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Colombia

Looking Ahead 2024: Colombia

The Year Ahead for Employers

In 2024, it is important to accentuate that important changes in labour and employment are expected due to the new government (left-wing) bill proposals that will likely be issued in the first semester of 2024. The new Labour Reform Bill was discussed in the Chamber of Representatives, where 16 out of the 98 articles were approved. The debate will continue this year.

At the start of the year, private sector employers will face new challenges and will have to comply with various labour-related obligations. Here are the most relevant ones:

1. Salary increases and reference values for the year 2024:

On Tuesday, 9 January 2024, DANE established that the annual variation of the Consumer Price Index (IPC) was 9.28% for the year 2023. The IPC measures the behaviour of the average cost of goods and services that are part of the family basket. Therefore, this is a relevant data for aspects such as the increase in the value of products, the increase in rental fees, and the increase in pension payments.

Now, given that the percentage variation of the IPC between two periods determines the inflation presented, the increase in the cost of living at the end of 2023 was 9.28% higher than the one at the end of 2022. This data is key for employers as it is one of the main criteria when determining salary increases for the year 2024 to maintain the purchasing power of salaries.

These figures become especially relevant when contrasted with the minimum wage increase decreed by the government for the year 2024. Last 29 December 2023, by means of Decree 2292, the minimum wage for this year was set at ONE MILLION THREE HUNDRED THOUSAND PESOS ($1,300,000.00), which implies an annual percentage variation of 12.07% compared to the minimum wage for the year 2023 and a real increase of 2.79%, taking the IPC figure as a reference.

Regarding salary increases, it is important to point out that there is no legal regulation that expressly establishes the obligation to annually increase the salaries of private sector workers who earn more than the minimum monthly salary in force. Thus, the increases will be determined by the circumstances of each company, which include the economic conditions in which it finds itself or the agreements it has reached with its workers, for which the IPC may be a reference factor.

Notwithstanding, the important thing in these cases is to ensure that the salary bands do not overlap and to maintain consistency between job responsibilities and the corresponding remunerations, which are not limited to salary payments, but may also include benefits that do not have a salary impact.

In the case of workers who earn a minimum salary or whose salaries use the minimum salary as a reference (such as the integral minimum salary), we reiterate that the increase for the year 2024 will be 12.07%, and the reference values to be considered for this type of salaries in the year 2024 will be as follows:

 

CONCEPT VALUE (COP)
Minimum Legal Monthly Wage in Force (SMLMV) $1.300.000
Legal Transportation Allowance $162.000
MLMW + Legal Transportation Allowance $1.462.000
Minimum Daily Wage $43.333
2 MLMW (Reference for Endowment and Legal Transportation Allowance) $2.600.000
Full Integrated Minimum Wage (13 SMLMV) $16.900.000
Social Security Cap (25 SMLMV) $32.500.000
Amount of Total Salary to be recognized with IBC in contribution ceiling Social Security $46.428.571
Regular Hour Value (Maximum Legal Workday of 47 hours per week) $5.532
Night Surcharge $1.936
Day Overtime $6.915
Night Overtime $9.681
Sunday Surcharge (under conditions of Article 179 of the Labour Code) $4.149

 

MONTHLYIZED COSTS 2024 – REGULAR SALARY (MAXIMUM LEGAL WORKING DAY)

CONCEPT VALUE (COP)
Salary $1.300.000
Legal transportation assistance – Digital connectivity assistance $162.000
Employer’s health contribution $110.500
Employer’s pension contribution $156.000
ARL Contribution (Risk I) * $6.786
Family compensation fund $52.000
ICBF $39.000
SENA $26.000
Monthly provision for “layoffs allowance” $121.785
Monthly provision for “layoff allowance interest rates” $14.620
Monthly provision for “Statutory legal bonus” $121.785
Monthly Vacation Provision $54.210
TOTAL** $2.164.686
TOTAL EXONERATED*** $1.989.186

 

*According to a report by the Ministry of Health, by September 2023, there were 13,019,262 members of Labour Risks. The tendency is that most of them are affiliated with Risk I.

