employment law overview 2017 - l&e...

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EmploymEnt law ovErviEw 2017

Colombia

i. GEnEral 01ii. hirinG practicEs 02iii. EmploymEnt contracts 03iv. workinG conditions 05V. Anti-DiscriminAtion LAws 08vi. social mEdia and data privacy 12vii. authorizations for forEiGn EmployEEs 13 viii. tErmination of EmploymEnt contracts 14iX. rEstrictivE covEnants 17X. riGhts of EmployEEs in casE of a transfEr oF UnDErtAKinG 18Xi. tradE unions and EmployErs associations 19Xii. othEr typEs of EmployEE rEprEsEntativE BodiEs 21Xiii. social sEcurity / hEalthcarE / othEr rEquirEd BEnEfits 22

Table of contEnts

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Therefore, an employment agreement subject to the Colombian labor regime is deemed to exist whenever the three (3) above mentioned items (1-rendering of personal service or activity, 2-continued dependence or subordination and 3-remuneration for the services) concur, and does not cease to exist as a result of change of name given to the agreement or any other conditions or modalities that are added.

3. legal framework

• Decree 1072 of 2015

4. New Developments

Recently the Colombian Government issued Decree 1072 of 2015, which compiles all current labor laws. The new legal instrument is divided into three books, which reflect the structure, regulatory regime, derogations and validity of the labor laws.


i. GEnEral

1. Introductory Paragraph

The purpose of the Colombian labor law is to attain justice regarding the relations between employers and employees, in a spirit of economic coordination and social equilibrium. Labor relations are governed by the Colombian labor Code, which regulates individual labor relations of private nature, and collective labor relations, whether official or private. According to the Territoriality Principle, Colombian labor law is enforceable throughout the Colombian territory and applies to all of its inhabitants, regardless of their nationality. Therefore, every national or foreign individual who renders services in a subordinated manner within Colombian territory to another individual or legal entity must be engaged through an employment agreement in Colombia.

2. Key Points

• There are two principles that are very important in order to understand the labor relations in Colombia, (i) territoriality principle; and (ii) reality principle.• Territoriality principle: Colombian legislation is governed by the territoriality principle, whereby it is assumed that the Colombian labor Code is applicable to all foreigners and nationals, when rendering labor related services within Colombian territory.• Reality principle: By virtue of the primacy of reality principle, every agreement whereby an individual obliges himself to provide to another person or entity a personal service under continuous dependence or subordination (reflected in the compliance of work schedules, mandates and instructions regarding the kind, the time and the amount of work, etc.) and receiving remuneration for the work performed1, it is considered to be an employment relationship (known as a de-facto labor relationship).

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1 Section 22 of Colombian Labor Code.

In Colombia, employers may request any documents they consider necessary to assess an applicant. However, such requirements may not include documents, certificates or information expressly prohibited by legal provisions. Job application forms or letters CANNOT DEMAND THE FOLLOWING INFORMATION: “information on the marital status of a person, the number of children he/she has, the religion he/she practices or the political party to which he/she belongs” (article 1º, Law 13, 2971); additional prohibitions include: pregnancy test results (except when related to activities that are classified to be of high risk)(article 43, C.N., articles is prohibited one and two, convention No. 111 of the OIT, Resolution No. 003941 of the Ministry of Labor), AIDS tests results (Regulatory Decree No. 559 of 1991, article 22) or require a Military Card (article 111 of Decree 2150 of 1995).

Employers may hire an external firm specialized in recruitment processes to engage personnel pursuant to the profiles and needs of the company. As such, companies must authorize the external firm to conduct tests, background checks, etc., and perform entry medical examinations through authorized health entities and drug and alcohol laboratory tests.

In this regard, employers will review the records of each applicant for a specific job position (according to the corporate policies for the performance of each job position and considering the capacities shown by the applicants), in order to select one of them to hold the open vacancy.

Any false data contained in the application, or any submitted document showing irregularities and/or false statements, and/or any alteration or forgery of the submitted certificates will result in the rejection of the applicant or, if applicable, if he/she has been employed based on the stated data or information, this will constitute a just cause for termination of the labor agreement pursuant to the provisions set forth in Decree 1072 of 2015 and article 62 of the Colombian labor Code.


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ii. hirinG practicEs

The selected applicant will undertake any training and introduction programs as required by the employer for new employees, including programs from: Humans Resources, Health and Safety, Quality, ethics, and any other matter the employer may determine.


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1. Minimum Requirements

Labor jurisprudence and doctrine agree in stating that in order for an employment agreement to be construed, the existence of the following three elements is required:

• The rendering of a personal service; • Subordination; and • The remuneration as compensation of the service (salary).

Therefore, it is assumed that an employment agreement exists when the three (3) above mentioned items concur, and it does not cease to exist because of the name given to it or any other conditions or modalities that may be added to it.

In addition, by virtue of the territoriality principle, the Colombian labor Code will be applicable to all foreigners and nationals, whenever they render their services of a labor nature within Colombian territory.

“The premise of the constitutional principle of prevalence of reality over formalities is nothing more than a strong commitment of the Constitution with material equality and Social Rule of Law, in which who delivers its workforce under a schedule and following orders must be covered by the guarantees and benefits of the labor laws, regardless of the contractual disguise that has been agreed”2.

2. Types of Employment Contracts

According to Article 45 of the Labor Code employment contracts can be executed for a fixed period, for the duration of a specific task, indefinitely or to run an occasional, accidental or temporary job.

• indEfinitE tErm contract: This type of agreement can be agreed by the parties verbally or in writing. The term is not specified, and it is not occasional or temporary. Under this type of agreement there is no legal requirement for termination notice in advance; the

agreement may be terminated at any time, subject to corresponding indemnifications if applicable.

• fiXEd tErm contract: This type of agreement must be documented in writing and its term cannot exceed three (3) years. It can be renewed indefinitely if its initial term is higher than one (1) year. In the event of a shorter initial term, the contract can only be renewed up to three (3) equal terms or for shorter terms, after which it can be indefinitely renewed for periods of one (1) year. Termination of this type of contract requires a prior thirty (30) calendar days’ written termination notice.

• contract for thE duration of a spEcific task: This type of agreement must be documented in writing and the parties shall agree that the duration of it corresponds to the necessary time to execute a particular job, and thus the duration is subject to a condition. In consequence, the employment relationship will end at the time in which the work for which the employee was hired is completed.

• occasional, accidEntal or tEmporary contract: This type of contract cannot exceed one calendar month in duration and is characterized by satisfying the extraordinary needs of the company. The purpose of this type of contract is for the momentary or special needs of the employer, as opposed to the core business activity of the employer.

