Colombia: Summary of Recent Labour and Employment Law Developments

In the past month, there have been several labour and employment law developments, chief among them: i) government establishes the minimum wage for 2020 and ii) new tax exemptions are put in place.

I. Government establishes Minimum Wage for 2020

On 26 December 2019, Colombia´s president, Iván Duque, issued Decrees 2360 and 2361, by which the minimum wage and transport aid for 2020 were set in place, increasing both labour payments 6% compared to last year´s costs.

The following are the figures set for 2020:

II. New Tax Exemptions

The Colombian National Congress issued the 2010 Act “through which rules are adopted for the promotion of economic growth, employment and others”. The most relevant contributions regarding labour law introduced by the new regulation can be summarised as follows:

• Sets lower retention rates for taxpayers, compared to the ones established by previous regulation.
• Creates a new regime for taxation that provides benefits for the formalisation and employment generation for taxpayers under the Simplified Tax Regime.
• Encourages large scale investments and employment through tax exemptions. For these exemptions to be applicable, employers must generate at least 400 jobs and invest 30 million Tax Unit Values (approx.. USD $303.000.000).
• As a benefit for youth employment, taxpayers required to file income tax returns may apply deductions of up to 120% of the payment of salaries regarding employees under 28 years of age, provided that:
  • it is a new job;
  • it is the employee´s first job;
  • the employee is hired after the 2010 Act comes into force; and
  • this reduction may not exceed 115 UVT (aprox. USD $1.162,65) a month per employee.
• Exempted income for companies engaged in orange economy that comply with the minimum standards of employment that will be set by the National Government, among other requirements. The same incentives will apply to companies dedicated to increasing the productivity of the agricultural sector.
• Sets in place temporary proceedings before (UGPP) through which conciliations and separation agreements can be reached with said entity. In order to carry out these proceedings, the interested party must submit a request following the guidelines established in the law.