Employment termination law and legislation in Colombia

1. Dismissal of employees

1.1 Reasons for dismissal

  1. Fair Dismissals: if there is a fair cause for dismissal, the employer must identify the facts and the standards that were broken by the employee and that determine the fair cause for termination as stated in Article 62 of the Colombian Labour Code. In a set case, the employee is not entitled to any compensation or damages derived from the contract's termination.
  2. Unfair Dismissals: the employer may unilaterally end an employment contract at any time, even in absence of fair cause. In a set case, the employee is entitled to receive compensation in the form of damages (i.e. legal severance) previously stated in Article 64 of the Colombian Labour Code.
  3. Non-renewal of a fixed term contract: if the employee has a fixed term employment contract, the employer may decide not to extend the contract after the date of expiration with 30 days prior notice. 
  4. Termination of a specific task or project: If the employee was hired with an employment contract that is tied to the development of a specific task or project, once the project or task is finished, the employer can terminate the contract without any notice and without payment of compensation or severance. In this case, the reason for dismissal will be the termination of the specific task, which must be expressly stated in the contract.

1.2 Form

  1. Fair Dismissals: the employer must invoke one or more of the fair causes established in Article 62 of the Colombian Labour Code, and identify the contractual and legal standards that were broken or the facts that justify termination. For evidential purposes, the decision must be in written form.
  2. Unfair Dismissals: for evidential purposes, the decision must be in written form.
  3. Non-renewal of a fixed-term contract: the employer must provide the employee with written notice with prior notice of at least 30 days from the expiration date of the fixed-term contract.
  4. Termination of the specific task or project: For evidential purposes, the decision must be in written form. Also, it is necessary that the specific task or project be finished, which allows the employer to terminate the contract in regard to this event.

1.3 Notice period

Only applicable to fixed-term contracts, at least 30 days to be given before the contract's date of expiration.

In exceptional cases, fair dismissal in which the employer invokes the causes established in issues 9, 10, 11, 12, 13, 14, and 15 of Article 62 of the Colombian Labour Code, the employer must provide written notice with at least 15 days prior notice before the termination date.

1.4 Involvement of works council

No involvement.

1.5 Involvement of a union

Prior verification of the existence of a fair cause from a labour judge is needed when employees are protected by union immunity (e.g. union officials, union founders within the first six months of foundation, members of the commission of claims).

1.6 Approval of state authorities necessary

Unfair dismissal is prohibited in the following cases, which imply reinforced labour stability since contracts may only be terminated with proven fair cause for dismissal:

  1. Employees with union immunity, for which a judge is entitled to verify the existence of fair cause for termination;
  2. During pregnancy and the first six months after a birth, women may not be dismissed without fair cause. Furthermore, the Ministry of Labour is entitled to verify the existence of fair cause for terminating the contract of a pregnant woman or during the first three months after giving birth.
  3. Employees with any health condition (e.g. on sick-leave, experiencing restrictions, handicapped, etc.) that limits their interactions in the work environment may only be dismissed with a fair cause that precludes discrimination. However, the Ministry of Labour Is entitled to authorise the dismissal of employees with health limitations when the decision is founded on the medical condition of the employee. In the case of unfair dismissal of employees with health limitations, these dismissals will be presumed to be motivated on their conditions.
  4. Employees whose economically dependent partners are pregnant or are on maternity leave as defined by the Colombian Constitutional Court in Case C-005/17.
  5. Employees who are within the last three years of fulfilment of the requirements of an old-age pension.
  6. Employees who, six months prior to their termination, filed claims of labour harassment, which was verified by a judge.
  7. During collective bargaining, the potential beneficiaries of the eventual collective bargaining agreement may only be dismissed if there is fair cause.

1.7 Collective redundancies

It is considered a collective redundancy if a company dismisses without fair cause the following percentage of its employees within a period of six months:

  • 30% of its employees if the company has ten to 49 employees.
  • 20% if it has 50 to 99 employees.
  • 15% if it has 100 to 199 employees.
  • 9% if it has 200 to 499 employees.
  • 7% if it has 500 to 999 employees.
  • 5% if it has more than 1,000 employees.

For a company to dismiss this percentage or more of its workforce, prior authorisation must be requested from the Colombian Ministry of Labour.

To receive the employment authority’s approval, it is necessary to prove that the company is facing a financial crisis or another extraordinary situation forcing the collective redundancy.

1.8 Summary dismissals

Does not apply.

1.9 Consequences if requirements are not met

If requirements for dismissal with fair cause are not met, employees are entitled to claim damages (i.e. legal severance). However, for employees with reinforced labour stability or seniority prior to 1 January 1981 who have been dismissed without fair cause, a judge may decide on their reinstatement through a constitutional action.

