Bill 367 of 2023 submitted to the Congress on March 16 of 2023: Labour Reform

In regard to the announcements made by the National Government, on March 16 of 2023 the final draft of the labour reform was submitted to the Congress as a formal Bill.

Below, we will refer to the main changes and adjustments that were found on the final Bill that was issued at the Congress, in comparison to preliminary versions that had been shared before: 

Contract Types: 

• This version maintains the dispositions related to establishing the indefinite duration contract as the general rule for hiring staff, authorizing the hiring through fixed term agreements or contracts which duration is tied to the lasting of a specific project, only for special tasks that are temporary.
• In regard to fixed term contracts, even though the first draft limited its duration to only one (1) year, this new version changes the maximum duration and increases it to two (2) years, clarifying that in those events in which the parties sign fixed term contracts with a duration lower than one (1) year, it is allowed to extend them as many times as it is required, as long as it does not surpass the two (2) year limit. Also, it is mandatory that they are formalized in writing, stating expressly the temporary task that motivated the use of this type of contract.
• It is warned that in those cases in which the parties sign fixed term contracts or those with a duration tied to the lasting of a specific project, without complying with the formalities and requirements described on the Bill, it will be understood as indefinite since the beginning of the employment relationship.

Termination of the Contract:

• One of the main concerns that brought the initial draft, was the suggested adjustment to number 6 of article 62 of Colombian Labour Statute, related to the possibility to terminate employment contracts with a fair cause because of serious misconducts, considering that initially it eliminated the possibility to include serious misconducts on the internal Employee Handbook. Nevertheless, this new version included on the proposed wording “the serious breaching of obligations or prohibitions of the employee in accordance with articles 68 and 60 of Colombian Labour Statute, arbitration awards, collective bargain agreements or Internal Employee Handbook”.
• Despite the fact that the Bill maintains the protection for people who have special situations such as: maternity, paternity, disabilities, health limitations, about to comply with pension requirements and employees with union immunity, this version includes a differentiation, mentioning in which cases the authorization for dismissal with fair cause must be requested to a Judge.
• The submitted Bill includes the expression “administrative or judicial request” mentioning expressly that in the case of employees with union immunity the authorization to dismiss must be requested to a Judge, while in the cases of employees with protection due to maternity, paternity, about to comply with pension requirements or health limitations, the request must be submitted before the Ministry of Labour, clarifying that in those events in which an employee with any of these situations was hired by the employer  knowing about the condition and having mentioned it on the draft of the contract, this authorization won´t be required in case of dismissal.
• Regarding the possibility to terminate the contract without a fair cause, which was significantly limited on the first draft of the project, this version had some adjustments, eliminating the possibility for the dismissed employee to choose between a reinstalment or a severance compensation, and therefore keeping only the severance compensation for dismissals without a fair cause stated on article 64 of Colombian Labour Statute.
• Nevertheless, we must highlight that in regard to the mentioned article 64, this version includes an adjustment on the calculations of the amounts to be paid as unfair dismissal severance that will increase the costs for these payments, as shown below:

(i) On fixed term contracts, the severance is still the amount of the salaries caused between the dismissal date and the expiration date established by the parties, including as novelty that the amount of the severance cannot be lower than 45 days of salary.

(ii) In regard to indefinite duration contracts, it is established that the severance will be equivalent to 45 days of salary for the first year of services, and for each additional year the employee will be entitled to another 45 days of salary per year or proportionally per fraction (without making a difference between employees with salaries higher or lower than 10 minimum wages as it is currently stated on the regulations applicable nowadays).

• The submitted Bill includes a modification of article 65 of Colombian Labour Statute in regards to the penalty compensation in case of delays on labour payments, stating that in those cases in which the employer does not pay salaries, legal and extralegal benefits and penalties or compensations, the employee will be entitled to receiving a compensation equivalent to one day of salary for each day of delay until the final payment has been verified. 
• This version maintains the application of the disciplinary procedure stated on article 115 of Colombian Labour Statute for terminations with fair cause (except in those cases in which the fair cause if the recognition of a pension) granting all the procedural guarantees established on Constitutional Ruling C-593 of 20214, including the possibility to review the decision to terminate the contract by a second instance, stating that a termination with fair cause that is applied without conducting that preliminary procedure will be considered as invalid.                                   

