Employer of Record (EOR) in Colombia

An EOR in Colombia allows businesses to enter the market quickly and help maintain compliance with local laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment from payroll processing to compliant administration and immigration support.

Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce in Colombia.

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Country InsightsColombiaEmployer of Record

Quick Overview of EOR in Colombia

Expanding into Colombia doesn't have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can bypass the complexities of local regulations and quickly hire employees, all while maintaining compliance with Colombia's labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal nitty-gritty like social security contributions and 13th-month salary calculations, so you can focus on growing your business without the need to set up a costly local entity.

The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in Colombia can cost anywhere from USD 38,500 to USD 77,000 plus the cost of maintaining human resources (HR), legal assistance, accountants and more. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster, avoiding the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex local regulations.

Disclaimer: The contents of this article is not legal advice and should be used for reference only. If in doubt, please seek independent legal advice from a lawyer in the relevant jurisdiction.

What You'll Learn Ahead:

  • Looking to hire in Colombia without the hassle and administrative burden of setting up a local entity? An EOR helps you onboard employees while maintaining compliance with payroll and local labor laws.

  • With a Direct EOR, you gain control, faster onboarding, and stronger compliance. It is ideal for businesses aiming to scale quickly.

  • On the other hand, an Indirect EOR may be more cost-effective but comes with slower processes and added complexity.

  • EOR service fees typically range from USD 300 to USD 800 per employee per month.

  • Atlas HXM offers a robust Direct EOR solution, providing smooth market entry, compliance, and seamless employee management: all in one platform.

How an EOR Works

At Atlas HXM, we provide EOR services that ensure your business remains compliant with Colombia's labor laws while you focus on growing your operations, free from administrative and legal burdens.

Candidate Selection

Atlas HXM does not recruit candidates, but will check the employment setup for compliance around new hires like validating right-to-work, reviewing contract terms against Colombian rules, and configuring payroll and statutory obligations correctly. EOR providers in Colombia, including Atlas HXM, can assist with work visa applications and immigration support. Anyone hired via EOR must hold valid work authorization or be sponsored through the proper immigration process.

Employment Contracts

Atlas HXM drafts and administers employment contracts in compliance with the Colombian Labor Code. Clearly outlines key employment terms to reduce risk of future disputes, such as:

  • Job title and responsibilities

  • Salary, benefits, and working hours

  • Leave entitlements and notice periods

Payroll & Benefits Management

Payroll is processed in Colombian pesos (COP), including:

  • Accurate tax withholdings and social security contributions

  • Statutory benefits such as health insurance (EPS) and pension contributions

The EOR also helps maintain compliance with mandatory benefits like 13th-month salary payments and transportation allowances, so employees are protected under Colombia's laws.

Work Permit Compliance

In Colombia, EOR providers can assist with work visa applications and immigration compliance. Atlas HXM manages compliant employment, payroll, social security, and statutory obligations in alignment with Colombian immigration and labor regulations.

Ongoing HR Support

Provides HR support, including: Leave management and performance tracking, employee relations, and regulatory updates throughout the employee's tenure. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.

Costs & Pricing

EOR services in Colombia are typically billed as a platform/service fee in the range of USD 300–800 per employee per month. This fee covers administration such as compliant contracts, payroll processing, statutory filings, and HR administration for workers who already hold valid work authorization. This service fee is separate from the employee's salary, benefits, taxes, and visa-related costs, which vary by role and jurisdiction. By using an EOR, companies avoid the cost and overhead of setting up a Colombian entity, which can require USD 38,500–77,000 upfront before any operational spend.

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What to Choose: EOR vs PEO

EOR

Employer of Record

An EOR becomes the legal employer for your hires in a country where you do not have an entity. The EOR carries employer liability and handles compliant contracts, payroll, statutory benefits, tax filings, and labour-law adherence. You still direct the employee's work. This model suits companies expanding into Colombia without wanting to form a local entity or take on compliance risk.

PEO

Professional Employer Organization

A PEO provides outsourced HR services like payroll, benefits, HR admin, but only when you already have a local entity. You remain the legal employer, and the PEO shares administrative tasks without taking on employer liability. Suitable when you are already established in the country and are only looking to offload HR administration.

What’s Best for You?

  • Choose an EOR when you want to hire in Colombia without setting up an entity and want a partner who absorbs employer risk.

  • Choose a PEO when you already operate locally and just want HR support.

Work Life in Colombia

Colombia's employment framework is designed to balance operational needs with employee protections. Here's what you need to know:

Employment Types:

  • Permanent: Ongoing employment with full statutory benefits.

  • Fixed-Term: Hired for a specific project or defined duration (maximum 4 years, renewable).

  • Temporary: Short-term assignments through temporary service companies; entitled to statutory benefits.

Probation Periods: Probation periods must be stipulated in writing and cannot exceed 2 months. These periods allow employers to assess employee suitability before offering permanent employment. Either party may terminate during probation without penalties or prior notice.

Working Hours & Overtime: In Colombia, the standard workweek is currently 46 hours (reducing to 44 hours in July 2025 and 42 hours in July 2026), with a maximum of 9 hours per day. Employees must receive a break after working 6 consecutive hours. Overtime is paid at 125% for daytime hours and 175% for nighttime hours, with limits of 2 hours per day and 12 hours per week.