1.10 Severance pay

When an employer has fair cause to end a contract, there is no indemnification granted to the employee.

On the other hand, in case of unfair dismissal, according to Colombian Labour Law there are different types of indemnifications (i.e. legal severance) based on these types of contracts: 

i. in fixed-term contracts, the indemnification is calculated with the salary days pending until the end of the contract;

ii. in contracts for a specific project or service, the indemnification is calculated with the salary days pending until the end of the contract with a minimum of 15 days;

iii. in indefinite-term contracts, the indemnification is established as follows:

  • For employees hired after 27 December 2002:
    • If the employee has a salary ranging from one to ten Colombian minimum monthly wages, 30 days of salary for the first year of seniority, and 20 additional days for every additional year or in proportion if less.
    • If the employee has a salary of more than ten Colombian minimum monthly wages, 20 days of salary for the first year of seniority and 15 additional days for every additional year or in proportion if less.
  • For employees hired between 1 January 1981 and 27 December 2002: 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less.
  • For employees hired prior to 1 January 1981: the employee is entitled to choose between reinstatement or damages consisting of 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less. However, if the employee chooses reinstatement and it is not possible, a judge will determine whether damages should be paid consisting of 45 days of salary for the first year of seniority and 30 additional days for every additional year or in proportion if less.

1.11 Non-competition clauses

Employees are entitled to work for other employers outside their working hours unless otherwise stated in their employment contract (e.g. an exclusivity clause).

Post-termination restrictive covenants may be considered void in accordance with Colombian Labour Law and constitutional principles.

1.12 Miscellaneous

Other than dismissals, the non-renewal of fixed-term contracts and termination based on the conclusion of a specific task or project determined in the contract, employment contracts may be terminated through the resignation or death of an employee or by the mutual agreement of the parties.

2. Dismissal of managing directors

2.1 Reasons for dismissal

  1. Fair Dismissals: if there is a fair cause for dismissal, the employer must identify the facts and the standards that were broken by the employee and that determine the fair cause for termination as stated in Article 62 of the Colombian Labour Code. In a set case, the employee is not entitled to any compensation or damages derived from the contract's termination.
  2. Unfair Dismissals: the employer may unilaterally end an employment contract at any time, even in the absence of fair cause. In a set case, the employee is entitled to receive compensation in the form of damages (i.e. legal severance) as previously stated in Article 64 of the Colombian Labour Code.
  3. Non-renewal of a fixed term contract: if the employee has a fixed term employment contract, the employer may decide not to extend the contract after the date of expiration with 30 days prior notice.
  4. Termination of the specific task or project: If the employee was hired through an employment contract tied to the development of a specific task or project, once the project or task is finished, the employer can terminate the contract without notice and without the payment of compensation or severance. In this case, the reason for dismissal is the termination of the specific task, which must be expressly defined in the contract.

2.2 Form

  1. Fair Dismissals: the employer must invoke one or more of the fair causes established in Article 62 of the Colombian Labour Code, identify the contractual and legal standards that were broken or the facts that justify termination. For all evidential purposes, the decision must be in written form.
  2. Unfair Dismissals: for evidential purposes, the decision must be in written form.
  3. Non-renewal of a fixed-term contract:  the employer must provide the employee with written notice with at least 30 days prior notice before the expiration date of the fixed-term contract.
  4. Termination of the specific task or project: For evidential purposes, the decision must be in written form. Also, it is necessary that the specific task or project be finished, which allows the employer to terminate the contract in regard to this event.

2.3 Notice period

Only applicable to fixed-term contracts to be given at least 30 days before the date of expiration of the contract.

In exceptional cases, fair dismissals in which the employer invokes the causes established in Issues 9, 10, 11, 12, 13, 14, and 15 of Article 62 of the Colombian Labour Code, the employer must provide written notice with at least 15 days prior notice before the termination date.

2.4 Involvement of works council

No involvement.

2.5 Involvement of a union

No involvement, since Managing Directors may not be included as union officers.