3. Trial Period

The trial period is dependent on the type of employment agreement:

• For indefinite term contracts, the trial period can be up to two (2) months. • For fixed term agreements with a term of less than one (1) year the trial period cannot be higher than one fifth of the initial term agreed without exceeding two (2) months.

iii. EmploymEnt contracts

2 Attorney General’s Office. Concept No. 4362 of August 27, 2007.


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The trial period must be agreed upon in writing. During the trial period the labor contract may be unilaterally terminated at any time without prior notice, and without the payment of severance indemnification for termination without cause.

4. Notice Period

For the case of fixed term employment agreements, the employer must give notice of its decision to not renew the agreement at least 30 days prior to the expiration date; otherwise the agreement will automatically be extended.

As for indefinite term employment agreements, an employer can decide to terminate the agreement at any time without giving notice to the employee, but with the obligation of paying an indemnification for unilateral termination if the termination is not grounded on a just cause.

If termination is grounded on a just cause, whether the employment agreement is for a fixed or an indefinite term, if the alleged just cause is one of the stated in numbers 9 to 15 of article 62 of the Colombian Labor Code, the employer must give the employee fifteen (15) days notice.

The minimum statutory notice period an employee has for terminating his/her employment is thirty (30) days. Nevertheless, if the employee fails to give notice of termination there is no sanction provided by Colombian labor laws.


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1. Minimum Working Conditions

The Colombian labor Code contains the minimum rights and guarantees granted to an employee. Any stipulation that affects or disregards this minimum is considered null and void. In this regard, all articles in the Code must be considered minimum rights and guarantees available to all employees.

2. Salary

Salary is defined as the main and direct compensation for services rendered by the employee. There are two (2) types of salary:

• orDinAry sALAry (sALArio orDinArio):

a. This type of salary is a fixed compensation paid monthly; andb. In extraordinary compensations represented by overtime work, surcharges for night work and work on holidays and Sundays, percentage on sales and commissions, additional salaries, regular bonuses, and permanent travel expenses intended to provide meals and lodging to the employee. c. Under Colombian regulations, no full time employee can earn a salary lower than the monthly minimum wage (MMLW), set by the Colombian government at the beginning of each calendar year.3

• ALL-incLUsiVE sALAry (“sALArio intEGrAL”):

a. Colombian payroll regulations allow employees to earn an all-inclusive salary4.b. In this case employees who earn monthly salaries exceeding ten (10) MMLW may receive an all-inclusive salary, which is intended to compensate ordinary work, night shifts, work on Sundays and holidays, legal bonuses, severance payments, interests on severance payments, and, in general, any other employment benefits excluding vacations. This salary is composed of a fixed amount (not less than ten (10) monthly minimum wages) plus payroll benefits equivalent to 30% of the fixed amount. This means that an employee that earns (13) or more monthly minimum wages can agree with the employer to an all-inclusive salary.

3. Maximum Working Week

In accordance with applicable Colombian regulations, work shifts cannot exceed eight (8) hours per day or forty eight (48) per week. Daytime working hours extend from 6:00 am to 10:00 pm and night shifts extend from 10:00 pm to 6:00 am.

Employees in positions of trust and management5 are excluded from regulations regarding the maximum legal workday (article 162, Labor Code).

iv. workinG conditions

3 The minimum monthly wage for 2016 is COP$ 689.455, approximately, USD$225 (at an exchange rate of COP$3,058). 4 The minimum all-inclusive salary for 2016 is COP$ 8,962,915 is approximately USD$2,930 (at an exchange rate of COP$3,058). 5 It is important to clarify that there is no legal definition under Colombian laws as to what a specialized, trust or management position is. However, case law and doctrine have established that specialized, trust and management personnel are those employees who within a company are located in a level of special responsibility or control, and that because of their hierarchy, perform certain positions that are more directly aimed to comply with functions that represent the employer. In consequence, it is possible to say that the position of specialized, trust and management personnel involves carrying out acts of management, confidence and executive actions.

The Supreme Court of Justice has stated that specialized, trust or management positions are characterized because individuals holding those positions act not only in executive functions but rather pursuing the development and success of the company; they have a special hierarchical position that may involve disciplinary and command powers over ordinary personnel, without this being essential to this kind of positions. Furthermore, employees holding these positions may oblige the employer before third parties; have special powers for making decisions depending on their hierarchical position; and are considered as intermediate employees between the employer they represent and the rest of employees.

Please bear in mind that directive, trust and management personnel is just one category of employees who hold positions with all those characteristics, there are no trust employees different from those holding management positions. It is important to clarify as well that this condition has to be stipulated by the parties in a written document that can be the employment agreement or an addendum.

In addition, it is important to highlight that these employees are excluded from the regulations of the legal maximum workday and consequently, these employees are required to work for the time that may be necessary for the fulfillment of their obligations and the employer is not obliged to acknowledge and pay overtime.


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The parties (employer and employee) may agree on a temporary or indefinite basis to successive labor shifts that allow operating the company or divisions during week days without interruption provided that the respective shift does not exceed six (6) daily hours or thirty six (36) consecutive weekly shifts.

likewise the employer and its employees may agree that the weekly forty eight (48) hour shift can be carried out through flexible daily working hours, distributed in a maximum of six days a week with one mandatory rest day which may or may not coincide with Sunday. In this case the number of daily working hours may be distributed in a variable manner during the corresponding week and it can be of a minimum of four (4) hours and a maximum of ten (10) daily hours without giving rise to any surcharge, provided that the working hours do not exceed the average of forty eight (48) hours per week during the ordinary shift from 6am to 10 pm.

Supplemental work or overtime, except in the cases provided in article 163 of the Labor Code, may only be performed two (2) hours per day and subject to express authorization from Ministry of Labor or an authority designated by it (article 1, Decree 13 of 1967).

4. Overtime

Extra work is compensated with particular surcharges as follows:

Overtime pay

Night work 35% surcharge over daytime hour

Day overtime 25% surcharge over daytime hour

Night overtime 75% surcharge over daytime hour

Day overtime on Sunday or holidays

100% surcharge over daytime hour

Night overtime on Sundays or holidays

150% surcharge over daytime hour

5. Holidays

Sundays and holidays that are recognized as such by the labor legislation will be construed as paid mandatory rest days.

• Every employee has the right to paid rest days for the following civilian or religious holidays: January 1, January 6, March 19, May 1, June 29, July 20, August 7, August 15, October 12, November 1, November 11, December 8, December 25, and on all holy Thursdays and Fridays, the Ascension of the Lord, Corpus Christi and Sacred Heart of Jesus.

• However, when January 1, January 6, March 19, May 1, June 29, July 20, August 7, August 15, October 12, November 1, November 11, December 8, December 25, holy Thursdays and Fridays, the Ascension of the Lord, Corpus Christi and Sacred Heart of Jesus do not fall on a Monday, they shall be moved to the Monday thereafter. When the cited holidays fall on a Sunday, the relevant paid leave shall likewise be moved to the Monday thereafter.

• The social benefits and rights payable to employees for work over the holidays will be paid for the payable rest days set forth in the previous paragraph (Article 1 Law 51 of 1983).

