomy. The client is jointly liable for that contractor’s workers’ wages, benefits and indemnities unless the work is unrelated to the client’s normal business.[4]

Before you sign with an employer of record for a long-term hire, ask which of the two regimes it uses, how it handles the six-month limit if it operates as an agency, and who bears the joint liability.

When three elements concur: the person’s own activity, continuing subordination and a salary, whatever name the parties give the contract.[6] Every personal work relationship is presumed to be an employment contract, so the hiring party has to prove otherwise,[6] and the 2025 reform wrote the primacy of reality over the formalities set by the parties into the labor code’s principles.[4]

Subordination is the power to give orders at any time on the manner, time or amount of work and to impose rules for the whole relationship.[4] A contractor who works your hours, under your managers’ instructions, as part of your team looks like an employee whatever the contract says. If a judge finds an employment relationship, the labor code’s benefits apply to it, and claims under the code prescribe three years after each obligation became payable.[4]

For how this applies to a US company with no office in Colombia, and how the four main hiring countries compare, see Latin American labor law and US companies.

Since the 2025 labor reform, the indefinite-term contract is the general rule; fixed-term, project (obra o labor) and occasional contracts are exceptions.[4] A contract can be verbal unless the law requires writing,[6] and it does in the cases a US employer usually needs:

• Fixed-term contracts must be written and may last at most four years in total, renewals included; otherwise they are treated as indefinite from the start. After the fourth extension of a contract shorter than a year, each renewal must be for at least a year, and a contract renews automatically for the same term unless one party gives notice 30 days before it ends.[4]
• Project contracts must be written and describe the work precisely, or they become indefinite.[4]
• Probation exists only if agreed in writing. It lasts at most two months, and no more than a fifth of the initial term in fixed-term contracts under a year; during probation either party can end the contract without notice, and probation is valid only in the first of successive contracts.[6]

A written contract must identify the parties and their domicile, the place and date, the nature of the work, the pay and its periods, and the duration and termination of the contract.[6] Fixed-term and project workers earn vacation and benefits in proportion to the time worked.[4] An employment contract can be signed electronically when the signature meets Colombia’s electronic signature conditions, and the employer must provide the means at no cost to the worker.[12]

COP 1,750,905 a month since January 1, 2026,[1] a 23.0% increase on the 2025 figure of COP 1,423,500.[13] At the official exchange rate of COP 3,182.99 per dollar for October 31 to November 3, 2026,[3] that is about USD 550. Employees earning up to two minimum wages also receive a transport allowance of COP 249,095 a month,[2] and teleworkers in that range receive a connectivity allowance of the same amount instead.[4]

The decree went through the courts. The Consejo de Estado provisionally suspended it on February 12, 2026,[14] the government set the same amount transitorily with Decreto 0159 of February 19, 2026,[15] and on July 9, 2026 the court revoked the suspension, leaving the nullity case pending.[16]

Other rules tied to the minimum wage:

• An integral salary, which prepays all benefits except vacation, can be agreed in writing only above 10 minimum wages and may not be lower than 13 minimum wages, COP 22,761,765 a month in 2026.[6]
• Social security is paid on a base of at least one and at most 25 minimum wages a month.[17]
• Salary may be agreed in dollars, but the employee can demand the equivalent in pesos at the official rate of the payment date, and pay periods may not exceed one month for salaries.[6]

42 hours a week and 8 hours a day, fully in force since July 15, 2026, spread over five or six days by agreement and without any cut in pay.[4][5] The reduction came in steps under Ley 2101 de 2021:[5]

Since December 25, 2025, night work runs from 7 p.m. to 6 a.m.[4] Night work carries a 35% surcharge, daytime overtime 25% and night overtime 75%,[6] and overtime may never exceed 2 hours a day or 12 a week.[4] No permit is needed for overtime, but the employer must keep an overtime register for each worker.[4]

Work on the weekly rest day or a public holiday carries a surcharge of 90% since July 1, 2026, rising to 100% from July 1, 2027.[4] The rest day is Sunday unless employer and worker agree in writing on another day.[4]