** The value that the employer allocates for the endowment is not included in the monthly costs.

*** Under Article 114-1 of the E.T., the employers that pay income tax and complementary taxes and have two (2) or more employees are exempt from the payment of contributions to SENA (2%), ICBF (3%) and health (2%), ICBF (3%) and the health system (8.5%), corresponding to workers who earn less than 10 SMLMV.

 

NET MONTHLY EMPLOYEE INCOME 2024 – ORDINARY SALARY

EARNINGS
Salary $1.300.000
Legal transportation assistance – Digital connectivity assistance $162.000
DISCOUNTS
Health contribution $52.000
Pension contribution $52.000
TOTAL $1.358.000

 

MONTHLY COSTS 2024 – INTEGRAL SALARY (MAXIMUM LEGAL WORKING DAY)

CONCEPT VALUE (COP)
Salary $16.900.000
Basis for the calculation of contributions $11.830.000
Employer’s health contribution $1.005.550
Employer’s pension contribution $1.419.600
ARL Contribution (Risk I) $61.753
Family compensation fund $473.200
ICBF $354.900
SENA $236.600
Monthly Vacation Provision $704.730
TOTAL $21.156.333

 

NET MONTHLY EMPLOYEE INCOME 2024 – INTEGRAL SALARY

EARNINGS
Salary $16.900.000
DISCOUNTS
Health contribution $473.200
Pension contribution $473.200
Solidarity fund contribution $118.300
TOTAL $15.835.300

 

2. New deadline for the annual registration of self-assessments of minimum standards and occupational safety and health management system improvement plans

  • The Ministry of Labour established that all companies must register in an application the information for the annual report of self-assessment of minimum standards of the occupational safety and health management system and the improvement plan of the occupational safety and health management system.
  • Recently, through Provision (“Circular”) 093 of 18 December 2023, the Ministry of Labour reiterated that all companies must register the annual self-assessment report of the minimum standards and improvement plans of the system for the year 2023 and establish a new deadline for such registration. The companies can proceed with the registration in one of the following periods:
  • From 18 December  2023 to 29 December 2023 or
  • From 1 February 2024 to 29 March 2024
  • The registration must be filled out in the following application https://sgrl.mintrabajo.gov.co

 

3. Modifications generated by Decree 2126 of 2023

The Ministry of Health and Social Protection issued Decree 2126 of 2023 that introduces important modifications related to the granting of some economic benefits. The following are the most important points:

