Employer of record in Colombia: costs, prima and severance
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Colombia adds 34.2% to a COP 126,800,000 salary (USD 40,000) when the employer is an income-tax payer, by our math from the Labor Code, Ley 100 and Tax Statute texts (checked October 16, 2026): pension at 12% is the largest contribution, and statutory benefits make up 17.7 points of the total; lose the Tax Statute art. 114-1 exemption and the figure climbs to 47.7%. EOR fees run from $199 a month (Payoneer Workforce Management, formerly Skuad) to $699 (Oyster) per employee, per pricing pages checked October 16, 2026. The items easiest to leave out of a budget are the two extra months of pay each year: the prima de servicios and the cesantias, plus 12% interest on the cesantias.
An employer of record in Colombia is a Colombian company that hires your worker on its own payroll, pays pension, ARL, the family compensation fund and the mandatory benefits, and keeps you out of local registration, while you run the work.
- Employer cost on a sample salary
- 34.2% (exempt company); 47.7%…on top of gross pay
- Currency
- COP
On this page
Colombia's rules that shape the budget
- The art. 114-1 exemption. Income-tax-paying employers skip health (8.5%), SENA (2%) and ICBF (3%) for employees earning under 10 SMMLV (COP 17,509,050 a month). Above that line, or at a company that does not pay income tax, all three apply.
- Contributions on top of pay: pension 12% (the employer's 75% share of 16%), ARL work-risk insurance from 0.522% for class I, and the Caja de Compensacion Familiar at 4%. The contribution base is capped at 25 SMMLV, COP 43,772,625 a month (Ley 100 art. 18).
- A 42-hour week since July 15, 2026, the last step of Ley 2101 of 2021 (47 hours in 2023, 46 in 2024, 44 in 2025).
- Minimum wage under litigation. COP 1,750,905 a month plus a COP 249,095 transport allowance for earners up to 2 SMMLV, from January 1, 2026 (+23%). The decree is before the Consejo de Estado, with a final ruling pending in October 2026, so the figure could change.
- Probation: up to 2 months; for fixed-term contracts under a year, one fifth of the term (CST art. 78).
Employment costs and rules in Colombia
| Item | Colombia |
|---|---|
| Employer social contributions | 16.5% statutory contributions for a typical salary under 10 SMMLV at an income-tax-paying company (pension 12%, ARL 0.522% minimum, family fund 4%); 30.0% without the art. 114-1 exemption; mandatory benefits add about 17.7 points more |
| What the employer pays | Pension 12% (of 16% total; employer pays 75%); Health 8.5% (exempt for income-tax-paying companies on employees earning under 10 SMMLV, ET art. 114-1); ARL work risk 0.522% (class I) to 6.96% (class V) (rates per Decree 1772/1994 class table, unconfirmed today); Caja de Compensacion Familiar 4%; SENA 2% (exempt under art. 114-1 below 10 SMMLV); ICBF 3% (exempt under art. 114-1 below 10 SMMLV) |
| Caps and ceilings | Contribution base capped at 25 SMMLV (COP 43,772,625 per month) (Ley 100 art. 18). Integral salary: minimum 13 SMMLV, contributions on 70% (unconfirmed today). Art. 114-1 exemption applies only below 10 SMMLV (COP 17,509,050 per month) |
| Employee contributions | 8% (health 4%, pension 4%), plus 1% to 2% Solidarity Pension Fund on pay of 4 SMMLV or more (1% at 4 SMMLV per Ley 100 art. 20; higher bands unconfirmed today) |
| Minimum wage | COP 1,750,905 per month plus transport allowance COP 249,095 (for earners up to 2 SMMLV), effective Jan 1 2026 (Decrees 1469 and 1470 of Dec 29 2025; +23%). Consejo de Estado suspended Decree 1469 on Feb 12 2026; transitional Decree 0159 of Feb 19 2026 kept the same values; suspension lifted July 2026; final ruling pending as of Oct 2026 |
| Mandatory bonuses | Prima de servicios: 30 days of pay per year, half by June 30 and half by Dec 20; Cesantias: one month of pay per year deposited into a severance fund by Feb 14; interest on cesantias 12% a year paid to the employee by Jan 31; work clothing (dotacion) three times a year for earners up to 2 SMMLV (prima, cesantias, dotacion details per CST arts. 306, 249, 230, unconfirmed today) |
| Probation | 2 months; for fixed-term contracts under one year, one fifth of the term (CST art. 78) |