6. Employer’s Obligation to Provide a Healthy and Safe Workplace

Employers are responsible for the prevention of professional risks in the work place. among others, employers must: provide employees with the necessary industrial and safety equipment and appropriate training for the performance of their duties; perform entry, periodical, after disability or reinstatement, as well as exit medical exams; providing first aid assistance when emergencies or work accidents occur; report and investigate work accidents, keep an active emergency committee, and maintain compliance with industrial safety policies.

Decree 1443 of 2014, stipulates the procedure that must be followed by any employer in Colombia, for creating and implementing the Management System of Security/Safety and Health at Work (called Sistema de Gestión de la Seguridad y Salud en el Trabajo – SGSST).

The mentioned Decree determines the guidelines to successfully implement the SGSST, and is mandatory to comply with.

The elements of the SGSST are the following, and they must concur in order to successfully implement the SGSST: • Creation of a Policy of Safety/Security and Health at Work: This Policy must be established in writing and must be part of the management policies of the company/employer, with range of application to all working centers, and all engaged parties (meaning employees, contractors, trainees, subcontractors, mission employees, etc.).

• Organization of the SGSST : The organization of the SGSST implies activities such as assignment of responsibilities, management of risks and dangers, definition of annual working plan, prevention of labor risks, participation of employees, etc.

• Planning of the SGSST: It includes several activities, among others, the conduction of an initial assessment to identify the company’s priorities in safety/security and health at work, in order to establish an annual working plan or updating the existing one.

• Implementation of the SGSST: It includes several activities in order to put in practice the SGSST.

• Audit of the SGSST: Every employer/company must conduct an annual audit of the SGSST, which must review, among others, (i) the full compliance of the Policy of Security and Health at Work, (ii) the result of the indicators of the SGSST, (iii) the active participation of the employees, (iv) the communication mechanisms of the SGSST to all the employees, (v) the planning, development and implementation of the SGSS, the investigation process of incidents, labor accidents, labor illnesses, etc.

In addition, companies have to comply with the legal provisions currently in force, to ensure adequate and timely prevention of labor accidents and occupational diseases, pursuant to articles 34, 57, 58, 108, 205, 206, 217, 220, 221, 282, 283, 348, 349, 350 and 351 of the Colombian Labor Code, Law 9 of 1979, Resolution 2400 of 1979, Decree 614 of 1984, Resolution 2013 of 1986, Resolution 1016 of 1989, Resolution 6398 of 1991, Decree 1295 of 1994, External Communication 001 of June 2003, Law 1562 od 2012 and Regulatory Decree

1443 of 2014, and any other law enacted for such purposes.

It is an obligation to promote, incorporate and operate a Committee of Safety and Health at Work (COPASST, its acronym in Spanish), pursuant to the provisions set forth in Decree 614 of 1984, Resolution 2013 of 1986, Resolution 1016 of 1989, Decree 1295 of 1994, Law 1562 of 2012 and Regulatory Decree 1443 of 2014.In this regard, a company has to provide the necessary resources for the development of its activities in accordance with the Management System of Safety and Health at Work (SG-SST), prepared pursuant to Law 1562 of 2012, Decree 1443 of 2014 and Decree 171 of 2016, which contemplates, at least, the following matters:

• Preventive and Occupational Medicine Subprogram, aimed at promoting and maintaining the highest degree of physical, mental and social wellbeing of the company’s employees, in all activities preventing damage to their health due to the working conditions, protecting them during their work from the risks posed by the presence of harmful agents and procedures, placing and maintaining the employees in activities that are in accordance with his/her physiological and psychosocial skills.

• Industrial Hygiene and Safety Subprogram, aimed at establishing the best conditions for basic industrial sanitation and creating procedures that eliminate or control risk factors in the workplace or factors that might be a cause for occupational diseases or accidents.

• Industrial Safety Subprogram, aimed at the prevention, identification, assessment and control of risk factors that result in occupational accidents, preventing possible injuries, accidents, diseases or the employee’s death.

• Industrial Safety Subprogram, aimed at reduction of any environmental impact caused by the performance of the activities of the company.


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V. Anti-DiscriminAtion LAws

1. Brief Description of Anti-Discrimination Laws

Colombia´s national law prohibits discrimination in employment due to age, color, disability, sex, cultural and ethnic origin, language, pregnancy, race, religion, age, political or philosophical opinion.

2. Extent of Protection

• riGht to worK in conDitions oF EqUALity duE to aGE. law 931, 2004:

This law guarantees a special protection of the right that every citizen has to be treated on equal terms. Citizens cannot be discriminated in their access to work because of their age. employers cannot limit job applicants to a specific age range. In addition, age range cannot be used as criteria for being selected in a specific job or position. The requirements for access to a vacancy or to exercise a job should relate to merits or qualities of experience, profession or occupation.It applies to all employers, full-time or part-time employees, all employment agencies, educational institutions, and local and state governmental institutions, regardless of size and is enforceable through labor Courts.

• riGht to bE rEmUnErAtED in conDitions of Equality duE to sEX. law 1469, 2011:

This law guarantees equal salary and compensation between women and men, and establishes guidelines to eliminate any discriminatory form in terms of labor remuneration.

It applies to all employers, full-time or part-time employees, all employment agencies, educational institutions, and local and state governmental institutions, regardless of size and is enforceable through labor Courts.

• LAw For intEGrAtion oF pEopLE with disaBilitiEs. law 361, 1997:

Prohibits employment discrimination against individuals with a disability if they can perform the essential functions of the job with no special accommodations, or if they can perform such functions with special accommodations which are “reasonable” based upon the size of the company; the nature of the job; and the costs of the accommodations. Employees with disabilities cannot be terminated unless authorized by a labor authority.

It applies to all employers, full-time or part-time employees, all employment agencies, educational institutions, and local and state governmental institutions, regardless of size and is enforceable through labor Courts.

• intErnAtionAL coVEnAnt on ciViL AnD poLiticAL riGhts. LAw 74, 1968. titLE ii:

This law commits to respect the civil and political rights of individuals, including the right to life, freedom of religion, freedom of speech, freedom of assembly, electoral rights and rights to due process and a fair trial. Prohibits discrimination due to race, color, religion, sex (gender), and national origin in hiring, employment (all terms, conditions and benefits), and termination.

It applies to all employers, full-time or part-time employees, all employment agencies, educational institutions, and local and state governmental institutions, regardless of size and is enforceable through Civil or labor Courts.

• prEGnAncy DiscriminAtion. poLiticAL constitution of colomBia, articlE 43. coLombiAn LAbor coDE, ArticLEs 236-244:

Prohibits discrimination due to pregnancy or motherhood and establishes that pregnant women or women under maternity leave cannot be terminated unless authorized by a labor authority.

It applies to all employers, full-time or part-time employees, all employment agencies, educational

institutions, and local and state governmental institutions, regardless of size and is enforceable through Civil or labor Courts.