Outsourcing and Temporary Work Companies:

• Even though the first draft had established a differential treatment in regards to the joint liability of the independent contractor stated on article 34 of Colombian Labour Statute, mentioning that small and medium companies won´t be jointly liable if the services provided by outsourced independent contractor were not part of the business core, this final draft eliminated that differentiation, stating an absolute joint liability even though the activities conducted by contractors are not part of the beneficiary business core, and without stablishing differential treatment in regards to the size of the beneficiary company.
• Additionally, it is stablished that the employees of the contractor that provide outsourced services to develop activities that are part of the main business core of the beneficiary company, are entitled to the same rights that the direct staff of the beneficiary has in regard to salaries and benefits, including those derived from collective bargaining agreements.
• In regard to the supply of staff by Temporary Work Companies, even though the first draft had established a 6-month limit for this type of hiring in case of increase of sales or production, this final version eliminated this limit.  
• Also, it is stablished that in those cases in which the cause that originated the need to hire temporary staff still continues after the legal time limits, it won’t be possible to extend the commercial agreement with the Temporary Work Company or celebrate a new agreement with the same Temporary Work Company or another one.
• In those cases in which temporary staff is hired for different purposes to the ones allowed by the Law or in cases the temporary limits exceed, it will be understood that the beneficiary company is the real employer of the temporary staff.
• In regard to independent services agreements, it is established that it is forbidden to sign this type of agreements with natural people, in order to perform permanent and subordinated activities, defining that these contracts will be invalid, understanding that they are of employment nature since the beginning of the relationship and also includes that in those events in which it is judicially declared the primacy of reality on the employment relationship, the penalty stated on article 65 of Colombian Labour Statute shall be paid.

Work Schedule, Overtime and Work on Sunday and Holidays:

• This draft maintains the proposal to increase the remuneration of Sunday work with a charge equivalent to 100%. 
• Also, this draft maintains the proposal to change the nighttime schedule in order that it starts since 6:00 p.m. and finishes at 6:00 a.m. 
• In regard to the maximum legal work schedule, in previous newsletter we had commented that there were inconsistencies on the initial draft, due to the fact that some paragraphs referred to a work schedule equivalent to 42 hours per week, while others mentioned a weekly schedule of 40 hours, however, this last version made the correspondent adjustments, referring to a weekly work schedule of 42 hours in the same terms of Law 2101 of 2021.
• It is important to highlight that even though Law 2101 of 2021 had established that when the maximum work schedule was equivalent to 42 hours per week, the dispositions stated on Lay 1857 of 2017 about family days and the 2 hours for recreation and coaching activities stated on Law 50 of 1990 would not apply, the Bill of the labour reform include them again, which means that in addition to the reduction of the work schedule, employers will have to continue granting one additional day per semester as family day, plus the weekly recreation or coaching hours stated on Law 50 of 1990.
• About the flexible work schedule for people with family responsibilities, the initial wording was adjusted, and therefore it was changed from being mandatory to being applicable in case of “a mutual agreement between the parties”.
• In regard to overtime work, the limits of 2 hours per day and 12 overtime hours per week are maintained, nevertheless, it is defined that in those cases in which the parties agree to extend the ordinary work schedule to 9 hours per day, on that day the employee can only work one (1) additional hour as overtime.

Apprenticeship Contracts:

• In regard to apprenticeship contracts, the final draft maintained the intention to turn it into a special type of fixed term employment contract, receiving a minimum remuneration of one (1) legal minimum wage.
• Despite the fact that the initial draft stated dispositions in regard to the amounts that shall be paid in case of monetizing the apprenticeship quota, those were eliminated on the final version.

