international employment law firm alliance L&E Global

2. State Aid

Government subsidies and special relief resources allocated to support employers, and workers, in their efforts to maintain employment and pull through the crisis.

On two separate occasions in 2020, the Colombian government declared a nationwide State of economic, social, and ecological Emergency, allowing the President to take any decision required to cope with the COVID-19 crisis. As a result of the powers afforded to address this pandemic, the government further approved exceptional aid in order to provide support and to minimise the economic impact of the outbreak:

Regarding the unemployed:

  • access to the Layoff Protection Mechanism has been simplified and its scope has been magnified, while the requirements for access to the severance aid payment (one month of salary payed yearly by the employer to a fund) have been moderated. Lastly, economic aid for the unemployed, up to USD $430 (approximately two months of minimum wage) has also, under certain conditions, been extended.

Regarding the formal sector (e.g. encompasses all jobs with normal hours and regular wages, and are recognised as income sources on which income taxes must be paid):

  • for the months of April and May 2020, employers, employees and independent workers in Colombia could contribute with a reduced pension rate of 3% (regularly 16%), which will only be considered for minimum pensions (1 minimum salary).
  • for the months of May, June, July and August 2020, the government has granted a subsidy of 20% or more to the income of every employer in the country, financially affected by the outbreak of COVID- 19. Once the authority has verified the fulfillment of the minimum conditions, the employer could be entitled to receive a subsidy equivalent to (approximately) USD $95 per qualified employee.
  • to pay the legal service bonus in June 2020, the government created a subsidy in favor of employees earning the monthly minimum wage up to US $260 (approximately), which is equivalent to (approximately) USD $58 per qualified employee.
  • finally, for those employees whose employment contracts have been suspended, the government will grant aid up to (approximately) USD $42, on three occasions (3x).
Any questions

Ask our member firm López & Asociados in Colombia