How do you terminate an employee in Colombia in 2026?
Every Colombian employee accumulates a full 30 days of salary per year of service in cesantias, paid into a government-supervised fund annually. Dismiss someone without just cause on top of that and you owe a mandatory unjust-dismissal indemnity from day one of employment, with no statutory cap.
· Colombia guide
Illustration · Bogota, Colombia
Colombia law requires a reason for every termination of an indefinite contract. You can dismiss without just cause. You do not need to give advance notice. But you must pay an unjust-dismissal indemnity immediately: 30 days of salary for the first year, plus 20 days per additional year for employees earning below ten times the monthly minimum wage (Codigo Sustantivo del Trabajo).
Every employee also builds up cesantias separately. The rate is 30 days of salary per year of service. Your employer of record must deposit the balance into a licensed fund within 45 days of each year-end. The fund pays the employee annual interest at 12%. The employee keeps the cesantias however the contract ends.
Unjust-dismissal protection starts on day one. The qualifying period is 0 months. From 25 June 2025, non-renewal of a fixed-term contract requires 30 days of advance written notice (Law 2466 of 2025).
What counts as just cause in Colombia?
You must have a reason to dismiss on an indefinite contract in Colombia. Just cause (justa causa) includes serious misconduct, repeated insubordination, persistent poor performance, a criminal conviction affecting the role, violence or threats at work, and sustained poor attendance (Article 62 of the Codigo Sustantivo del Trabajo).
You can also dismiss without just cause. That is lawful. You pay the mandatory indemnity instead of running a cause-based process. The decision is yours. The cost is set by the law.
The distinction matters because the cost structures are completely different:
- With just cause (Article 62): 15 days of written notice, no dismissal indemnity. You must document the grounds and give the employee a chance to respond before the final decision.
- Without just cause (Article 64): no statutory advance notice required, but the mandatory unjust-dismissal indemnity is due immediately on the termination date.
Protected categories add a further layer. Pregnant employees, those on maternity leave, trade union officers, and workers with a recognised disability all require prior authorisation from the Ministry of Labour (Ministerio de Trabajo) before any termination can take effect. The authorisation process has no fixed statutory deadline, so planning a termination involving a protected worker requires significantly more lead time. Flag the protection to Teamed at the outset so we can sequence the process correctly.
Fixed-term contracts and Law 2466 of 2025
Fixed-term contracts can be renewed up to three times or used for a project's natural lifecycle. As of 25 June 2025, employers must give 30 days advance notice before a fixed-term contract expires without renewal. Previously, non-renewal carried no mandatory notice obligation. This is a live change worth building into your offboarding workflow.
During probation
Colombia's maximum probation period is 2 months. During probation, either party can end the relationship without notice and without owing the dismissal indemnity. Notice during probation is 0 days.
-
Decide the grounds
Choose whether you're terminating with just cause (Article 62) or without (Article 64). This determines whether you serve written notice or pay the indemnity, and whether any cause-based documentation process applies.
-
Check for protected status
Confirm whether the employee falls into a protected category: pregnant, on maternity leave, a trade union officer, or with a recognised disability. Protected workers require Ministry of Labour authorisation before any termination takes effect.
-
Calculate the full liquidation
Compute every component of final pay before the termination date: the unjust-dismissal indemnity (if applicable), the current cesantias balance, accrued vacation, the pro-rated service bonus, and any outstanding salary.
-
Issue the written termination letter
Deliver the termination in writing, stating the grounds (for cause) or confirming the without-cause election (for indemnity). For fixed-term non-renewal, the written notice must be given at least 30 days before the contract end date.
-
Pay on the final day
Colombia requires final pay on the last day of employment. Article 65 of the Codigo Sustantivo del Trabajo imposes a one-day salary penalty for every calendar day the payment is late.
How much notice do you give in Colombia?
For indefinite contracts dismissed without just cause, the notice requirement is 0 weeks. Colombia uses an indemnity-based system. You pay the lump sum instead of working out a notice period.
With cause: 15 days of written notice. Fixed-term non-renewal: 30 days of advance notice (Law 2466 of 2025).
| Termination type | Statutory notice |
|---|---|
| Indefinite contract, without just cause | 0 weeks (pay indemnity instead) |
| Indefinite contract, with just cause | 15 days written notice |
| Fixed-term contract, non-renewal (from 25 Jun 2025) | 30 days advance notice |
| During probation (max 2 months) | 0 days |
The absence of a notice period in the without-cause track is not a shortcut. The unjust-dismissal indemnity replaces the notice period economically: the employee gets a lump sum immediately rather than working out a notice period on full pay. Final pay, including cesantias balances, accrued vacation, and service bonus (prima de servicios), is due on the last day of employment. Colombia's Article 65 of the Codigo Sustantivo del Trabajo sets the final pay deadline at 0 days: day of termination. Late payment triggers an additional penalty of one day's salary per day of delay.
