Employer of Record in Colombia (2026): Costs, Contributions and Contracts

An employer of record (EOR) lets a foreign company hire employees in Colombia without its own Colombian entity. The EOR becomes the legal employer: it signs the contract, affiliates the employee to social security, runs payroll and issues electronic payroll documents to the DIAN. You direct the work and pay the employment cost plus a service fee. Here is what that involves in 2026.

How an EOR works in Colombia

• The EOR signs a written employment contract under the Labor Code (Código Sustantivo del Trabajo).
• It affiliates the employee to health (EPS), pension, occupational risk (ARL) and a family compensation fund before work starts.
• It pays contributions monthly through the PILA form and reports electronic payroll to the DIAN.

What employing someone costs in Colombia

• Minimum wage: COP 1,750,905 a month in 2026, plus a transport allowance of COP 249,095 for employees earning up to two minimum wages.
• Pension: 12% employer, 4% employee (16% total).
• Health: 8.5% employer and 4% employee. Corporate taxpayers are exempt from the employer’s 8.5% for employees earning under 10 minimum wages (Tax Statute, art. 114-1).
• Payroll levies: 4% to the family compensation fund, plus 2% SENA and 3% ICBF, which are also exempt under art. 114-1 below 10 minimum wages.
• ARL: occupational-risk insurance paid by the employer, by risk class; for class I (office work) the initial rate is 0.522%, within a 0.348%–0.696% band (Decreto 1772/1994, art. 13).
• Benefits: a service bonus (prima) of one month’s salary a year in two instalments, severance savings (cesantías) of one month’s salary a year deposited by 14 February, 12% annual interest on cesantías, and 15 working days of paid vacation.

Contracts and working time

Contracts can be indefinite, fixed-term or for a specific job. The probation period is up to two months and must be agreed in writing. The maximum working week is 42 hours from 15 July 2026 (Law 2101 of 2021). Under the 2025 labor reform (Law 2466), night work starts at 7 p.m., and the surcharge for work on rest days rises to 90% from 1 July 2026 and 100% from 1 July 2027.

Ending employment

Dismissal without just cause on an indefinite contract requires an indemnity (Labor Code, art. 64). For employees earning less than 10 minimum wages, it is 30 days’ salary for the first year and 20 days for each additional year, pro rata. For higher earners it is 20 days for the first year and 15 for each additional year. On a fixed-term contract, the indemnity equals the salary for the time remaining. Accrued prima, cesantías and vacation are always paid.

When to set up your own company

An EOR suits a first hire or a market test. For a growing team, local invoicing or contracts in your own name, it is usually better to set up your own company (most foreign founders use an SAS) and run payroll there. See our employer of record and PEO services in Latin America and our payroll outsourcing in Colombia guide.

Get help from Easyco

Easyco coordinates the company setup in Colombia up to the issue of the NIT, and supports companies afterwards with tax, accounting, payroll and company compliance, including a registered office address. Request a quote to discuss your hiring plans.