Colombia: Regulating the Social Protection Floor

On August 27, the national government issued Decree 1174 aiming at regulating the access and operation of the Social Protection Floor (SPF) created by Law 1955, the National Development Plan 2018-2022. The Decree has been created as part of the Pension General System, Decree 1833 of 2016.

Following the characteristics established by Law 1955, Decree 1174 recalls the composition of the SPF: 1) the Subsidized Health Scheme, 2) the Social Service of Periodic Economic Benefits (BEPS by its acronym in Spanish), and 3) an inclusive insurance for occupational risks and diseases covered by the BEPS. Eventually, employees under the FSP will have access to the family subsidy once it will be regulated.

In addition, Decree 1174 establishes the mandatory and voluntary affiliates to the FSP, once they have fulfilled the conditions to access to the subsidized Health Scheme and the BEPS:

• Mandatory affiliates: Employees and independent contractors that, working under part-time contracts, earn less than a monthly minimum wage.
• Voluntary affiliates: Those without a contract of employment or of any other nature, which income is lower than the monthly minimum wage.

Once the employer knows their employee is a FSP mandatory affiliate, they should pay a contribution of 15% of their income, instead of the regular 16% contribution for regular employees (adding up the 12% and 4% related to the pension and parafiscal contributions, respectively). For those hiring independent contractor’s services, the 15% should be calculated over the regular payment.

Even though Decree 1174 will be mandatory as of February 2021, it has been highly debatable in the country, as some have read it from a narrow perspective without acknowledging it as part of the Social Protection System, and not as an alteration of its essential provisions.

For additional information on any matter related to labor issues in Colombia, please contact Alejandro Castellanos (Partner) of López & Asociados at alejandro.castellanos@lopezasociados.net or visit www.lopezasociados.net

For more information please contact Joseph Granato, Communications Manager at L&E Global at joseph.granato@leglobal.org.