| Notice period | Indefinite contracts: no notice required for employer dismissal without cause (indemnity is due instead). Fixed-term contracts: 30 days' written notice before expiry or the contract renews automatically (CST art. 46) |
| Severance | Dismissal without just cause, indefinite contract (CST art. 64): under 10 SMMLV, 30 days' pay for the first year plus 20 days for each later year (prorated); 10 SMMLV or more, 20 days plus 15 days per later year. Fixed-term: pay for the remaining term |
| Payroll frequency | Monthly or twice monthly (common practice) |
| Standard work week | 42 from July 15 2026 (Ley 2101 of 2021 step-down: 47 in 2023, 46 in 2024, 44 in 2025, 42 in 2026) |
| Sample salary used | COP 126,800,000 per year (COP 10,566,667 per month, about 6.0 SMMLV; USD 40,000 at TRM 3,170.46 on Oct 16 2026) |
| Employer cost on that salary | 34.2% (exempt company); 47.7% if not exempt |
Checked October 16, 2026. Source type: mixed: official (Ley 2101, ET 114-1, Ley 100 arts. 18 and 20, CST arts. 46, 64, 78, TRM); secondary (minimum wage decrees: consultorsalud.com, buk.co, cuatrecasas.com, publimetro.co; health 8.5% split, ARL table, parafiscal rates). Sources are listed at the end of this page.
What an EOR charges to employ someone in Colombia
| Provider | EOR fee per employee per month | Deposit | Entity model (provider claim) |
|---|---|---|---|
| Payoneer Workforce Management | from $199 | None listed | Claims owned entities across APAC, MEA, Europe and the Americas |
| Pebl | $399 | Not listed | About 90% of employees on Pebl-owned entities |
| Playroll | from $399 | One month's salary per employee, refundable | No clear owned-entity claim |
| Rivermate | $319 to $639 | Not stated | Claims 38 owned entities |
| Multiplier | $459 (annual) or $499 (monthly) | Sized from costs, fees and notice period (method published, no fixed amount) | Claims owned entities in 160+ countries |
| Rippling EOR | Quote only (third-party reference: $499) | Not listed | Claims Rippling entities; no partner mention |
| Deel | $599 | Not stated by Deel | Claims owned entities in 130+ countries |
| Remote | from $599 | Waived for startups; otherwise not stated | Claims 100% owned entities in 90+ countries |
| Atlas | from $599 | Not published | Claims owned entities in 160+ countries |
| Papaya Global | from $650 | Refundable deposit, amount not stated | Uses in-country partners |
| Oyster | $699 | At least one month of total service cost, refundable (per its terms) | Owned entities and partners |
| Globalization Partners (G-P) | Quote only | Not stated | Information page claims 100+ wholly owned entities |
Source: each provider’s pricing page, checked October 16, 2026. Fees are the provider’s charge on top of salary and the employer contributions above. Some providers adjust prices by country.
What a COP 126.8 million employee costs
We converted USD 40,000 at the Banco de la Republica's representative rate (TRM) for October 16, 2026, COP 3,170.46, which gives COP 126,818,400, rounded here to COP 126,800,000. Monthly pay of COP 10,566,666.67 is roughly 6 minimum wages, under the 10 SMMLV line, so health, SENA and ICBF drop out.
| Line | Per month | Per year |
|---|---|---|
| Salary | COP 10,566,666.67 | COP 126,800,000 |
| Pension, 12% | COP 1,268,000.00 | COP 15,216,000 |
| ARL class I, 0.522% | COP 55,158.00 | COP 661,896 |
| Family compensation fund, 4% | COP 422,666.67 | COP 5,072,000 |
| Prima de servicios (1 month) | COP 880,555.56 | COP 10,566,666.67 |
| Cesantias (1 month) | COP 880,555.56 | COP 10,566,666.67 |
| Interest on cesantias, 12% | COP 105,666.67 | COP 1,268,000 |
| Employer cost (34.19%) | COP 3,612,602.44 | COP 43,351,229.33 |
| EOR fee at $599 | COP 1,899,105.54 | COP 22,789,266.48 |
| All-in cost | COP 16,078,374.65 | COP 192,940,495.81 |
Law texts: secretariasenado.gov.co (Ley 100, Tax Statute 114-1, Labor Code). TRM: datos.gov.co. The fee uses $599, Deel's and Remote's price. Benefit rows are monthly accruals, paid out on the legal dates. The ARL class I rate (Decree 1772/1994) and the prima and cesantias rules (CST arts. 249 and 306) are as commonly applied; we have not yet confirmed them on the official texts. Checked Oct 2026.
