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 making ready loads 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 for certain to influence your small business. Let’s check out what to anticipate if the reform is permitted by Congress and the way it could have an effect on the authorized necessities to start a business 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 give attention to the features that can influence your small business.
- Modifications to Labor Contracts
- Termination of the Labor Contract
- Compensation for Dismissal With out Simply Trigger
- Working hours, leaves, and leaves of absence
- Further Provisions
- Collective Labor Features
1 – Modifications to labor contracts:
In the present day, now we have two predominant forms of contracts: The Indefinite Time period contract and the Prestación de Servicios, or Fastened-Time period. The primary distinction, apart from 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 should 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 maintain every part on their very own. It may also be prolonged a most of three occasions.
With the brand new labor reform in Colombia, staff beneath an indefinite contract now have to offer 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 isn’t specified will likely be understood as an indefinite contract.
The fixed-term contract is probably the most affected, beneath the reform. In the present day, many firms use fixed-term contracts for jobs or positions that might usually be categorised as Indefinite to not pay the employee’s medical health insurance.
That’s going to alter, 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 satisfy everlasting wants.
The length of the contract should even be specified, though it may be prolonged as many occasions as wanted, offered the whole 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 strengthened labor stability, as extra authorization is required for a dismissal to be efficient in some particular instances:
Within the case of a employee with union safety, authorization from a labor choose 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 beneath 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 could resort to labor courts. In these instances, the employer may have the duty to show the dismissal was not primarily based on discriminatory reasonings, however quite 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 here are the principle adjustments:
- In fixed-term contracts, the minimal compensation goes from 15 to 45 days of wage.
- In indefinite contracts, it goes just a little otherwise:
In the present day, 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 extra days per yr labored on the firm.
- Staff who earn greater than 10 minimal month-to-month wages are entitled to twenty days of wage, with 15 extra days per yr labored on the firm.
The labor reform in Colombia will eradicate this differentiation, and each employee will likely be entitled to the identical compensation, regardless of how a lot they earn.
- Each employee will likely be entitled to 45 days of wage, with 45 extra days per yr labored on the firm.
4 – Working hours and absences:
Weekly working hours will likely be diminished, further hours and holidays will now be dearer, extra compulsory leaves are launched, and evening work hours (which pay greater than daytime work) will likely be prolonged.
The working week will go from 48 to a most of 42 hours. This implies Saturdays will doubtless 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 strange wage, quite than the present 75 p.c. Evening-time work will likely be prolonged by 3 hours, and can now be from 6:00 pm to six:00 am.
Moreover, the understanding of a “home calamity” will likely be expanded. They embody “any private or household occasion, fortuitous occasion or pressure majeure whose seriousness impacts the conventional 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 attributable to 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 – Further provisions:
This impacts wages, so pay shut consideration:
The yearly wage readjustment will likely be a minimum of equal to the CPI variation as of December thirty first of the earlier yr for staff 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 should pay for these days.
6 – Collective labor features
That is crucial side of the labor reform in Colombia, and can most likely have the best influence on your small business, because it entails many various subjects:
Proposed adjustments to the rules surrounding unions and collective bargaining embody a number of key factors.
The definition of an “employer” will likely 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 a minimum of one-fifth of the whole variety of staff or workers of an organization or teams of firms will likely be prolonged to all staff at that degree, 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 degree.
Nevertheless, 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 companies in favor of third events in change for a value to staff’ organizations.
Lastly, let’s discuss strikes. They’re sure to change into extra frequent if working circumstances usually are not met, attributable to them being additional protected by the state.
The proposed adjustments 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 be certain that all staff, whether or not unionized or not, have the basic proper to strike in all its kinds, together with partial strikes. The proper to strike can be now contemplated in firms or entities that present public companies.
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 throughout the framework of negotiation of an organization settlement, it have to be permitted by a majority of staff affiliated with the union or unions concerned with the battle after they signify a minimum of 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 situations the place putting is deemed unlawful have been restricted to solely three situations:
1 – When in important companies the availability of minimal companies isn’t complied with, when it’s not peaceable, or when prior discover 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 towards these answerable for an unlawful strike are eradicated.
3 – The utmost length of the strike of 60 days is eradicated, and staff beneath 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 small business?
The working circumstances in Colombia are about to alter drastically, whether or not this or different variations of the Labor Reform are accepted.
There is no such thing as a method of realizing but if these adjustments will likely be good in your particular firm. Understanding the proposed adjustments will likely be helpful for your small business in the long run as compliance with authorized necessities in Colombia will assist keep away from penalties.
Biz Latin Hub may also help you with the Labor Reform in Colombia
At Biz Latin Hub, we offer built-in market entry and back-office companies 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 concerning the Labor legal guidelines in Colombia, our portfolio of companies contains hiring & PEO accounting & taxation, firm formation, checking account opening, and company authorized companies. Contact us right now to seek out out extra about how we will help you to find high expertise or in any other case doing enterprise in Latin America and the Caribbean.