Proposed Labor Reform in Colombia: What to Count on

Colombia’s new president could be very totally 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 making ready plenty of reforms to make Colombia aligned with the values he stands for. The labor reform in Colombia is one in every of these adjustments, which is definite to affect what you are promoting. Let’s check out what to anticipate if the reform is authorised by Congress and the way it could have an effect on the authorized necessities to start out a enterprise in Colombia. 

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

As this reform is complete and can modify varied working circumstances, we are going to solely concentrate on the facets that may affect what you are promoting.

• 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:

At this time, we now have two primary kinds of contracts: The Indefinite Time period contract and the Prestación de Servicios, or Mounted-Time period. The primary distinction, except for the length 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 must compensate any employee who has been dismissed with out simply trigger and the worker is free to give up at any time with out giving discover. 

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

With the brand new labor reform in Colombia, employees underneath an indefinite contract now have to provide a 30-day discover earlier than quitting, though it’s not clear if there’ll be a consequence for not complying. Additionally, each contract wherein the length will not be specified shall be understood as an indefinite contract.

The fixed-term contract is probably the most affected, underneath the reform. At this time, many firms use fixed-term contracts for jobs or positions that may usually be labeled as Indefinite to not pay the employee’s medical insurance. 

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

The length of the contract should even be specified, though it may be prolonged as many occasions as wanted, offered the full length 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 choose is required; within the case of different protected employees, resembling pregnant and disabled folks, authorization from the labor inspector is required except the particular person was employed underneath these circumstances and they’re explicitly said within the contract. 

These measures are put in place to keep away from discrimination within the office, so if the employee feels they had been dismissed due to their situation, they might resort to labor courts. In these circumstances, the employer could 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 said earlier than, the employee should be compensated when dismissed with out simply trigger. Listed here are the primary adjustments: 

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

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

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

The labor reform in Colombia will remove 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 yr labored on the firm. 

4 – Working hours and absences: 

Weekly working hours shall be lowered, additional hours and holidays will now be costlier, 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 possible be now understood as additional hours, which together with Sunday and vacation work will now be paid with a surcharge of 100% of the odd wage, fairly than the present 75 p.c. Evening-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 pressure 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 rigidity resulting from menstruation.
• To attend college obligations because the authorized guardian of youngsters or minor members of the quick household.
• Paternity go away will now be 12 weeks (3 months).

5 – Extra provisions:

This impacts wages, so pay shut consideration: 

The yearly wage readjustment shall be no less than equal to the CPI variation as of December thirty first of the earlier yr for employees who earn two or fewer month-to-month minimal salaries. 

If the employee can’t work due to the employer, they can not 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 must pay for these days. 

6 – Collective labor facets

That is a very powerful facet of the labor reform in Colombia, and can in all probability have the best affect on what you are promoting, because it entails many alternative subjects: 

Proposed adjustments 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 might be negotiated with no less than one-fifth of the full variety of employees or workers of an organization or teams of firms shall be prolonged to all employees at that degree, no matter whether or not or not they’re unionized. 

The negotiations for collective bargaining should 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 degree. 

Nonetheless, collective bargaining agreements aimed 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 change for a value to employees’ organizations.

Lastly, let’s discuss strikes. They’re certain to develop into extra widespread if working circumstances will not be met, resulting from them being additional protected by the state.

The proposed adjustments to the rules surrounding the appropriate to strike embody a number of key factors. 

First, the appropriate to strike is redefined, and the State now should be sure that all employees, whether or not unionized or not, have the elemental proper to strike in all its types, together with partial strikes. The proper to strike can also be now contemplated in firms 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 employees to strike inside the framework of negotiation of an organization settlement, it should be authorised by a majority of employees affiliated with the union or unions concerned with the battle after they signify no less than 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 putting is deemed unlawful have been restricted to solely three situations:

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

2 – The employer is now not capable of dismiss employees who’ve legally declared a strike and the sanctions that the employer can train towards these answerable for an unlawful strike are eradicated.

3 – The utmost length of the strike of 60 days is eradicated, and employees underneath union autonomy can lengthen 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 what you are promoting?

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

There is no such thing as a approach of understanding but if these adjustments shall be good to your particular firm. Understanding the proposed adjustments shall be useful for what you are promoting in the long run as compliance with authorized necessities in Colombia will assist keep away from penalties.

Biz Latin Hub can assist 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 workplaces in Bogotá and Cartagena, in addition to over a dozen different main cities within the area.

Our unequalled 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 consists of hiring & PEO accounting & taxation, firm formation, checking account opening, and company authorized providers. Contact us right now to seek out out extra about how we are able to help you to find prime expertise or in any other case doing enterprise in Latin America and the Caribbean.