Proposed Labor Reform in Colombia: What to Count on

Colombia’s new president may be very completely different from the management of the previous. Gustavo Petro is the first left-leaning leader in the country’s history, and as such has been getting ready a variety of reforms to make Colombia aligned with the values he stands for. The labor reform in Colombia is considered one of these modifications, which is for certain to affect your enterprise. Let’s check out what to anticipate if the reform is authorized by Congress and the way it might have an effect on the authorized necessities to start out a enterprise in Colombia. 

What’s going to change with the brand new labor reform in Colombia?

As this reform is complete and can modify numerous working circumstances, we’ll solely deal with the features that can affect your enterprise.

• Modifications to Labor Contracts 
• Termination of the Labor Contract
• Compensation for Dismissal With out Simply Trigger
• Working hours, leaves, and leaves of absence 
• Extra Provisions
• Collective Labor Facets

1 – Modifications to labor contracts:

Immediately, we’ve two primary sorts of contracts: The Indefinite Time period contract and the Prestación de Servicios, or Fastened-Time period. The principle distinction, other than the period of the contract, is the obligations of the employer. 

In an indefinite contract, the employer has to pay for a fraction of the price of the worker’s healthcare, a sort of labor insurance coverage, amongst different issues. Moreover, they need to compensate any employee who has been dismissed with out simply trigger and the worker is free to stop at any time with out giving discover. 

In a fixed-term contract, the worker has to deal with every little thing on their very own. It may also be prolonged a most of three occasions.

With the brand new labor reform in Colombia, staff below an indefinite contract now have to present a 30-day discover earlier than quitting, though it’s not clear if there’ll be a consequence for not complying. Additionally, each contract through which the period just isn’t specified shall be understood as an indefinite contract.

The fixed-term contract is probably the most affected, below the reform. Immediately, many corporations use fixed-term contracts for jobs or positions that may usually be labeled as Indefinite to not pay the employee’s medical health insurance. 

That’s going to vary, as they would be the exception, that means that the corporate has to expressly point out the short-term wants they’ve in order that it’s not used to satisfy everlasting wants. 

The period of the contract should even be specified, though it may be prolonged as many occasions as wanted, supplied the full period of the contract doesn’t exceed two years. 

2 – Termination of the labor contract: 

New standards of reasonableness and proportionality are going to be launched to evaluate violations by both the employer or the worker when terminating the employment contract for ‘Simply Trigger’. It additionally introduces an obligation for the employer to do a dismissal continuing earlier than any termination, in any other case, it may be dominated ineffective. 

The reform additionally has bolstered labor stability, as further authorization is required for a dismissal to be efficient in some particular circumstances: 

Within the case of a employee with union safety, authorization from a labor decide is required; within the case of different protected staff, similar to pregnant and disabled individuals, authorization from the labor inspector is required except the particular person was employed below these circumstances and they’re explicitly acknowledged within the contract. 

These measures are put in place to keep away from discrimination within the office, so if the employee feels they have been dismissed due to their situation, they might resort to labor courts. In these circumstances, the employer may have the duty to show the dismissal was not primarily based on discriminatory reasonings, however fairly goal ones.

3 – Compensation for dismissal with out simply trigger:

As acknowledged earlier than, the employee have to be compensated when dismissed with out simply trigger. Listed below are the principle modifications: 

• In fixed-term contracts, the minimal compensation goes from 15 to 45 days of wage. 
• In indefinite contracts, it goes a little bit in another way: 

Immediately, compensation in indefinite contracts is set by the wage and the way lengthy the worker has been working at that firm:

• Staff who earn lower than 10 minimal month-to-month salaries are entitled to 30 days of wage, with 20 further days per 12 months labored on the firm. 
• Staff who earn greater than 10 minimal month-to-month wages are entitled to twenty days of wage, with 15 further days per 12 months labored on the firm. 

The labor reform in Colombia will get rid of this differentiation, and each employee shall be entitled to the identical compensation, regardless of how a lot they earn.

• Each employee shall be entitled to 45 days of wage, with 45 further days per 12 months labored on the firm. 

4 – Working hours and absences: 

Weekly working hours shall be decreased, further hours and holidays will now be dearer, further compulsory leaves are launched, and evening work hours (which pay greater than daytime work) shall be prolonged. 

The working week will go from 48 to a most of 42 hours. This implies Saturdays will probably be now understood as further hours, which together with Sunday and vacation work will now be paid with a surcharge of one hundred pc of the atypical wage, fairly than the present 75 p.c. Night time-time work shall be prolonged by 3 hours, and can now be from 6:00 pm to six:00 am. 