• protEction From hArAssmEnt. LAw 1010, 2006:

labor harassment is persistent and demonstrable conduct taken against an employee by a co-worker, superior or boss, with the purpose of generating fear, intimidation, terror and anguish, or of inducing the employee’s resignation. Harassment generally includes any conduct that is capable of offending human dignity, life, physical integrity or sexual freedom. Harassment is presumed to have occurred whenever any of the following take place: (i) threats of dismissal; (ii) physical aggression; and, (iii) harmful expressions of insulting language, and language related to ethnicity, religion, gender, family origin or nationality and is enforceable through Civil or labor Courts.

It applies to all employers, full-time or part-time employees, all employment agencies, educational institutions, and local and state governmental institutions, regardless of size and is enforceable through Civil or labor Courts.

3. Protections Against Harassment

labor harassment shall be construed as any persistent and provable conduct, exerted on an employee by an employer, including a supervisor or a direct or indirect superior, a coworker or a subordinate, which is aimed at causing fear, intimidation, terror or anguish, work related damages, producing lack of motivation at work, or to induce the victim to resign.

The following are considered types of labor harassment as defined in Law 1010 of 2006: work related abuse, work related persecution, work related discrimination, work related obstruction, work related inequality and work related lack of protection.

The mechanisms for the prevention of labor harassment are:

• Information to the employees on Law 1010 of 2006, which must include preventive outreach campaigns, talks and training on the content of this law, particularly in relation to conduct which constitutes labor harassment, aggravating circumstances, mitigating conducts and sanctions.

• Spaces for dialogue, participation circles or groups of similar nature to periodically evaluate work life, with the purpose of promoting operational coherence and the functional harmony to facilitate and promote proper treatment within the Company.

• Design and implement activities with the participation of the employees, in order to:

• Establish values and habits which promote collaborative work life through collective efforts;

• Formulate applicable constructive recommendations with regard to corporate situations which may affect the compliance with these values and habits; and

• Examine specific conducts, which could constitute labor harassment or other type of harassment within the Company, which may affect the dignity of the employees, pointing out the corresponding recommendations.

• Add as part of the induction procedure of personnel who join the Company what is relevant to the mechanisms for the prevention and resolution of labor harassment.

• Annually include within the training budget a session to sensitize the work community on the respect towards human dignity, social harmony and the values of the Company.

• Use enhancement and commitment plans with those employees, supervisors or directors who, because of their style of relating to others, require support to encourage better treatment of their subordinates, coworkers or superiors.

• All other activities which, from time to time, can be established by the Company to prevent harassment.

To seek a resolution to labor harassment, the following internal procedure is established by which the procedures of confidentiality, effectiveness and conciliation required by the law are intended to be carried out:

• Pursuant to Resolutions 652 and 1356 of 2012, the Company shall have a committee, composed of two (2) employee representatives and two (2) Company representatives, with their respective alternates if the


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company has more than twenty (20) employees, if not, the Committee will be composed of one (1) employee representative and one (1) Company representative. This committee shall be called the “Social Committee for Workplace Harmony” or the “Anti-Harassment/Cohabitation Committee”.

• The Company shall directly appoint its representative and the employees shall choose theirs through a secret vote which shall represent the free, spontaneous and authentic expression of all employees. The procedure for the election shall be included in the respective invitation for the election.

• The Anti-Harassment/Cohabitation Committee shall not be composed of employees who have been accused of labor harassment, or who have been victims of labor harassment within the six (6) months prior to its creation.

• The Anti-Harassment/Cohabitation Committee shall carry out the following activities:

• Assess the ongoing work life of the Company in relation to the environment and the harmony in the work relationships, making suggestions and remarks deemed necessary to the responsible or participating areas.

• Promote the effective development of the prevention mechanisms referred to in the articles above.

• Receive and resolve complaints filed in which there is a description of events that may constitute labor harassment and the supporting evidence.

• Examine on a confidential basis, when applicable, specific or individual cases in which a complaint or a claim is filed, detailing events that could constitute labor harassment conduct, without prejudice to the fact that the Anti-Harassment/Cohabitation Committee may examine cases at its discretion and own volition that may constitute labor harassment, (i.e. without there being the need of a filing of any claim or complaint).

• Listen to the parties involved on the facts that gave rise to the complaint.

• Hold meetings in order to create a space for dialogue between the involved parties, promoting

mutual commitments to reach a final resolution of the dispute.

• Prepare a plan for improvement jointly agreed by the parties, to build, renew and promote labor harmony, guaranteeing confidentiality.

• Follow up on the development of the commitments undertaken by the parties involved in the complaint, verifying compliance with the agreed terms.

• In the cases in which there is no agreement between the parties, when the proposed recommendations are not complied with or the conduct continues, the Anti-Harassment/Cohabitation Committee shall report to higher management of the Company, close the case, and the employee may file the complaint before the work inspector or file a claim before a competent judge.

• Present to higher management of the Company the recommendations for the effective development of preventive and corrective measures of labor harassment, and prepare the annual report of results for the management of the Anti-Harassment/Cohabitation Committee and the reports required by the authorities.

• Follow up on the compliance with the recommendations given to the management offices of the Human Resources and Workplace Safety departments of the Company.

• Prepare quarterly reports on its management, which include statistics on the complaints, follow-ups on the cases and the recommendations, which shall be presented to higher management of the Company.

• Formulate the recommendations, which are deemed pertinent to reconstruct, renovate and maintain a good workplace life within the presented situations, maintaining the principle of confidentiality when required.

• Make the suggestions it deems necessary to carry out and develop prevention mechanisms, with an emphasis on activities that promote in a more effective way the elimination of labor harassment, especially those instances which have a higher tendency to occur within the work life in the Company.


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• Respond to the preventive warnings issued by the work inspectors in the development of the provisions of number 2 of article 9 of Law 1010 of 2006 and provide the measures that are deemed pertinent.

• All other activities inherent to or connected with the aforementioned functions.

The term of the members of the Social Committee for Workplace Harmony will be two (2) years starting on the date of communication of the election and/or of appointment. once formed, it shall elect by mutual agreement among its members a president and a secretary who shall carry out the duties established in articles 7 and 8 of Resolution 652 of 2012.

The assessment of situations, which may eventually constitute labor harassment, as well as the suggestions to enhance the work life, must be formulated before the secretary appointed.

This committee shall meet ordinarily at least once every quarter and extraordinarily whenever there are cases which require immediate intervention, or as any of its members may call a committee meeting.This committee shall appoint from within, a coordinator before whom the requests for the assessment of situations which may eventually constitute labor harassment shall be made by the committee, as well as the suggestions for the enhancement of the work life. Upon receipt of the requests to assess possible situations of labor harassment, the committee shall examine them in the respective session, listening, if it were the case, to the people involved. The committee will reconstruct with these people the issue, if necessary; and it shall give the recommendations it deems appropriate and, in special cases, it shall require social harmony commitments between the involved parties.