How is the Colombia dismissal indemnity calculated?
When you dismiss without just cause, the law sets the indemnity amount. For employees earning below ten times the monthly minimum wage: 30 days of salary for the first year, plus 20 days per additional year (Article 64 of the Codigo Sustantivo del Trabajo).
For employees earning ten times the minimum wage or above: 20 days of salary for the first year, plus 15 days per additional year. There is no cap. The indemnity grows with tenure and salary without limit.
| Salary level | First year | Each additional year |
|---|---|---|
| Below 10 times monthly minimum wage | 30 days of salary | 20 days of salary |
| 10 times monthly minimum wage or above | 20 days of salary | 15 days of salary |
Cesantias: the parallel accrual that runs alongside
Cesantias (auxilio de cesantia) are separate from the dismissal indemnity and accrue regardless of how the contract ends. Under Ley 50 de 1990, the accrual rate is 30 days of salary per year of service. Your employer of record must deposit the full balance into a licensed cesantias fund (fondo de cesantias) by 45 days after year-end. Late deposit attracts a penalty equivalent to one day's salary per day of delay. The fund pays the employee an additional 12% per year on the balance.
The practical implication: every unjust dismissal in Colombia carries at least two termination costs at the same time, the indemnity (which may have been building for years) and the cesantias balance. Both are due on the last day of employment.
The unjust dismissal indemnity under Article 64 applies from day one of employment, with no minimum service requirement. The formula: 30 days of salary (year 1) + 20 days per additional year for employees below the ten-SMMLV threshold. There is no statutory cap. Cesantias accrue separately at 30 days per year and must be deposited within 45 days of year-end.
Source: L&E Global, Termination of Employment Contracts in Colombia
When do collective dismissal rules apply in Colombia?
Collective dismissal rules are based on percentage, not a fixed headcount. They apply when enough people are dismissed within a 180 days window (Ley 50 de 1990 Art. 67).
The trigger rates are: 10% of the workforce in companies of 10 to 50 employees. 15% in companies of 50 to 100 employees. 20% in companies of more than 100 employees.
| Company size | Threshold to trigger collective rules |
|---|---|
| 10 to 50 employees | 10% of workforce within 180 days |
| 50 to 100 employees | 15% of workforce within 180 days |
| More than 100 employees | 20% of workforce within 180 days |
When the collective dismissal threshold is crossed, the employer must apply to the Ministry of Labour for prior authorisation before the dismissals take effect. The Ministry reviews whether the economic, technical, or structural reasons are genuine. Authorisation is not automatic, and the review process can take weeks to months depending on the inspector's caseload and the documentation provided. Carrying out collective dismissals without authorisation exposes the company to reinstatement orders and additional indemnities for each affected employee.
Practically, any restructuring that will affect more than a handful of employees in a Colombian workforce needs Ministry involvement planned from the start, not added at the end.
Can you terminate by mutual agreement in Colombia?
Yes. A written mutual termination agreement (acuerdo de terminacion mutua) is valid. It is widely used for senior exits and contested performance cases where a formal cause-based process would be slow and costly.
The agreement must be freely entered into by both parties. It must not be a disguised dismissal that removes the employee's legal rights. Courts check whether the employee had independent advice and whether the terms were genuinely negotiated.
A well-structured mutual termination in Colombia typically includes:
- A negotiated settlement payment, often equivalent to or above the unjust-dismissal indemnity the employee would otherwise be owed, to confirm the voluntariness of the exit
- Cesantias balance transfer from the fund to the employee directly (triggered by termination)
- Accrued vacation payment (vacaciones), pro-rated to the last day of service
- Prima de servicios (service bonus) pro-rated at 1 month of monthly salary per full year, payable on termination
- A waiver and release clause, covering labour claims through the termination date
- Agreed reference wording where the relationship has been long-term
Colombia does not have a state-mediated mutual-termination track equivalent to France's rupture conventionnelle. The agreement is a private contract between employer and employee. Teamed's legal operations team drafts the agreement and ensures the final settlement is structured correctly before any payment is authorised.
