Professional Employer Organization (PEO) in Colombia

What is a PEO?

A Professional Employer Organization (PEO) is a type of full-service human resource (HR) team that’s also referred to as co-employment. Employers abroad outsource this type of service to perform various administrative tasks, such as payroll and benefits management, local law compliance, and more.

PEOs serve as a dedicated resource for SMEs that would otherwise be difficult to come by — unless an employer wanted to go through the motions of incorporating a business and putting together their own in-house team within the country they’re hiring from.

Here’s what PEO services in Colombia can help with:

• Payroll and tax filing. In most cases, aside from processing payroll, your PEO in Colombia can take care of paying local employment taxes in accordance with the employment laws in Colombia. They can also take care of your foreign company registration in Colombia. 
• Benefits management. Your PEO can ensure that your Colombian employees receive a comprehensive benefits package that’s both compliant and competitive.
• Compliance. PEOs typically work with experts in global law that will help protect your business from being found non-compliant, mitigating any risks of legal recourse.
• HR support. PEOs revolve around HR professionalism as they aim to provide top-level HR services to ensure your employees get the support they need when they need it.
• Talent management. When it comes to business expansion in Colombia, your PEO service provider can help you source and recruit top talent within the country, ensuring a strategic hiring plan as well as employee training, engagement, and performance management.   

If you’re setting up a business in Colombia and are in need of high-quality HR services, speak to a team member at Skuad to see if a PEO is right for you.

What are the benefits of using a PEO provider in Colombia?

Working with a Professional Employer Organization in Colombia can help SMEs like yours to access all the benefits and resources of an enterprise-level organization. They’ll also leave you with full autonomy and flexibility over your company and employees so you can run things how you want in regards to what’s best for your business.

Your PEO services in Colombia will work alongside you, acting as an extension of your core team. They also help to keep smaller and mid-size businesses stable during unstable market conditions by ensuring that all business processes are carried out as efficiently and effectively as possible.

Let’s dive into some of the finer details regarding the benefits of using PEO services in Colombia:

Handling your employment contracts in Colombia

While it’s not always necessary to have employment contracts in Colombia, they’re a great way to define expectations, terms and conditions, your employer-employee relationship, and retain talent. Therefore, a written contract is strongly recommended for each Colombian employee.

Your PEO in Colombia will ensure that all contracts remain compliant with the employment laws in Colombia. For example, it’s required that the employment contracts are written in Spanish and include details of the employment terms, such as compensation and benefits, vacation time, and so on. 

Creating schedules with standard working hours and overtime

In Colombia, the typical workweek is up to 48 hours long. That time is spread over five or six days per week from 6 am to 9 pm, making the maximum legal duration of the typical workday eight hours. 

Overtime rates are paid at a minimum of 125% of an employee’s standard wages and 175% for any required night shifts.

Additionally, Colombian employees receive pay based on a mandatory 13-month salary. This means that as an employer, you’re obligated to pay the first half of this salary within the first 15 days of June and the second half within the first 20 days of December.

Your PEO services in Colombia will ensure that your employees only work within the legal limits and that they are compensated appropriately for any overtime they’re asked to perform and for the 13th month.

Observing public holidays and vacation time

Colombian employees are entitled to 18 public holidays throughout the year, which equates to time off. While Colombian law doesn’t specify that it’s mandatory to pay employees during their time off for these public holidays, any employee required to work on a public holiday is entitled to a 75% premium above their regular wages.

Additionally, Colombian employees are entitled to up to 15 paid vacation days each year. It’s also mandatory for Colombian employees to take at least 6 vacation days annually, however, leftover vacation days may be accumulated for up to two years.

A Professional Employer Organization in Colombia will ensure that your employees receive the appropriate time off and compensation, whether it be mandatory or voluntary.

Taking care of paid leave

Generally speaking, Colombian employees are entitled to at least two-thirds of their normal pay when taking sick leave. This compensation is covered by the employer for the first two days, and then by the state for up to 180 days.

Additionally, pregnant employees are entitled to 14 weeks of paid maternity leave which is split into two weeks before giving birth and then 12 thereafter. Male employees are also entitled to up to eight days of paternity leave.

Keeping you compliant with Colombian tax laws

Both Employers and employees in Colombia are required to pay a certain percentage of income into various social schemes. This would include health insurance, workplace risk insurance, family welfare funds, and pension plans.

Additionally, income tax rates in Colombia range between zero and 39% based on income level while corporate tax rates are set at 32%.

You won’t have to worry about paying the wrong percentage per employee because your PEO in Colombia will worry about it for you.

Supporting your business growth

According to the National Association of Professional Employer Organizations (NAPEO), working with a PEO will help your business grow 7-9% faster. This is because they free up time for business owners so they can focus their attention on productivity and growth activities like product development, sales, and marketing rather than tedious administrative tasks.

‍Book a demo to see how Skuad can help your business grow and deliver against all the benefits outlined above.

What does it cost to build a team in Colombia?

Let’s get down to the details: how does the cost of hiring in Colombia with a PEO compare to your other alternative, opening a legal entity there?

Cost of company incorporation in Colombia

If you’re thinking about forming your own legal business entity in Colombia, you’ll need to understand the initial and ongoing costs you’ll be facing. Generally speaking, incorporation costs within the country in the first year typically cost around $6,875 and then around $1,200 each year after.

Plus, there’s the average fee for Colombian engagements which is $13,772. This is just to take care of the incorporation, government fees, and opening a local bank account.

Cost of PEO services in Colombia

With a Professional Employer Organization in Colombia, like Skuad, you have much more affordable options. We offer three plans that you can choose from depending on the size of your company and your PEO needs. 

If you want to simply onboard and pay your contractors anywhere in the world from one unified platform, you can start for free to see if it’s right for you and then pay just $19 per month thereafter.

If you’re looking to hire full-time employees complete with an HR ensemble or need a more custom solution for your global business needs, we have affordable options for those as well. Moreover, you can cancel at any time and you won’t have to worry about any hidden costs or ridiculous fees.

Get started with a PEO in Colombia today

At Skuad, we’ve made it our business to help businesses like yours hire across the globe. Our PEO services streamline the process of onboarding new hires and then nurturing and supporting them throughout their tenure. We’ll tick all the compliance boxes and deliver payroll perfectly.

See for yourself what Skuad can do for you by taking the platform for a test drive today.