If as a result of the committee’s actions, it considers prudent to adopt disciplinary measures, it shall give the recommendations and suggestions to the competent officers or employees of the Company, so that they may begin the procedures pursuant to what is provided for these cases in the law and in these regulations.In any case, the internal preventive procedure contained herein, does not impede or affect the rights of whoever is considered a victim of labor harassment to carry out the administrative and judicial actions set forth to this effect in Law 1010 of 2006.

The Anti-Harassment/Cohabitation Committee shall establish the mechanisms necessary to preserve the confidentiality and preserve the documents, versions and any other information received by it during the investigation of the labor harassment claims before it.

4. Employer’s Obligation to Provide Reasonable Accommodations

Employers in Colombia are prohibited from discriminating against individuals with disabilities if they can perform the essential functions of the job without a special accommodation, or if they can perform such functions with a special accommodation, which is “reasonable” based on the size of the company, the nature of the job, and the financial burden of the special accommodation.

Recent case law has established that the employees that have special protection due to disability or illness cannot be terminated and instead they must be relocated to another position if it is required, so that the employee can keep performing his/her activities in the company.

In addition, by means of case law, the Constitutional Court has determined that if an employee cannot perform essential functions of the job due to the disability or illness that he/she has, the employer cannot terminate the agreement and instead the employer must accommodate the employee in a new position and assigned functions that he/she can perform considering the disability that the employee has.

5. Remedies

The Anti-Discrimination Laws are enforced through Civil and/or labor Courts.


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vi. social mEdia and data privacy

1. Can the employer restrict the employee’s use of Internet and social media during working hours?

Yes, the employer can restrict the employee´s use of internet and social media during workday hours.

2. Employee’s use of social media to disparage the employer or divulge confidential information

Article 56 of the Colombia Labor Code establishes that the employees have an obligation of obedience and loyalty to their employer of obedience and loyalty, and in consequence if the employees do not comply with the general obligations set forth in the Colombian Labor Code, the employer can terminate the employment agreement with just cause due to the breach attributable to the employees. In this regard, if the employees use social media to disparage the employer, it would be considered a breach of his/her obligations under the employment contract that can result in a disciplinary sanction or the termination of the employment with cause.

On the other hand, according to article 58 of the Colombian labor Code, the employee has the special obligation to refrain from disclosing to third parties or companies or individuals to which the company renders services to, unless expressly authorized, any confidential information which disclosure may cause damages to the Company; the above, without prejudice of denouncing any common offences or breaches to the labor contract or regulations before the competent authorities.

Usually the parties enter into a confidentiality agreement for employees to treat as strictly confidential all non-public information he/she may come to know, related to the employer’s business as well as to the business of his/her clients, contractors and contracting parties.


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vii. authorizations for forEiGn EmployEEsall foreigners who work in Colombia must obtain a work visa, and in the event that the foreigners practice a regulated profession they must obtain the corresponding work permit from the competent professional council. According to Resolution 532 of 2015, for the issuing of a temporary work visa (TP -4), it is no longer required to file a permit to endorse the practice of a regulated profession; notwithstanding the above, it is necessary to clarify that in order to perform any regulated profession, the authorization of the competent professional Council is required.


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viii. tErmination of EmploymEnt contracts1. Grounds for Termination

According to article 62 of the Labor Code, the employer can terminate an employment contract with cause in the following circumstances:

• Having been cheated, or been subject to deception by the employee through the presentation of false certificates for admission or with the purpose of getting undue benefits;

• Any acts of violence, insult, poor treatment or serious indiscipline carried out by the employee, during the performance of his or her duties, against the employer, his or her family members, high-level personnel or fellow co-workers;

• Any serious acts of violence, insult or poor treatment carried out by the employee, while not performing its duties, against the employer, his or her family members, representatives or partners, heads of workshops or security personnel;

• Any material damage caused intentionally by the employee against the buildings, works, machinery, equipment, raw materials, instruments and any other objects related to work, and any serious negligence that jeopardizes the security of persons or objects;

• Any immoral or delinquent acts committed by the employee in the workplace or during the performance of his or her duties;

• Any serious breach of obligations or prohibitions pursuant to articles 58 and 60 of the Labor Code, or any serious fault considered as such in collective bargaining agreements, arbitration decisions, individual employment agreements or regulations;

• The arrest of the employee for more than 30 days, unless he or she is subsequently absolved of any charges (jurisprudential restrictions have to be considered to apply this cause);

• The disclosure of technical or commercial secrets or matters that are confidential, causing damages to the company;

• The poor performance of an employee given his or her abilities and in comparison with the average performance of similar positions, and the employee does not improve his or her performance within a reasonable time, despite being requested to do so by the employer;

• The systematic breach of the employer’s legal or conventional obligations without valid reason;

• Any habits of the employee that disturb the discipline of the establishment;

• The employee’s systematic refusal to accept the preventive, curative or healing procedures prescribed by the employer’s doctor or health authorities in order to avoid illness or injury;

• The employee’s ineptitude in carrying out his or her duties;

• The fact that the employee is granted a retirement or disability pension while in the service of the employer; and

• Chronic or contagious illness of the employee that is not work-related, or any other illness or injury that has not been cured within 180 days (jurisprudential restrictions have to be considered to apply this cause).Under Colombian law the employment contract can also terminate as a consequence of the death of the employee, mutual consent of the parties, the expiration of the term, the completion of the work or task hired, the closing down or winding up of the business, a suspension of activities for 120 days or more, a judge’s decision, and the employee not returning to his or her position after a leave or license.


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2. Collective Dismissals

When terminating employment agreements, please be advised that Colombian labor law establishes a restriction for a collective dismissal of employees. For such purposes it is considered to be a collective dismissal when within a time frame of six (6) months the employer terminates unilaterally an amount of employees in the terms of the following table:

Under the collective dismissal scenario, the employer will need to obtain a prior, discretional authorization from the Ministry of Labor in order to be able to terminate legally the employment contracts. However, in any case, the employer must pay to all the dismissed employees the legal indemnification for termination without cause of the employment contract.

3. Individual Dismissals

Under Colombian labor law, if the employer terminates the employment relationship without cause, the employee is entitled to an indemnification payment.

a. is sEvErancE pay rEquirEd?

Yes, the severance pay varies depending on the type of contract, the employee’s salary and seniority within the company.

a. In the case of fixed-term agreements, the severance salaries will correspond to the remaining time until completion of the term.

b. In the case of indefinite term agreements, the following table indicates the amount of the severance to be paid to employees upon termination of the employment agreement:

4. Separation Agreements

The termination of the employment agreement can occur by unilateral decision of the employer, by the resignation of the employee or by mutual agreement of the parties.

The separation agreements are usually signed in mutual consent scenarios in which the parties settle in a total and definite manner all-eventual differences and disputes.

