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Legal minimum wage increase and transportation allowance for 2021

DECREE 1785 OF 2020: MINIMUM LEGAL MONTHLY WAGE FOR 2021

Considering the economic and health crisis generated by the global COVID-19 pandemic, the year 2021 began as one of the most difficult in Colombia due the speculation about the increase of the legal minimum wage and transportation allowance. Indeed, in accordance with Article 56 of the Colombian Constitution and Law 278 of 1996, the Permanent Commission on the Coordination of Salaries and Labour Policies, conformed by representatives of employers, workers, and the Colombian Government, should attempt to fix by agreement these amounts that constitute the pillar of the economic functioning of the country.

However, although the agreement has not materialized on many occasions since 1997, it was foreseeable that December 2020 would not be different, as both the public and private sectors have been deeply affected by the economic consequences of the restrictions imposed on the transit of people and goods during this pandemic. In that order, it was clear that there would be a clash of interests, mainly when national public health and financial circumstances do not have any point for conciliation.

Thus, on December 29th, 2020, the Colombian Government, in exercise of its legal powers and in the absence of any agreement, issued the Decree 1785 of 2020, by which, as of January 1, 2021, the minimum legal monthly wage was set at the sum of NINE HUNDRED AND EIGHT THOUSAND AND FIVE HUNDRED AND TWENTY-SIX THOUSAND COLOMBIAN PESOS (COP $908,526). Therefore, the increase in the minimum wage compared to that established for the year 2020, corresponded to 3.5%, that is, the sum of THIRTY THOUSAND SEVEN HUNDRED AND TWENTY-THREE PESOS (COP $30,723).

However, in relation to the adjustment of the minimum wage, there is a concern every year about the legal obligation to apply the corresponding increase and which workers should be covered by the measure.

In this regard, it is important to point out that from the analysis of articles 145 and 148 of the Substantive Labour Code, it is noted that it is a legal obligation of the employer to increase the salary of those workers who earn the minimum wage, based on the percentage established annually by decree. Precisely because of this, the labour law expressly provides that "the fixing of the minimum salary automatically modifies the labour contracts in which a lower salary is stipulated”.

However, for workers who earn more than the legal minimum salary, the labour law does not clearly establish the mandatory nature of the annual increase, so the High Courts have taken different positions.

First, the Colombian Constitutional Court, among other pronouncements, through the Sentences SU-400 of 1997, C-1433 of 2000 and C-1064 of 2001, has indicated that salaries that are higher than the legal minimum must be indexed at least, according to the Consumer Price Index (CPI), due otherwise, the salary would lose purchasing power, and this would represent a deterioration of the workers' working conditions.

By its part, the Colombian Supreme Court of Justice, through Case Studies such as SL 12213 of 1999 and SL 11681 of 2015, has developed an opposite thesis, according to which there is no legal basis, except in the case of minimum wages, for the employer to unilaterally proceed to an annual adjustment for workers who earn higher salaries. In fact, this position was accepted by the Colombian Ministry of Labour through Concept No. 359772 of 2008, in which the entity considered that the increase in these salaries could be presented by mutual agreement between the parties to the employment contract, but not because of a legal regulation.

Considering this difference in positions, we believe that, although there is no rule that establishes the obligation to make an annual adjustment of salaries that are higher than the legal minimum, economic phenomena such as inflation, are not unrelated to the exercise of the right to work and the labour market. Thus, from a perspective that seeks to guarantee the rights of workers and anticipate claims for employers, we suggest increasing these salaries taking into account the percentage of the Consumer´s Price Index.

DECREE 1786 OF 2020: TRANSPORTATION ALLOWANCE FOR 2021

On December 29th, 2020, the Colombian Government issued Decree 1786 of 2020 by which, as of January 1st, 2021, the transportation allowance was set at the amount of ONE HUNDRED SIX THOUSAND FOUR HUNDRED AND FIFTY - FOUR COLOMBIAN PESOS (COP $106,454) per month, for those workers who earn up to two (2) minimum wages per month.

In this regard, it should be recalled that Decree 771 of June 3, 2020, established that during the health emergency declared by the Colombian Ministry of Health and Social Protection because of the COVID-19 pandemic, employers must recognize the value corresponding to the transportation allowance, as a connectivity allowance. This, clarifying that it applied equally to employees who earned up to two (2) legal minimum wages and who performed their duties in the modality of working at home and not in teleworking, under the terms and with compliance with requirements established in Law 1221 of 2008.

Thus, considering that the health emergency was extended by Resolution 2230 of 2020 of the Ministry of Health and Social Protection at least until February 28, 2021, and that Sentence C-311 of 2020 of the Constitutional Court, established that the application of the connectivity allowance may be extended beyond the term of the mentioned emergency, when it is necessary to guarantee the continuity of the work at home to avoid the contagion of COVID-19, it is clear that the legal sum must be paid to the employees entitled to it, through one or another title by the employers in compliance with their obligations.

REFERENCE LEGAL VALUES: MINIMUM SALARY AND TRANSPORTATION ALLOWANCE FOR 2021.

Considering the increase in the current monthly legal minimum salary and the transportation allowance for the year 2021, we present below the reference values of updated labor concepts:

Labour ConceptValue for 2021
 Monthly legal minimum salaryCOP $908.526
Transportation AllowanceCOP $106.454
Monthly legal minimum salary + Transportation AllowanceCOP $1.014.980
Integral Minimum SalaryCOP $11.810.838
Daily legal minimum salaryCOP $30.284
Ordinary hour minimumCOP $3.785

 

Authors

Adriana-Escobar-CMS-Colombia
Adriana Escobar
Partner
Bogotá
Ana María Cubillos
Associate
Bogotá