• Vacation: 15 working days a year.[6] Up to half can be paid in cash if the worker asks and both agree in writing; at least six days must be taken each year, and the rest can be accumulated for up to two years, or four for technical, specialized, trust or management staff and foreigners.[6]
• Maternity leave: 18 weeks of paid leave.[6] A pregnant or breastfeeding worker cannot be dismissed without prior authorization from a labor inspector; without it, the employer owes an extra 60 days’ pay.[6]
• Paternity leave: two weeks.[6]
• Sick leave: two thirds of salary for the first 90 days and half for the rest of the period, up to 180 days.[6]
• Bereavement: five working days for the death of a spouse, partner or close relative.[6]
• Other paid leave: the 2025 reform added specialist medical appointments, compulsory school meetings as a guardian, and judicial or administrative summons.[4]

Holidays are set by statute, not by an annual decree. Some are always kept on their date, and most religious and civic holidays that do not fall on a Monday move to the following Monday.[6] In June 2026 a new national holiday was created for Our Lady of the Rosary of Chiquinquirá on July 9, observed under the same Monday rule,[18] and it was first observed on Monday, July 13, 2026, while a constitutional challenge against it was pending.[19] That makes 19 holidays in 2026[20] and 19 in 2027, three of them on a Saturday.[21]

Three payments come on top of salary, plus a transport allowance and work clothes for lower salaries:

The service bonus is not salary,[6] and a late deposit of cesantías costs one day’s salary per day of delay.[7] Since the 2025 reform, employers may deposit cesantías monthly in advance at 8.33% of salary and pay the 12% interest monthly at 1%.[4] An integral salary prepays these benefits,[6] and genuine independent contractors receive none of them.[23]

Employer and employee contributions, as a percentage of salary:

Contributions are paid on a base of one to 25 minimum wages,[17] and the employer withholds the employee’s share and remains liable for it even if it fails to deduct it.[17] The art. 114-1 exemption covers companies, and individuals with two or more employees, that file income tax, for each worker earning under 10 minimum wages.[11] Colombia’s 2024 pension reform is not yet in force: the Constitutional Court ruled on August 25, 2026 that it takes effect on April 1, 2027.[28]

Worked example, calculated by Nearshorers (the Colombia cost guide has four salary levels). A developer on COP 8,000,000 a month, about USD 2,513 at the official rate of October 31, 2026,[3] employed by a company covered by the art. 114-1 exemption, in risk class I:

The employee’s own 4% pension, 4% health and 1% solidarity contributions, COP 720,000, come out of the salary.[17][24] Without the art. 114-1 exemption, for example for a salary of 10 minimum wages or more, add 13.5 points for health, SENA and ICBF, which takes the on-cost to about 52% of salary.

Employers also withhold income tax monthly with a progressive table: 0% up to 95 tax value units (UVT) of taxable monthly labor income, COP 4,975,530 in 2026, then rates from 19% up to 39% above 2,300 UVT,[29][30] and 25% of labor income is exempt up to 790 UVT a year.[31] Employers that file income tax must issue an electronic payroll document to DIAN to deduct those labor costs.[32]

The employer can end an indefinite contract in two ways:

• For just cause. The reason must be stated at the time of termination and cannot be added later,[6] some causes, such as deficient performance, require 15 days’ notice,[6] and since the 2025 reform any disciplinary sanction requires due process: written charges, access to the evidence, at least five days to respond, a reasoned decision and the right to challenge it.[4]
• Without just cause, by paying an indemnity:

For a developer on COP 8,000,000 a month dismissed without cause after three years, that is 70 days’ salary, about COP 18.7 million (calculated by Nearshorers).

Two rules make mistakes expensive. When the contract ends, the employer must prove it paid social security and payroll levies for the last three months, or the termination has no effect.[6] And if final wages and benefits are not paid on time, the employer owes one day’s salary for each day of delay for up to 24 months.[6] An employee who resigns must give 30 days’ notice, but no penalty can be agreed for not doing so,[4] and claims prescribe in three years.[4]

A contractor with a services contract pays their own social security once fees reach one minimum wage: health 12.5% and pension 16% on a base of 40% of monthly fees before VAT, plus occupational-risk insurance if the contract lasts more than a month.[23] Colombian clients must check that the contractor paid before paying each invoice;[23] the rule is written for clients in Colombia, but asking for the monthly contribution receipt is a simple way to see that a contractor is in order.

