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Colombia

Employment Agreement Essentials

Understand the key elements of employment contracts in Colombia

Types of employment agreements

Colombia's labor law framework outlines various employment agreement types, each with specific characteristics and regulations. These distinctions are crucial for both employers and employees to ensure a legally compliant working relationship.

Indefinite/Open-Ended Contract (contrato a término indefinido)

An indefinite or open-ended contract represents a permanent employment position. There's no predetermined end date, offering job security to the employee. The Colombian Labour Code recognizes indefinite contracts under Article 47. These contracts can be established verbally or in writing.

  • Key characteristics:
    • No set expiration date
    • Can be established verbally or in writing
    • Employer provides benefits like paid breaks and social security contributions
    • Employer is liable for severance pay upon termination (subject to specific conditions)

Fixed-Term Contract (contrato a término fijo)

Fixed-term contracts have a predetermined duration. These agreements must be established in writing, otherwise, Colombian law presumes them to be indefinite contracts (Article 46 of the Labour Code and Article 28 of Law 789 of 2002). The maximum term for a fixed-term contract is three years.

  • Key characteristics:
    • Predetermined end date (maximum 3 years)
    • Must be established in writing
    • Employer has more flexibility in terms of project-based needs
    • Employee benefits might be different compared to indefinite contracts

Contract for Duration of Work (contrato por obra o labor)

A contract for duration of work is tied to the completion of a specific project or task. Once the project or task is finished, the contract terminates. There's no predetermined timeframe as long as the project is ongoing.

  • Key characteristics:
    • Linked to the completion of a specific project or task
    • Ends upon project/task completion
    • Offers flexibility for project-based work
    • Similar benefits structure to fixed-term contracts

Occasional Contract (contrato ocasional)

Occasional contracts are designed for short-term, sporadic work that doesn't exceed 30 days. These agreements can be verbal or written. They are suitable for one-off situations or tasks outside the company's core functions.

  • Key characteristics:
    • Maximum duration of 30 days
    • Suitable for short-term, casual work
    • Can be established verbally or in writing
    • Limited employee benefits compared to other contracts

Essential clauses

An employment agreement in Colombia should clearly state the expectations and protections for both the employer and employee. Essential clauses to consider include:

Basic Information

  • Parties involved: The employer and employee should be identified by name and legal representation (if applicable).
  • Position and Start Date: The employee's job title, department, and official starting date should be clearly defined.

Compensation and Benefits

  • Salary: The gross salary amount, payment frequency, and any applicable deductions should be specified. Colombian law mandates employers to contribute to social security.
  • Benefits: Any additional benefits offered, such as health insurance, vacation pay, and bonuses should be outlined.

Job Duties and Responsibilities

  • Job Description: The employee's duties, responsibilities, and reporting structure should be clearly outlined.

Working Hours and Schedule

  • Schedule: The employee's regular working hours, including breaks and overtime regulations, should be defined. Colombian law dictates specific working hour limitations and requires additional compensation for overtime.

Termination

  • Termination Clause: The grounds and procedures for contract termination by either party, including notice periods and severance pay requirements, should be outlined. The Colombian Labour Code dictates specific severance pay calculations based on employment duration and termination cause.

Intellectual Property

  • Intellectual Property Clause: If the role involves creating intellectual property, ownership rights of any inventions or creations made during employment should be specified.

Applicable Law

  • Governing Law: The Colombian jurisdiction that governs the interpretation and enforcement of the agreement should be indicated.

Probationary period

The Colombian labor framework includes a probationary period, known as periodo de prueba, within employment agreements. This initial period allows employers to evaluate an employee's suitability for the role and vice versa.

The legal basis for probationary periods in Colombia is established in the Colombian Substantive Labour Code (CĂłdigo Sustantivo del Trabajo), specifically in Articles 76 to 80. These articles detail the maximum duration and key aspects governing this initial employment phase.

Maximum Duration

The legal maximum duration for a probationary period in Colombia varies depending on the type of employment contract:

  • Indefinite Contracts (contrato a tĂ©rmino indefinido): For permanent positions, the maximum probationary period is two months.
  • Fixed-Term Contracts (contrato a tĂ©rmino fijo): For fixed-term contracts with a duration less than one year, the probationary period cannot exceed one-fifth of the total contract length, with a two-month maximum still applicable.

It's important to note that any agreed-upon probationary period within the legal limits must be explicitly stipulated in writing within the employment contract.

Key Characteristics

  • Assessment Period: The probationary period serves as a trial phase for both the employer and the employee to evaluate suitability for the long-term working relationship.
  • Employee Benefits: During probation, employees are entitled to all benefits enjoyed by regular employees, including social security contributions.
  • Termination: Termination during the probationary period can occur at any time by either party without requiring a notice period. However, employers are still obligated to pay earned wages and any accrued vacation time.

Confidentiality and non compete clauses

In Colombian employment agreements, the protection of confidential information and potential competition after employment ends are often addressed. However, a key distinction exists between these clauses:

Confidentiality Clauses

Colombian law recognizes the employer's right to protect confidential business information. There's no specific legislation outlining confidentiality clauses, but they are generally enforceable under the principle of good faith enshrined in the Colombian Civil Code. Confidentiality clauses can be included in employment agreements to restrict employee disclosure of designated confidential company information during and after employment. These clauses should clearly define what constitutes confidential information (e.g., trade secrets, customer lists) and the limitations on disclosure.

Non-Compete Clauses

Colombia heavily restricts non-compete clauses due to their potential violation of an employee's constitutional right to work. Article 33 of the Colombian Constitution guarantees freedom to choose a profession or trade. Non-compete clauses are generally considered unenforceable by Colombian courts. Employers cannot restrict an employee's ability to seek employment with a competitor after their employment terminates.

Employers in Colombia can utilize confidentiality clauses to safeguard sensitive information. However, they cannot restrict former employees from working for competitors through non-competes.

Alternative Strategies

While non-compete clauses are off the table, Colombian employers can explore alternative strategies to protect their interests:

  • Standalone confidentiality agreements, separate from employment contracts, might be enforceable depending on their specific terms.
  • Clauses restricting the solicitation of clients or employees during or after employment might hold more legal weight, but their enforceability can vary depending on the specific circumstances.
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