Under this type of termination, the company grants the employee a settlement amount, which is usually calculated as the mandatory indemnification plus an additional amount in order to encourage the employee to sign the document (otherwise the employee will probably have no reason to negotiate and will rather go for the option of unilateral termination). Usually, the additional amount rages from 10% - 30% over the severance amount.

As compensation, the employee will declare that he/she satisfactorily received all the payments and benefits that he/she was entitled to during the labor relationship and at its termination, and thus, he/she resigns to file any future claim before the judicial or administrative authorities for any future and eventual differences.

The document may be signed either (i) before a judicial authority or labor inspector, case in which both parties must assist to an appointment previously arranged with the labor judge, or (ii) before a public notary in Colombia.

Number of employees in the Company

Percentage of employees dismissed

More than 10 less than 50 30% 50 or more but less than 100 20% 100 or more but less than 200 15% 200 or more but less than 500 9% 500 or more but less than 1000 7% 1000 or more 5%

6 Ten minimum salaries are equivalent to approximately USD$2,254 (at an exchange rate of COP$3,058).


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a. is a sEparation aGrEEmEnt rEquirEd or considErEd BEst practicE?

The best practice (less risky) during a termination of a labor relationship is to enter into a settlement agreement with the former employee. The termination can be by mutual consent or by resignation of the employee.

B. what is thE purposE of a sEparation aGrEEmEnt?

The purpose of the settlement agreement is that the parties settle in a total and definite manner all eventual differences and disputes between the parties, originated in the negotiation, execution and termination of the employment agreement, and to avoid an eventual future litigation. Therefore a separation agreement prevents the possibility of the employee bringing a claim against the company.

c. doEs thE aGE of thE EmployEE makE a diffErEncE?

No.

d. arE thErE additional provisions to considEr?

If the employee has stability protection, it would be necessary to include a clause in the settlement agreement in which the employee states that although he/she knows about the special protection he/she has, it is his/her decision to terminate the labor agreement.

5. Remedies for employee seeking to challenge wrongful termination

The best way to terminate an employment agreement is through a settlement agreement according to the provisions explained above.


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iX. rEstrictivE covEnants

1. Definition of Restrictive Covenants and Types of Restrictive Covenants

Article 44 of the Colombian Labor Code sets out that the stipulation whereby an employee binds him/herself not to work in certain activities, or not to work with the competitors of his employer upon the termination of his/her contract, shall produce no legal effect. In consequence, it is not possible to enforce such clauses through a judicial proceeding in Colombia, as the employee would be fully entitled to change employment or execute any other activity even if it competes with the business or activities of the previous employer. Also, prosecution is very difficult because the burden of proof is very high.

(A) non-compEtE cLAUsEsPost-employment non-compete clauses are not valid, and therefore cannot be enforced before a Colombian court.

(b) non-soLicitAtion oF cUstomErs AnD non-solicitation of EmployEEsParties may agree on such post-employment restrictive covenants as non-solicitation of customers, employees or suppliers, but it is very difficult to prove non-compliance with such clauses and they are therefore difficult to enforce.

3. Enforcement of Restrictive Covenants—process and remedies

durinG EmploymEnt: While the employment contract is in effect, the employee may be compelled not to work in a certain activity and/or not to render his/her services to a competitor having exclusivity duty with the employer. Colombian law does not establish any additional benefits, other than the normal payment of the wages and/or fees, for the employer to obtain the employee’s agreement to such restrictions.

post-tErminAtion non-compEtEs: Non-compete restrictions after termination of employment are not enforceable.

post-tErminAtion non-soLicitAtion: although non-solicitation obligations are valid, their enforceability and prosecution is difficult because the burden of proof is very high.

4. Use and Limitations of Garden leave

The garden leave is not regulated under Colombian laws.

It is a figure used in cases that the employee resigned or when the employment agreement has terminated, in consequence, the employee continues receiving during the period of the garden leave his/her payroll and benefits, with the condition of staying away from work during that period of time. It is a way to protect the interest of the employer by preventing the employee from going to work for a competitor.


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X. riGhts of EmployEEs in casE of a transfEr of undErtakinG1. Employees’ Rights

There are three different alternatives under Colombian labor laws for transferring employees from one employer entity to another employer entity in a business acquisition process. Those alternatives are: (i) employer substitution; (ii) termination and rehiring; and (iii) assignment of the employment contract. Employees’ rights vary according to each alternative.

2. Requirements for Predecessor and Successor Parties

They depend on the transfer alternative, as follows:

• EmpLoyEr sUbstitUtion: Under an employer substitution scenario, all employment contracts of a business unit are transferred to a new employer without termination. In order for the employer substitution to take place, the following 3 elements must be met: (i) change in the employer; (ii) continuity of the company or business; and (iii) continuity of the rendering of the personal services by the employee.

according with the principle of the primacy of reality, the employer substitution may operate without the consent of the employees. Usually employers inform their employees of an employer substitution to prevent any misunderstandings, but there is no legal obligation to consult employees to carry out an employer substitution.

The main effects of an employer substitution are that: (i) employment agreements will continue in force under the same terms and conditions; (ii) the employer substitution by itself does not extinguish, suspend, or modify the employment agreements; (iii) the former employer and the new employer will be jointly and severally liable for all labor obligations due to the employees by the employer existing at the time of the substitution; (iv) if the new employer satisfies labor obligations due by the former employer existing at the time of the substitution, he can recover the paid amounts from the former employer; (v) The new employer will

be liable for any obligations arising as from the date in which the employer substitution has taken effect; and (vi) the former employer can agree with the employee to pay the severance payment amounts accrued until the date of the employer substitution.

• tErminAtion AnD rEhirinG: In order to extinguish the current employment relations between the company and the employees before hiring them through a new entity it is necessary for the existing employment agreements to be terminated. The termination of the employment agreements can occur by unilateral decision of the employer, by the resignation of the employees or by mutual agreement of the parties.

If the termination of the employment agreements occurs by unilateral decision of the employer such termination shall be considered without cause, resulting in the obligation for the terminating employer of an indemnification payment calculated in accordance with the applicable rules depending on the type of employment contract.

• AssiGnmEnt oF EmpLoymEnt contrAct: It is a commercial and civil figure established in Colombian laws, through which one of the parties transfers its position in the contract to a third party. Therefore, a transfer of the employment agreement will take place when a new employer replaces the position of the initial employer under the employment agreement. We must mention that in any case the employee must be part of the assignment agreement and expressly consent to the change of employer.


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Xi. tradE unions and EmployErs associations1. Brief Description of Employees and Employers Organizations

Colombian employees are entitled to unionize and/or create unions. This constitutional right aims to protect the creation and development of unions, as well as to guarantee the enjoyment on the part of the employees of the defense of their labor and union interests.In addition, unions can organize federations and confederations according to the rules of Colombian Labor Code, Article 417, which establishes that all unions have the right to unite with or join local, regional, national, trade or industrial federations, and the latter to join confederations. Federations and confederations have the same rights of the union except of decelerating strikes.