Digital Work Platforms:

• On the submitted Bill it is stated that the people who provide services on digital delivery platforms must be hired through employment contracts.
• Additionally, it establishes an obligation for the “digital delivery platform Company” to affiliate their employees to the social security system and to generate reports in regard to the number of work hours (including the time in which they were online and available to comply any requests from the platform) in order that they are taken into account at the moment of defining the amount of the social security contributions.
• It also establishes an obligation to assign a “human supervisor” that will have contact with the digital employee, in order to clarify possible doubts or questions. Also, it is stated that it will be forbidden to suspend the employee from using the platform or to retain his/her remuneration.

Agricultural Work:

• The Bill includes the definition of agricultural work, referring to all the activities that take place during the primary production line of agriculture,  including permanent, transitional, stationary, seasonal, continuous or discontinuous activities, clarifying that despite the duration of the correspondent stage, it is presumed that an agricultural employment contract exists, which will be of indefinite duration in those events in which the activities take more than 27 weeks.
• The industrial activities related to packaging, transportation, exhibition, sales or transformation and the ones performed by agro-industrial companies are expressly excluded of these dispositions, and therefore will continue being regulated by the general provisions stated on the Colombian Labour Statute.
• The definition of “agricultural daily salary” is incorporated, allowing to retribute the daily job and compensating the amounts corresponding to legal salary benefits anticipatedly (without including vacations). The amount of the agricultural daily salary cannot be inferior to the equivalent of a day of legal minimum wage plus an additional 30% corresponding to the legal benefits factor and another 4% for family allowance paid directly to the employee. This type of remuneration requires a written agreement. 
• The affiliation to the social security system will be through the modality of partial time dependent employee stated on Decree 2616 of 2013, taking as base for calculation the amount of the daily agricultural salary without the benefits factor.
• Last, it is established that in those cases in which the employer requires that the agricultural employee lives on the place of work, the employer must guarantee that the property will have drinkable water, access to sanitary services and a first aid kit. Also, it establishes that the costs of the repairments that are required because of force majeure or sudden events, must be assumed by the employer.

Automatization and Descarbonizing Procedures:

The Final draft maintains the protection alternatives for employees in those cases in which there are automatization (modernizing) or decarbonizing processes, with some adjustments we highlight below:

• Regarding dismissals derived from automatization processes, in those events in which despite all the efforts, it was not possible to have a reconversion or relocation of the employee, the obligation to pay an additional 30% of the legal dismissal severance that was included on the first draft, was eliminated.
• The final draft included an obligation for the National Government to regulate the creation of an unemployment insurance fund that covers employees who were laid off because of automatization or modernizing procedures and a mechanism to continue paying social security contributions for the employees affected by this type of processes.
• In regard to the measures derived from decarbonizing processes, the final version eliminated a provision included on the first draft, that referred to a 3 year notice that the employers had to give to the employees in case of closure, resignation of titles or changes in the operation.

Migrants and Athletes:

• The Bill maintains the wording in relation to the equality on labour guarantees for migrant, eliminating the disposition “for hiring” in regard to the requirement to regulate the migratory status to be hired. 
• This final version includes an article focused on regulating the work of “professional athletes”, stating that those athletes who provide services for professional leagues or clubs must be hired through employment agreements and with full social security coverage, whether they are nationals or migrants.

Equality and Reduction of Gaps:

• The wording related to permits due to domestic calamities was adjusted, eliminating the dispositions related to permits derived from “disabling menstrual cycles or abdominal tension caused because of menstruation associated with endometriosis diagnosis” stating a more general wording.
• In regard to the inclusion guarantee, in addition to people with disabilities, the new wording expressly refers to members of the LBTIQ+ community and ethnic groups. 
• The dispositions related to the hiring of employees who provide domestic cleaning services through written work agreements that must be registered before the Ministry of Labour, are maintained on the last version of the reform.
• The Bill maintained the same provisions regarding the gradual increase of the paternity leave to 12 weeks since the year 2025.