  • Establishes the rules for issuance, recognition and payment of maternity leave and paternity leave in their different modalities in cases of spontaneous abortion, premature birth, voluntary interruption of pregnancy, and care of children.
  • Establishes the rules for issuance, recognition, and payment of medical incapacities of common origin, including those lasting more than 540 days.
  • Defines the situations of abuse of rights in granting economic benefits to the health system and the procedure to be followed in such cases.
  • Establishes the creation of an Information System of Economic Benefits of the Social Security Health System (SIPE), which allows for traceability and flow of resources.
  • Reiterates that medical incapacities extensions are understood as those that are issued after the initial one, either for the same disease or injury or, failing that, for another one that is directly related, even if it is a different diagnosis code, if between one and the other there is no interruption of more than thirty (30) calendar days.
  • Meanwhile the SIPE System is being implemented, the health service provider must inform the Health Promoting Entity or adapted Entity of the issuance of the medical incapacity certificate so that the patient’s care can be managed, and the recognition and payment process can be facilitated.
  • The issuance of the medical leave certificate, whether of common origin or due to accident or illness, must be issued by the treating physician or dentist, who is registered in the Special Registry of Human Talent in Health (ReTHUS), including professionals who are presenting the mandatory social service, attached to an authorized health service provider.
  • The medical leaves that are not issued by professionals must be validated by an entity to which the worker is affiliated, and such validation must be made by the entity within fifteen (15) days following its issuance, attaching the request together with the result of the attention or medical records, when they are external consultation services or ambulatory attention.
  • When there are concerns regarding the medical incapacity issued by the doctor or dentist not assigned to the entity’s network, the affiliate may be submitted to a medical evaluation by a peer professional, who may refute or accept it. However, if eight (8) working days have passed without it having been validated or submitted for evaluation, the entity shall recognize and settle the medical incapacity within fifteen (15) working days following the presentation of the medical incapacity certificate and shall pay it within the following five (5) days, provided that the conditions of article 2.2.3.3.3.1 of Decree 2126 are complied with.
  • If during the vacation period of the contributor a medical incapacity of common origin is issued, the vacation is interrupted for the duration of the medical incapacity and will be resumed the day after the end of it without requiring an agreement between the worker and the employer for the return to work.
  • During the period of labour protection (three months after the withdrawal from the system and if the employee has been affiliated with the same EPS for five years or more), there will be no recognition and payment of medical incapacities of common origin.
  • The variations of the IBC of the month at the beginning of the leave or the month prior to the beginning of the medical incapacity, which exceed forty percent (40%), with respect to the average of the previous twelve months or its fraction if less, will not be taken into consideration in the part that exceeds such percentage for the liquidation of economic benefits, while for the liquidation of medical incapacities of common origin, when the salary is not fixed, the average salary earned in the last year of service or all the time contributed, if it is less than one year, will be taken.
  • For the maternity certificate for adoption applicable to shared or flexible part-time parental leave, the information provided by the adoptive parents on the agreed start and termination dates and the days, as applicable, must be recorded.
  • For the payment of maternity leave by extension, the health insurance company, or the adapted entity to which the biological mother is affiliated will be in charge of the payment.
  • Maternity leave of the independent worker and that of the independent father cannot be paid with an income lower than 1 monthly minimum wage.
  • Hospitalization certificates issued by IPS do not give rise to the recognition of economic benefits, and only the recognition of a retroactive medical incapacity shall be applicable, which may not exceed thirty (30) calendar days.
  • For the certificates of medical incapacities of common origin and/or licenses issued in another country, the legalization and apostille procedures must be carried out at the Colombian Embassy or Consulate in the country of issue or a friendly nation and must be translated into Spanish by an official translator. The contributor will have six (6) months from the date of issue of the medical incapacity or license to request the validation.

4. Labour-related responsibilities 

  • Prepare and report to the Ministry of Labour and the Occupational Risks Administrator the self-assessment of the OSHMS (Occupational Health and Safety Management System) as of 31 December 2023 and the improvement plan for the year 2024, as established in Resolution 0312 of 2019.
  • Report the variation in the number of employees for the regulation of the apprentice quota in the periods July and January or March and September.
  • Pay on January workers 2023 interest rate over the unemployment severance allowance to all employees.
  • Deposit the 2023 severance payment before or on 14 February on the severance funds to which the workers are affiliated.
  • Recognise statutory service bonuses on 30 June and 20
  • Reduce the weekly working week to 46 hours starting in July 2024. This entails the revision of internal work regulations, employment agreements and possible adjustment of work
  • Order periodic occupational
  • Deliver working clothes and footwear allowances on 30 April, 31 August, and 20 December to all employees that earn up to twice the minimum wage, appropriate to the work performed by the employee.
  • Congress is currently studying a bill proposal to reform the current Labour Law in Colombia.
  • The Government has announced its intention to create substantial restrictions on the possibility of contracting outsourcing services and independent contractors, especially for services related to core business activities.

As a recommendation, employers need to be aware of new employment and labour law regulations, according to the New Government objectives. Once these are implemented, they need to be undertaken in the workplace in compliance with the Labour Reform Act which is expected in the upcoming months.

For additional information on any matter related to labour issues in Colombia, please contact Angélica María Carrión Barrero (Partner) of López & Asociados at angelica.carrion@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.