2. Rights and Importance of Trade Unions

According to Article 39 of National Constitution and Article 353 of Colombian Labor Code, unions have the constitutional right of association, by which the employees can associate freely in defense of their interest, by forming professional associations or unions. In addition, since the main purpose of unions is to obtain better benefits than the ones mandated by law and guarantee the respect and enjoyment of legal rights and benefits, unions have as well the right of negotiation, by which the employees, following the rules of Colombian Labor Code, can agree either to a collective bargaining agreement or a collective agreement that contains better benefits for unionized employees.

Nevertheless, if the parties do not get into an agreement, the Colombian Labor Code authorizes the employees to use their right of strike, which is defined as the temporary collective and peaceful work stoppage of the employees of a company. It is only legitimate and possible within the process of collective bargaining as an option for employees, provided they work for an employer in the private sector that does not carry out activities that are considered under the law as an essential public service.according to the above, and considering the rights

that the law granted to the unions, we can tell that the importance of the unions is related with the scope of it, considering that the their purpose is obtaining, improving and consolidating common rights and be responsible for the individual and collective interests of their members.

3. Types of Representations

Article 356 of the Colombian Labor Code establishes that the unions are classified into four (4) types as follows:

4. Number of Representatives

According to Article 359 of Colombian Labor Code, a labor union needs at least twenty five (25) members to be organized and to subsist as such; and an association of employers must have at least five (5) members who must be independent of each other.

5. Appointment of Representatives

In accordance to Article 391 of the Colombian Labor Code, the election of the board directors (representatives of the unionized employees) is by secret vote of the unionized employees.

Usually the board of directors is composed by ten (10) members, five (5) principals and five (5) alternatives. All ten (10) members are covered by a special protection

a. Company Union

This union is composed of individuals of different professions, trades or skills, who render their services in the same company, establishment or institution.

b. Industry Unions

This union is composed of individuals who work for different companies engaged in the same branch of industrial activity.

c. Trade Unions

This union is composed of individuals of the same profession, trade or skill.

d. Miscellaneous activities union

This union is composed of employees of different professions, which are dissimilar or unconnected. This union can only be formed where there are no employees engaged in the same activity, profession or trade in the minimum number required for a trade union, and only while this situation exists.


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and in this regard they cannot be terminated, transferred or diminished in their employment conditions without prior authorization by the labor judge.

6. Tasks and Obligations of Representatives

In general terms, the tasks and obligations of the representatives bodies are: i) Present to the employer petitions in order to make better the labor rights of the employees; ii) Negotiate during the collective negotiation process; iii) Audit to the employer in the compliance of the collective bargaining agreement; iv) audit the compliance of the employer regarding the salaries, fringe benefits, working hours, vacations and any other mandatory labor right; v) advise and assist any unionized employee in a disciplinary process.

although the above are the general tasks of the representatives bodies, Article 376 of the Colombian Labor Code establishes some specific attributions to the Assembly, which are: (i) amendment of the by-laws; (ii) merger with other unions; (iii) affiliation with federations or confederations and withdrawal therefrom; (iv) replacement of directors in case of vacancies; (v) removal of directors; (vi) expulsion of members; (vii) fixing of extraordinary dues; (viii) approval of the general budget; adoption of lists of petition; (ix) designation of negotiators; (x) election of conciliators and arbitrators; (xi) voting on strike in the cases contemplated by law; and (xii) dissolution of the union.

On the other hand the by-laws of each union establish some others specific additional tasks and obligations to the board directors, and in consequence, the tasks can vary depending on each case.

7. Employees’ Representation in Management

Is not mandatory, unless it is established in the collective bargaining agreement.


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committEE of safEty and hEalth at work (copAsst)

Resolution 2013 of 1986 establishes the obligation for any employer in Colombia to have a Committee of Safety and Health at Work (COPASST) when it has 10 or more permanent employees, or an Inspector of Safety and Health at Work Inspector, when it has less than 10 employees. The health and safety at work committee must meet monthly and within 5 days after the occurrence of any labor accident.

Xii. othEr typEs of EmployEE rEprEsEntativE BodiEs


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1. Legal Framework

law 100 of 1993 and dEcrEE 1072 of 2015

Under Colombian current labor and social security legislation, every employer is required to register itself and its employees before the social security entities, such as (i) health promoting entities (EPS), Pension Funds (AFP), labor risks entities (ARL) and family welfare funds (cajas de compensación familiar).

2. Required Contributions

social sEcurity systEm contriButions:

Employers in Colombia have the obligation to register all employees before the social security system, which covers health, pensions, and professional risks. below please find a description of these systems:

A) pEnsions:

b) hEALth:

c) proFEssionAL risKs: employers must make periodical payments to a labor Risk administrator (“Administradora de Riesgos Profesionales”), intended to cover the risk of work accidents. The payments depend on the company’s level of risk and the activities performed by the employees.

payroll taXEs:

There are three payroll taxes that Colombian employers are obligated to make monthly. These legal contributions are determined by reference to the monthly payroll of the company and they sum up to nine percent (9%) of the monthly payroll.

As of May 1, 2013, payroll contributions percentages for employees earning less than ten (10) minimum monthly wages decreased as follows:

• Contributions to the Family Compensation Funds (Cajas de Compensación Familiar) did not change and were maintained as a contribution of 4% of the employee´s salary base. Contributions to the Colombian

Xiii. social sEcurity / hEalthcarE / othEr rEquirEd BEnEfits

7 Ten minimum monthly salaries for 2016 are COP $ 6,894,550 approximately USD $2,254 (at an exchange rate of COP$ 3,058).


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Institute of Family Welfare (Instituto Colombiano de Bienestar Familiar) and to the National Apprenticeship Service (Servicio Nacional de Aprendizaje) were suspended.

• Therefore contributions to payroll taxes were reduced in a 5%.

3. Required Maternity/Sickness/Disability/Annual Leaves

• bErEAVEmEnt LEAVE. The Company will, by virtue of the law, grant employees paid mourning leave of five (5) business days in case of the death of husband, wife, permanent companion, step parents, grandparents, brothers, sisters, daughters, sons, step children or parents, regardless of his/her type of contract or labor relationship. Said leave will commence as from the day of the death.

This event will be proven by means of a written document issued by the competent authority within thirty (30) days following death.

• sicK LEAVE. This leave refers to the paid time off from work that employees take due to personal illness, disability, medical appointment, with advanced approval, and/or, for illness of an employee´s parents, spouse, children, sibling, or any other person who is residing in the employee’s household.

• pAtErnity LEAVE. The company, will by virtue of the law, grant the employee eight (8) business days of paid paternity leave (Law 755 of 2002). Said leave will be granted without there being any assessment whatsoever on the existing relationship between the father and the mother (Ruling C-282 of 2012).

The Civil Registry of Birth is the only valid supporting documentation for the granting of the paid paternity leave, which will be filed with the Health Promoting Entities (E.P.S.), at the latest, within the thirty days (30) following the birth.

