What is the Salary and Compensation Structure in Colombia?

In Colombia, the salary and compensation structure encompasses various types of salary setups and benefits, which are crucial for both employers and employees to understand. Here's a comprehensive overview of the salary framework in Colombia, including minimum wage, ordinary and integral salary types, and mandatory payments.

Minimum Wage

2024 Rate: COP 1,300,000per month (approximately USD 334).
- This represents a 12% increase from the previous minimum wage of COP 1,160,000.
- For further details, refer to the Wage Indicator - Colombia.

Salary Payment

Recurrence: Salaries are paid monthly.

Mandatory Salary Components

13th and 14th Month Salary:
- Ordinary Salary (Salario Ordinario):Employees are entitled to a mandatory 13th and 14th month salary, which is divided as follows:
  - 13th Month Salary: 50% to be paid in June and 50% in December.
  - 14th Month Salary: Similar distribution as the 13th month salary.
  - Pension Payment (Cesantías): Equivalent to 100% of the monthly salary, paid in February into a designated severance fund, not directly to the employee's account.
- Integral Salary (Salario Integral): Employees earning more than 10 times the minimum wage may opt for an integral salary arrangement, which bundles the 13th and 14th month payments into a single, comprehensive salary package. This option should be agreed upon in the employment agreement.

Ordinary Salary (Salario Ordinario)

Definition: The basic monthly wage plus any additional payments such as overtime and bonuses.
Benefits:
- Vacation: 15 days of paid vacation per year.
- Prima de Servicios (Service Bonus): 15 days' pay, distributed twice a year.
- Cesantías (Severance Pay): One month’s salary per year, paid into a severance fund.
Work Hours: The standard workweek is now 42 hours, reduced from the previous 48 hours. Overtime work is compensated additionally.
Contributions: Both employer and employee make social security contributions based on the ordinary salary.

Integral Salary (Salario Integral)

Definition: A higher salary structure for high-income earners that combines base pay with most legal benefits into one comprehensive package.
Components:
- Includes a base salary plus a 30% benefits allowance, which covers overtime, vacation, severance, and other benefits.
Usage: Typically offered to executives or high-level professionals earning at least 10 times the minimum wage.
Contributions: Social security contributions are calculated on 70% of the integral salary.

Key Differences Between Salary Types

Target Group: Ordinary salaries are applicable to most employees, whereas integral salaries are reserved for high earners.
Benefit Structure: Ordinary salaries itemize benefits separately, while integral salaries bundle them into a single payment.
Work Hours: Both salary types are subject to the new 42-hour workweek, with additional pay required for overtime.

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Colombia