Moreover, the understanding of a “home calamity” shall be expanded. They embody “any private or household occasion, fortuitous occasion or power majeure whose seriousness impacts the traditional improvement of the employee’s actions”.

Lastly, two new compulsory leaves are launched, and one is prolonged: 

• To attend scheduled medical appointments or emergency medical appointments, these embody the employee presenting incapacitating menstruation cycles, dysmenorrhea, or belly stress on account of menstruation.
• To attend college obligations because the authorized guardian of youngsters or minor members of the fast household.
• Paternity depart will now be 12 weeks (3 months).

5 – Extra provisions:

This impacts wages, so pay shut consideration: 

The yearly wage readjustment shall be at the very least equal to the CPI variation as of December thirty first of the earlier 12 months for staff who earn two or fewer month-to-month minimal salaries. 

If the employee can’t work due to the employer, they can’t refuse to pay wage for the times the worker has not labored. Which means that if the employer asks the employee to not work, they nonetheless need to pay for these days. 

6 – Collective labor features

That is crucial side of the labor reform in Colombia, and can in all probability have the best affect on your enterprise, because it entails many alternative subjects: 

Proposed modifications to the rules surrounding unions and collective bargaining embody a number of key factors. 

The definition of an “employer” shall be expanded to embody contractors and their organizations, permitting for contractors to be included in union associations. 

Moreover, collective bargaining agreements which can be negotiated with at the very least one-fifth of the full variety of staff or staff of an organization or teams of corporations shall be prolonged to all staff at that stage, no matter whether or not or not they’re unionized. 

The negotiations for collective bargaining have to be carried out with unity of the negotiation settlement, unity of the negotiating committee, unity of the negotiating desk, and conclude with the signing of a single collective bargaining settlement at every stage. 

Nonetheless, collective bargaining agreements geared toward fixing working and employment circumstances are prohibited, as are these agreements whose function or impact is to entrust the execution of labor or providers in favor of third events in trade for a value to staff’ organizations.

Lastly, let’s discuss strikes. They’re sure to turn out to be extra frequent if working circumstances will not be met, on account of them being additional protected by the state.

The proposed modifications to the rules surrounding the fitting to strike embody a number of key factors. 

First, the fitting to strike is redefined, and the State now should make sure that all staff, whether or not unionized or not, have the elemental proper to strike in all its types, together with partial strikes. The fitting to strike can be now contemplated in corporations or entities that present public providers.

Each strike has to adjust to the authorized necessities to be declared. That is proven by how the bulk guidelines for the approval of the strike are actually regulated:

For staff to strike inside the framework of negotiation of an organization settlement, it have to be authorized by a majority of staff affiliated with the union or unions concerned with the battle once they symbolize at the very least one-third of the employees of the corporate; and strikes can now solely be initiated after a two-day discover has been given to the employer, besides within the case of strike attributable to the employer. 

The cases the place placing is deemed unlawful have been restricted to solely three situations:

1 – When in important providers the availability of minimal providers just isn’t complied with, when it isn’t peaceable, or when prior discover just isn’t given when required.

2 – The employer is not capable of dismiss staff who’ve legally declared a strike and the sanctions that the employer can train in opposition to these liable for an unlawful strike are eradicated.

3 – The utmost period of the strike of 60 days is eradicated, and staff below union autonomy can prolong the strike till they deem it pertinent or request the convening of an arbitration tribunal at any time.

How can the Labor Reform in Colombia have an effect on your enterprise?

The working circumstances in Colombia are about to vary drastically, whether or not this or different variations of the Labor Reform are accepted. 

There isn’t any approach of understanding but if these modifications shall be good to your particular firm. Understanding the proposed modifications shall be useful for your enterprise in the long run as compliance with authorized necessities in Colombia will assist keep away from penalties.

Biz Latin Hub will help you with the Labor Reform in Colombia

At Biz Latin Hub, we offer built-in market entry and back-office providers all through Latin America and the Caribbean, with places of work in Bogotá and Cartagena, in addition to over a dozen different main cities within the area.

Our unmatched attain means we’re ideally positioned to help multi-jurisdiction market entries and cross-border operations.

In addition to data in regards to the Labor legal guidelines in Colombia, our portfolio of providers contains hiring & PEO accounting & taxation, firm formation, checking account opening, and company authorized providers. Contact us at present to search out out extra about how we will help you to find prime expertise or in any other case doing enterprise in Latin America and the Caribbean.