• mAtErnity LEAVE. all women employees that are pregnant have the right to a leave of fourteen (14) weeks that may start one (1) or two (2) weeks prior to the due date (at the employee’s discretion). The maternity leave will be paid with the employee’s salary at the time she takes maternity leave. If the salary is variable, like the case of project work or assignments, the average of

the earned salary during the last year will be taken into account (or her salary during all the time she has been working if she has been working for less than a year).

Whenever the employee is summoned as a party by a judicial authority, the Company will grant leave for the term required by said authority, provided the employee submits a certificate of summoning evidencing the start and end dates of the hearing or judicial proceeding.

In the event of mandatory leaves granted to the employee for the performance of mandatory official positions (other than as a voting jury, treasurer or overseeing the counting of votes at an election; mandatory leaves for private sector employees to perform union duties that are inherent to the organization; and mandatory leaves for employees to attend the funeral of their co-worker), the time spent on leave cannot be deducted from the employee’s salary nor shall the employee be required to work to make up the time outside of his/her regular work schedule.

With the purpose of keeping records and enforcing the measures necessary to avoid obstructions in the normal performance of activities, the employee is required to report to his/her immediate superior when taking such leaves and justified absences, observing the procedures in place.

In case of force majeure events, notice may be given through his/her dependents or family members.

4. Mandatory and Typically Provided Pensions

There are currently two (2) pension regimes in Colombia which are mutually exclusive but coexist: (i) the average premium with defined benefit regime (hereinafter “RPM” per its name in Spanish); and, (ii) the individual savings with solidarity regime (hereinafter “RAIS” per its name in Spanish); these regimes as characterized by:

• rpm: In this regime, the affiliates’ contributions and their yields are part of a common fund of public nature, which guarantees the payment of benefits to those who qualify as pensioners every financial year.

• To obtain an old age pension in this regime, according to article 9 of Law 797 of 2003, which modified article 33 of Law 100 of 1993, the affiliate, if female must have fifty-seven (57) years of age and if male sixty-two (62)

years of age and have contributed one thousand and three hundred (1,300) weeks.

Finally, the entity in charge of administering this regime is the Colombian Administrator of Pensions – COLPENSIONES.

• rAis: Is the group of entities, regulations and proceedings through which the private and public resources destined to the payment of pensions and benefits that must be acknowledged to the affiliates are managed. This regime is based on the savings from the contributions made by affiliates and their corresponding yields.

To obtain an old age pension in this regime, pursuant to article 64 of Law 100 of 1993, affiliates can retire at the age they wish provided that the accrued capital in their individual savings account allows them to obtain a monthly pension higher than 110% of the monthly minimum wage in force, annually updated according to the percentage variation of the consumer price index certified by DANE. Likewise, for the calculation of the pension, the amount of the pension bonus, if any, must be taken into account.

This means that the old age pension will be higher, depending on the saved capital at the time the pension is obtained. This capital is made by the balance in the individual account of the affiliate with the corresponding yields, the capital corresponding to the pension bonus if any, and the voluntary contributions the affiliate wishes to make with this purpose.

We must point out that in light of the provisions of article 17 of Law 100 of 1993, modified by article 4 of Law 797 of 2003, the affiliates to RAIS can make voluntary contributions in addition to the mandatory contributions that must be made, with the purpose of accruing a larger capital for their old age pension.

Note that the entities in charge of managing this regime are the Pension Fund’s Administrator Entities (“AFP” per their name in Spanish) or Private Funds.

The RAIS has different ways for obtaining the old age pension: (i) immediate life annuity; (ii) scheduled retirement; and (iii) scheduled retirement with deferred life annuity.

• schEDULED rEtirEmEnt: pursuant to what is established by article 81 of Law 100 of 1993, this is the pension type by which the affiliate or beneficiaries obtain the pension from the administering entity making withdrawals from the pension account of the affiliate. In this pension mode, the affiliate obtains a pension charged to the balance of his/her individual capitalization account, as a result of annually withdrawing the amount in constant value, that results from dividing each year the effective balance in his/her individual capitalization account by the capital needed to pay a pension unit to the affiliate, and upon his/her death, to his/her beneficiaries, in accordance to the percentages which legally correspond to them. This type of pension gives the affiliate the possibility to advance his/her retirement when he/she wishes to and when the minimum required balance is left in his/her account.

It is important to mention that this type of pension is recalculated every year with the balance of the account; this is why the affiliate’s capital is exposed in a more risky way.

• immEDiAtE LiFE AnnUity: pursuant to what is established by article 80 of Law 100 of 1993, in this pension type there are three entities involve: (i) the insurance company; (ii) the administering entity; and (iii) the affiliate.

In this regard, the affiliate or beneficiary hires directly and irrevocably with the insurance company of his/her choosing, the payment of a monthly annuity until he/she dies and the payment of a survivor’s pension in favor of their beneficiaries for the time they are entitled to it and the administering entity will be in charge of making the payments.

This type of pension is very safe due to the fact that the acquisition capacity is maintained during the entire time of the person’s retirement.

• schEDULED rEtirEmEnt with deferred life annuity: pursuant to what is established by article 82 of Law 100 of 1993, this pension type is a combination of the two pension types explained above. In consequence, the affiliate will receive his/her pension in two portions; the first portion received in accordance with the scheduled retirement system and the second portion like the immediate life annuity.


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In this regard, the affiliate hires an insurance company of his/her choosing, a life annuity with the purpose of receiving monthly payments as of a determined date, withholding his/her individual pension savings account enough funds to obtain from the pension administrator a scheduled retirement, during the period between the date in which this option is chosen and the date in which the life annuity starts to be paid by the insurance company.

In this pension mode, the affiliate hires an insurance company to administer payment of a monthly allowance as from a future date determined in the agreement. The affiliate will maintain in his/her individual account enough funds to obtain from the pension administrator a temporary allowance during the period between the date in which this option is chosen and the date in which the life annuity starts to be paid.


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Posse Herrera Ruiz provides legal advice and assistance on labor and employment matters, including labor and social security law and regulations, compliance, labor due diligences, labor litigation and administrative hearings, compensation plans and management of expatriate staff. The firm also provides assistance in obtaining work permits, residency and other immigration matters. The practice advises multinational and local companies in the development of labor structures best suited to their individual needs and goals. The firm also provides support to clients for the resolution of labor disputes through mediation, negotiation and litigation.

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This memorandum has been provided by:Posse Herrea RuizCra 7 No. 71-52 Tower A 5th FloorBogotá - ColombiaP +57 (1) 325 7300

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This publication may not deal with every topic within its scope nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice with regard to any specific case. Nothing stated in this document should be treated as an authoritative statement of the law on any particular aspect or in any specific case. Action should not be taken on this document alone. For specific advice, please contact a specialist at one of our member firms. This document is based on the law as of 2016.

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