Labor Law Aspects:

Regarding unions and collective bargaining provisions, the following aspects are highlighted:

• The last version of the project kept the intention to expand the concept of “employer” on the labour regulations, meaning that whenever these regulations mention the word “employer” it also refers to “contracting parties”, which extends the exercise of the right of union association to independent contractors.
• This final version includes obligations for Unions to promote the inclusion of women, people with health limitations, sexually diverse and youths in order to encourage the representation of these groups on union directives.
• The final wording maintains the list of union guarantees, such as: the granting of union permits (establishing a minimum amount of hours for certain permits, stating differences for small companies), the access to corporate information of employer companies, direct communication with all the employees of the company in order to promote the union and explain the benefits established on collective bargain agreements, adjusting the initial wording which stated an obligation to allow unions to intervene during the internal training and retraining procedures, including this time a wider and more general wording.
• In regard to the fines imposed in case of incurring in conducts against the right of union association, it is stablished that the amount of the fines will be determined in accordance with the standards stated on article 486 of Colombian Labour Statute and considering the size of the company that will be sanctioned. 
• Additionally, it is pretended to include a special judicial procedure named “judicial protection of union rights” that will allow unions to request protection to a judge in case of conducts against the right of association, and therefore the judge can adopt prevention measures and additional will impose fines between 1 and 100 minimum wages to the natural people that allow and promote these conducts (despite of the fines that the Ministry of Labour would impose to the employer company).
• In regard to the collective bargaining, the final version maintains the negotiation by levels, mentioning that despite of this type of negotiation and the collective agreements reached by industry or branch, it is possible to create special chapters that will only apply to certain companies of the sector, specially addressed to micro, small and medium companies.
• Also, it includes an article related to the unity in the bargaining process, establishing that the collective bargaining in any level will have to be executed with a unified list of demands, unified negotiation commission and a unified bargaining panel to have a unified collective bargaining agreement by level.
• In regard to the prohibition to sign benefit agreements with non-unionized employees in companies in which there are union organizations, the wording of the initial version was adjusted, stating that prohibition of signing “any kind of group or plural agreements, in despite of its denomination” between employers and non-unionized employees with the goal to establish job and employment conditions, stating that the current plural benefit agreements will stop being valid once its expiration date takes place, without being possible to extend them, understanding that the benefits that the employees have been receiving in regards to those agreements will be incorporated to their individual employment contracts.
• The Bill includes the prohibitions for unions to sign services agreements in favor of third parties (union contracts).
• In regard to strike, the limits for companies who provide essential services is kept, stating the obligation to determine which minimum services would be provided in case of strike for this type of companies. Also, the number of employees required to convoke the strike is reduced and therefore the final draft proposed that it is equivalent to the third part of the total number of employees of the company.
• In relation to arbitration panels, the wording that pretended to extend the faculties of the arbitrators to decide about all the request stated on the list of demands, including those that are not of economic kind, was eliminated.

Final Provisions:

Even though the initial draft included the following provisions on the first part of the project, the final version includes them as part of the final dispositions:

• The intention to have a salary increase equivalent to at least the Index Consumer Price for employees who earn more than a minimum wage is kept.
• This final version included a provision in which it is pretended to increase the statute of limitations for employment claims extending it from 3 to 5 years. Also, it is stated that in case of claims related to rights derived from an employment relationship, the statute of limitations period will start counting since the termination of the employment contract, clarifying that on this last version, a new paragraph is included mentioning expressly that claims regarding social security contributions do not have a statute of limitations.

Hence, even though we observe that in some aspects the final version of the reform made certain adjustments that were necessary and provide a better understanding in some provisions, we consider that there are still other dispositions that require a detailed review by the Congress, considering the economical and social situation of the country and reiterating the importance of having a reform that guarantees both the welfare of employees and the sustainability of companies, due to the fact that they are the main pillar for maintaining current jobs and the generation of new ones.

In summary, in addition to the lack of clarity in some particular aspects that contains this last version, there is still the sensation that with this proposal of labour reform, tit is pretended that the companies are responsible of guarantees that the Government has not been able to provide to citizens, imposing obligations of constitutional nature that are out of the employment relationship scope, on a State governed by the rule of Law guided by our Constitution.