Two blocks make up the 34.19%: social contributions of 12 + 0.522 + 4 = 16.522 points, and benefits of 8.333 + 8.333 + 1 = 17.667 points, which together are COP 43,351,229.33. An employer without the exemption also pays health 8.5, SENA 2 and ICBF 3, another COP 17,118,000, reaching 47.69%. In pesos the $7,188 annual fee is COP 22,789,266.48.
The cost of letting someone go in Colombia
An indefinite contract can be ended without notice, but dismissal without just cause triggers an indemnity (CST art. 64). Under 10 SMMLV it is 30 days' pay for the first year plus 20 days for each later year, prorated; at 10 SMMLV or more, 20 days plus 15 per later year. A fixed-term contract ended early owes pay for the rest of the term, and one left to expire needs 30 days' written notice or it renews automatically (art. 46).
For the sample employee after 3 years, that is 30 + 20 + 20 = 70 days. At a day's pay of one thirtieth of the monthly salary, 70 x COP 352,222.22 = COP 24,655,555.56. Ask your EOR whether it holds a deposit against this.
Picking an EOR for Colombia
| Provider | Our score | EOR fee per month | Deposit |
|---|---|---|---|
| Multiplier | $459 (annual) or $499 (monthly) | Set from employment costs, fees and notice periods; refunded within 60 days | |
| Oyster | $699 | At least one month of total service cost; credited about 60 days after the end date | |
| Remote | from $599 ($699 in a March 2026 help article) | Reserve or letter of credit may be required; none for startups | |
| Playroll | from $399 | One month's salary, refundable | |
| Deel | $599 | Not stated by Deel |
HRPricing scores, October 17, 2026. Fee and deposit wording from each provider, October 16, 2026.
Get it in writing that the provider's Colombian employing company pays income tax; that single fact decides whether you pay 34.2% or 47.7%. Given the indemnity math above, ask too how big a deposit it holds and when it comes back. More detail: our scoring, the full ranking, and reviews of Oyster, Remote and Deel. The EOR cost index lines Colombia up against Mexico, Peru and others.
Own entity, EOR or contractor in Colombia
A Colombian subsidiary has to run the monthly contribution payments, the prima and cesantias calendar and the fund deposits itself. Five people through an EOR at $599 cost $35,940 a year in fees; compare that in our EOR versus own entity guide. An independent contractor carries no prima, cesantias or employer pension, which is exactly what a worker could later claim if the arrangement is ruled employment. For project work, look at contractor management platforms or a contractor of record.
Frequently asked questions
What does an EOR in Colombia cost?
What is the minimum wage in Colombia in 2026?
What are prima and cesantias?
What is the severance for dismissal without cause in Colombia?
Sources (13)
- Pebl: Pebl EOR pricing (checked Oct 16, 2026)
- Playroll: Playroll pricing (checked Oct 16, 2026)
- Multiplier: Multiplier pricing (checked Oct 16, 2026)
- Deel: Deel pricing (checked Oct 16, 2026)
- Remote: Remote pricing (checked Oct 16, 2026)
- Oyster: Oyster pricing (checked Oct 16, 2026)
- Payoneer Workforce Management (formerly Skuad): Skuad pricing (checked Oct 16, 2026)
- secretariasenado.gov.co/senado/basedoc/ley_2101_2021.html (checked October 16, 2026)
- secretariasenado.gov.co/senado/basedoc/estatuto_tributario_pr004.html (checked October 16, 2026)
- secretariasenado.gov.co/senado/basedoc/ley_0100_1993.html (checked October 16, 2026)
- secretariasenado.gov.co/senado/basedoc/codigo_sustantivo_trabajo_pr... (checked October 16, 2026)
- secretariasenado.gov.co/senado/basedoc/codigo_sustantivo_trabajo_pr... (checked October 16, 2026)
- datos.gov.co/resource/32sa-8pi3.json (checked October 16, 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.