2.6 Approval of state authorities necessary

Unfair dismissal is prohibited in the following cases, which imply reinforced labour stability since contracts may only be terminated with proven fair cause for dismissal:

  1. Employees with union immunity for which a judge is entitled to verify the existence of fair cause for termination;
  2. During pregnancy and the first six months after a birth, women may not be dismissed without fair cause. Furthermore, the Ministry of Labour is entitled to verify the existence of fair cause for terminating a contract during the pregnancy of a woman or for the first three months after giving birth.
  3. Employees with any health condition (e.g. on sick-leave, experiencing restrictions, handicapped, etc.) that limits their interaction in the work environment may only be dismissed with fair cause that precludes discrimination. However, the Ministry of Labour Is entitled to authorise the dismissal of employees with health limitations when the decision is founded on the medical condition of the employee. However, in cases of unfair dismissal of employees with health limitations, the dismissals will be presumed to be motivated on their conditions.
  4. Employees whose economically dependent partners are pregnant or are on maternity leave as defined by the Colombian Constitutional Court in Case C-005/17.
  5. Employees who are within the last three years of fulfilment of the requirements of an old-age pension.
  6. Employees who, six months prior to their termination, filed claims of labour harassment,, which was verified by a judge.
  7. During collective bargaining, employees who are potential beneficiaries of an eventual collective bargaining agreement may not be dismissed without fair cause.

2.7 Collective redundancies

It is considered a collective redundancy, if a company dismisses without fair cause the following percentage of its employees within period of six months:

  • 30% of its employees if the company has 10 to 49  employees.
  • 20% if it has 50 to 99  employees.
  • 15% if it has 100 to 199  employees.
  • 9% if it has 200 to 499  employees.
  • 7% if it has 500 to 999  employees.
  • 5% if it has more than 1000 employees.

For a company to dismiss this percentage or more of its workforce, prior authorisation must be requested from the Colombian Ministry of Labour.

To receive the employment authority’s approval, it is necessary to prove that the company is facing a financial crisis or another extraordinary situation forcing the collective redundancy.

2.8 Summary dismissals

Not applicable.

2.9 Consequences if requirements are not met

If requirements for dismissal with fair cause are not met, employees are entitled to claim damages (i.e. legal severance). However, for employees with reinforced labour stability or employees with seniority prior to 1 January 1981 who are dismissed without fair cause, a judge may decide on their reinstatement through a constitutional action.

2.10 Severance pay

When an employer has fair cause to end a contract, there is no indemnification granted to the employee.

On the other hand, in case of unfair dismissal, according to Colombian Labour Law there are different types of indemnifications (i.e. legal severance) based on these types of contracts:

i. in fixed-term contracts, the indemnification is calculated with the salary days pending until the end of the contract;

ii. in contracts for a specific project or service, the indemnification is calculated with the salary days pending until the end of the contract with a minimum of 15 days;

iii. in indefinite-term contracts, the indemnification is established as follows:

  • For employees hired after 27 December 2002:
    • If the employee has a salary ranging from one to ten Colombian minimum monthly wages, 30 days of salary for the first year of seniority, and 20 additional days for every additional year or in proportion if less.
    • If the employee has a salary of more than ten Colombian minimum monthly wages, 20 days of salary for the first year of seniority, and 15 additional days for every additional year or in proportion if less.
  • For employees hired between 1 January 1981 and 27 December 2002: 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less.
  • For employees hired prior to 1 January 1981: the employee is entitled to choose between reinstatement or damages consisting of 45 days of salary for the first year of seniority and 40 additional days for every additional year or in proportion if less. However, if the employee chooses reinstatement and it is not possible, the judge will determine whether damages should be paid consisting 45 days of salary for the first year of seniority and 30 additional days for every additional year or in proportion if less.

For dismissal of managing directors, some companies may have special severance payments (i.e. Golden Parachute Agreements). However, these will only apply In those cases in which there is a written agreement since the Colombian Labour Code does not establish special severance for managing directors.

2.11 Non-competition clauses

Employees are entitled to work for other employers outside their working hours unless it is otherwise stated in their employment contract (e.g. an exclusivity clause).

Post-termination restrictive covenants may be considered void in accordance with Colombian Labour Law and constitutional principles. However, under commercial and civil law, the former employer may enforce legal actions against a former employee, even after the termination of the contract, under the following circumstances: 

  1. Use of private databases that belong to the former employer, including worker databases and client databases.
  2. Use of confidential information and industrial, industrial secrets or intellectual property from the prior employer.
  3. In the case of former employees, it is their legal duty to guard and protect the commercial and industrial reserves of an enterprise, such as the know-how of the business or any trade or industrial secrets. They also have a legal duty that forbids them from using any privileged information of their previous employer for their own benefit.
  4. Lastly, anti-competitive conduct is also forbidden by Colombian Law, such as acts of client deviation or acts that disrupt the internal organisation of an enterprise.

2.12 Miscellaneous

Other than dismissals, the non-renewal of fixed-term contracts and termination based on the conclusion of a specific task or project determined in a contract, employment contracts may be terminated through resignation or the death of an employee or by the mutual agreement of the parties.