Leave Entitlements

Leave Type

Eligibility / Duration

Payment / Notes

Annual Leave

15 consecutive working days after 1 year

Paid by employer; minimum 6 days must be taken consecutively

Maternity Leave

18 weeks

Full pay through social security system

Paternity Leave

2 weeks

Paid by government social insurance

Sick Leave

Up to 180 days

66.67% of wages first 90 days, 50% remaining period

Public Holidays

All statutory holidays

Paid; 75% surcharge for work on holidays

Payroll & Benefits: Wages include mandatory 13th-month salary paid in two installments (June 30 and December 20), transportation allowance for eligible employees, and comprehensive social security contributions. Atlas HXM manages payroll in COP, social security contributions, statutory benefits, and supplemental benefits like private health insurance.

Atlas HXM can help you manage these aspects and can help ensure that employees are supported and compliant with Colombia's labor laws while businesses can focus on operations without administrative burdens.

More Reading

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What to Choose: Indirect vs Direct EOR

Direct EOR

The EOR owns the legal entities in the target country, coordinating all employment-related tasks directly. It offers faster onboarding, better compliance, and more control.

Best for: Businesses looking to scale quickly, expand long-term, or enter Colombia with compliance.

Indirect EOR

The EOR provider acts as an intermediary between the business and a third-party local entity. While it can be cheaper, it may result in delays and compliance complexity.

Best for: Small teams or short-term hires with less urgent compliance needs.

What’s Best for You?

  • For Small Teams or Contractors: Indirect EOR could work, especially for temporary hires or testing a market.

  • For Scaling and Compliance: Direct EOR is the best choice. With Atlas HXM, you'll have control, faster entry, and streamlined compliance.

Taxes & Compliance

Colombia operates on a calendar-year tax system, running from January 1 to December 31. Employers must submit monthly social security contributions by specific due dates, annual tax returns by March 31, and provide required tax documentation to employees. Individual income tax returns are due between August and October based on taxpayer identification numbers.

Category

Details

Employer Payroll Tax

Social security contributions: ~25% of payroll (pension 12%, health 8.5%, ARL variable)

  • Family compensation fund: 4%

  • ICBF: 3%, SENA: 2%

Employee Payroll Tax

Progressive income tax: 0%–39% based on UVT units

  • Employee social security: 8% (pension 4%, health 4%)

  • Solidarity contributions for higher earners

Pension System

Dual system: public (RPM) or private (RAIS)

  • Retirement age: 62 (men), 57 (women)

  • Minimum 1,300 weeks contribution

  • Benefits: 55%–80% of average salary

VAT & EOR Costs: Colombia applies a 19% Value Added Tax on EOR services. This tax applies to service fees and must be factored into total cost calculations. Companies may be able to claim VAT credits if registered as taxpayers in Colombia.

Atlas HXM handles tax compliance, including progressive income tax calculations, social security contributions, year-end filings, and expatriate tax planning, ensuring businesses remain compliant with local laws while minimizing administrative burden.

Termination

There are no mandatory notice periods for termination. A 30 day notice applies only for non-renewal of fixed-term contracts and is recommended (not required) for employee resignation. Severance pay is mandatory for dismissals without just cause: 30 days salary for the first year plus 20 days for each additional year (employees earning less than 10 minimum wages), or 20 days for the first year plus 15 days for each additional year (higher earners). The EOR helps ensure proper handling of terminations, including notice periods, final wages, and required documentation.

Visas & Work Permits

In Colombia, foreign nationals must obtain appropriate visas for employment. The main categories include Visitor Visa (type V), Migrant Visa (type M), and Resident Visa (type R). Work visas are issued for 2 years for multiple entries, requiring employment contracts, employer certificates, and proof of qualifications. Depending on the visa category, the end-to-end generally takes 2-3 months.

If the foreign national is working in a Colombian regulated profession (economics, law, medicine, business, engineering, etc.), prior approval must be obtained from the relevant Professional Council, which is issued in the form of a Professional Permit and/or Degree Validation.

EOR providers, including Atlas HXM, can assist with visa applications and immigration support. Work visa applications require proper documentation and coordination with Colombian immigration authorities. Once authorization is in place, Atlas HXM can employ the individual under the EOR model and manage payroll, social security, benefits, and compliant employment administration.

5 Things to Look for in an EOR Provider

  1. Local expertise and knowledge of Colombian labor laws, social security contributions, and Ministry of Labor requirements.

  2. Advanced technology for payroll, reporting, and HR system integration.

  3. Experience in your industry and handling immigration and work permit management.

  4. Strong compliance track record and relationships with government agencies and legal advisors.

  5. Global presence to support multi-country expansion, with verified security and compliance standards (ISO 27001/27017/27018, GDPR).

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Atlas HXM provides direct EOR services, managing payroll, compliance and benefits efficiently. Our unified platform automates HR, payroll, and compliance tasks, while offering premium employee support, global benefits, and access to 9,000+ learning courses. Recognized by Everest Group PEAK Matrix 2025 and NelsonHall NEAT Assessment 2025, Atlas HXM combines compliance, technology, and global expertise.

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FAQs

Can an EOR in Colombia assist with work visa applications?

Yes. Atlas HXM can assist with work visa applications and immigration support, coordinating with immigration attorneys and handling administrative aspects of maintaining proper immigration status.

What is the 13th-month salary requirement in Colombia?

Mandatory payment equivalent to one month's salary, paid in two installments: first half by June 30, second half by December 20.

What is the typical probation period in Colombia?

Maximum 2 months and must be stipulated in writing in the employment contract.

How much notice is required for termination in Colombia?

45 days for indefinite-term contracts, 30 days for fixed-term contracts exceeding one month.

What are the social security contribution rates in Colombia?

Employers contribute approximately 25% of payroll; employees contribute 8% (4% pension, 4% health).

Can employees work overtime without limits in Colombia?

Overtime is limited to 2 hours per day and 12 hours per week, paid at premium rates (125% daytime, 175% nighttime).

         

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