On taxes:

• Services provided in Colombia and used exclusively abroad by a client without business in Colombia are exempt from VAT, with the right to a refund, if the exporter keeps proof of the operation.[33]
• Individuals with gross income under 3,500 UVT, COP 183,309,000 in 2026, and no single contract above that amount are not VAT-responsible,[29] and those not VAT-responsible are not obliged to invoice unless they opted into the simplified SIMPLE regime.[34]
• DIAN keeps the tax register (RUT) and offers an online lookup of a taxpayer’s RUT status by tax ID.[35]
• Bank debits and withdrawals pay a 0.4% financial transactions tax, including on money received from abroad.[36]
• Foreign companies without a permanent establishment in Colombia are taxed there only on Colombian-source income.[11]

On the US side, collect a Form W-8BEN, or a W-8BEN-E if the contractor invoices through a company, and screen them against the OFAC sanctions lists; most US employment and payroll laws do not reach a contractor working in Colombia.

Payments for services do not have to go through Colombia’s regulated exchange market, and foreign-exchange operations are handled by authorized intermediaries, including banks and specialized electronic payment companies.[37] Sending money to Colombia cost 2.43% of the amount on average in 2023, according to the World Bank.[38]

For works created under a services contract or an employment contract, the author is the original owner, but the economic rights are presumed transferred to the client or employer, to the extent needed for its usual activities, unless agreed otherwise and only if the contract is in writing.[39] The same presumption covers inventions and other industrial property created under a written services or employment contract.[40] Software is protected by copyright as a literary work.[41]

The presumption has limits. Any transfer of economic rights must be in writing to be valid and covers only the uses, term and territory it states; if the contract is silent, it is limited to five years and the country where it was made, and registration with the National Copyright Registry makes it enforceable against third parties.[39] Moral rights, such as attribution and integrity, cannot be waived or assigned.[39] A contract with a Colombian developer should therefore assign all economic rights in writing, for all uses, worldwide and for the full term of protection.

Yes, with safeguards. Colombia’s data protection law is Statutory Law 1581 of 2012, enforced by the Superintendence of Industry and Commerce (SIC).[42] Transfers of personal data to countries without an adequate level of protection are prohibited unless an exception applies, such as the person’s express authorization or a transfer needed to perform a contract with them.[42] The SIC’s list of countries with an adequate level of protection includes the United States, but the exporter must still be able to show appropriate and effective safeguards.[43] Sending data to a processor abroad does not need the person’s notice or consent if a data transmission contract with the content required by Decreto 1377 de 2013 is signed.[44]

Fines reach 2,000 monthly minimum wages per violation, COP 3.5 billion in 2026.[42] A government bill to update the law was filed in Congress in August 2025,[45] and Law 1581 still governs.

Not for employees. The labor code applies to everyone working in Colombia, whatever their nationality, it sets minimum rights that no clause can reduce, and workers cannot waive them,[6] so a clause choosing US law does not remove those protections. A pre-dispute arbitration clause is not valid in an individual employment contract: labor arbitration clauses are valid only in collective agreements, and individuals can agree to arbitrate only after a dispute arises.[46]

For a business-to-business services contract, such as one between a US company and a Colombian contractor’s company, the parties may agree to international arbitration, which applies when their domiciles are in different countries, and the tribunal applies the law they choose.[47] Colombia has been a party to the New York Convention on foreign arbitral awards since 1979.[48] Contracts can be signed electronically: a data message meets a legal writing requirement, and an electronic signature that is reliable and appropriate has the same effect as a handwritten one.[49][50]

Not for the law: the minimum wage, hours and benefits are national. Colombia keeps UTC-5 all year, the same as US Eastern Standard Time, so it is one hour behind New York while the US is on daylight saving time.[8]

The labor markets differ. In July-September 2026, unemployment was 7.6% in Bogotá and 7.8% in Medellín, among the lowest of 23 cities and metro areas,[51] and Bogotá had the lowest informality rate, 34.1%, in June-August 2026.[52] In the EF English Proficiency Index 2025, Colombia scored 480, below the global average of 488, with Bucaramanga (518), Medellín (516), Manizales (515) and Bogotá (513) ahead of Barranquilla (506) and Cali (482).[53] The English proficiency guide compares Colombia with the rest of Latin America.