If the employee later claims the agreement was coerced, a Colombian labour court can annul it and reinstate the full indemnity obligation. The paper trail and the negotiation record are the employer's defence.
How Teamed runs Colombia terminations
Teamed becomes your legal employer of record in Colombia for from $599 per employee per month, with zero FX mark-up in any currency. Your Colombian hires are on Teamed's payroll. Every termination procedure runs through Teamed's Colombia ops.
We handle the indemnity calculation, cesantias fund balances, final-pay reconciliation, and documentation. Everything is on one platform. The decision to end the relationship is yours. The grounds and the commercial terms of any settlement are yours too.
Real HR and legal experts handle your Colombia hires, from the first offer letter through every social security contribution and annual cesantias deposit. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee, and employer cost passes through at cost, itemised on every invoice.
The split of responsibilities under EOR for Colombia terminations:
| What Teamed handles | What the client decides |
|---|---|
| Indemnity calculation under Article 64 by salary band and tenure | Whether to dismiss with or without just cause |
| Annual cesantias fund deposit and interest calculation | Whether to negotiate a mutual termination above statutory minimum |
| Ministry of Labour authorisation process for protected-worker terminations | Grounds documentation for cause-based dismissals |
| Fixed-term non-renewal notice under Law 2466 of 2025 | Whether to renew or let a fixed-term contract expire |
| Final pay: indemnity, cesantias, vacation, service bonus (prima de servicios) | Communication with the wider team |
| Mutual termination agreement drafting with local legal partners we engage | The commercial terms of any negotiated exit |
| Social security deregistration and UGPP notifications | Settlement vs cause-based strategy |
Colombia's cesantias system means every hire carries a growing balance in a government-supervised fund from day one. Teamed tracks that balance in real time, deposits on schedule, and calculates the full liquidation package the moment a contract ends, so you're never surprised by a final invoice.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Colombia contractor who converts to PAYE keeps their record, and that same employee can graduate from EOR to your own Colombian entity without switching systems. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Colombia hire, until it isn't. Start from the Colombia hiring overview; each guide here takes one layer of Colombian employment law.
Key sources: L&E Global, Colombia termination guide, CMS Law dismissals guide, and Articulo 65 Codigo Sustantivo del Trabajo.
Frequently asked questions
Do you have to give notice when terminating a Colombian employee without just cause?
No. For indefinite-term contracts terminated without just cause, there is no statutory advance notice requirement. The notice period is 0 weeks. The employer pays the mandatory unjust-dismissal indemnity on the last day of employment instead.
What is the unjust dismissal indemnity in Colombia?
For employees earning below ten times the monthly minimum wage: 30 days of salary for the first year of service, plus 20 days of salary for each additional year. For employees at or above ten times the minimum wage: 20 days for the first year, plus 15 days per additional year. There is no statutory cap and protection applies from day one of employment.
What are cesantias and when do they have to be paid?
Cesantias are a statutory savings fund that accrues at 30 days of salary per year of service for every employee. The employer must deposit the full annual balance into a licensed fund within 45 days after each year-end. The fund pays the employee 12% annual interest on the balance. On termination, the full cesantias balance is released to the employee regardless of the reason for termination.
When do collective dismissal rules apply in Colombia?
When dismissals within 180 days reach 10% of the workforce (companies of 10 to 50 employees), 15% (50 to 100 employees), or 20% (more than 100 employees). Prior Ministry of Labour authorisation is required before the dismissals take effect.
When is final pay due after termination in Colombia?
Final pay, including the unjust-dismissal indemnity, pro-rated vacation, the service bonus (prima de servicios), and any outstanding salary, is due on the last day of employment. Article 65 of the Codigo Sustantivo del Trabajo imposes a penalty of one day's salary per calendar day of delay.
Can a fixed-term contract in Colombia be ended without notice?
Fixed-term contracts can be ended at their natural expiry, but since Law 2466 of 2025 came into force on 25 June 2025, non-renewal requires 30 days of advance written notice. Failure to give that notice before expiry can expose the employer to claims that the contract was effectively terminated without cause.
The most common Colombia termination mistake we see is treating the indemnity and the cesantias as one cost. They're two separate obligations with two separate deadlines and two separate calculations. Get either one wrong and the penalty clock starts the same day.
Colombia gives every employee 30 days of salary per year deposited into a fund they own outright. That's the cesantias. Dismiss without cause and you owe the indemnity on top of it.
Both costs land on the last day. No notice period softens the blow.
Know the number before the conversation, not after.
