Key Takeaways:
- There are two main types of employee termination in Colombia: termination with just cause and termination without just cause.
- When employers terminate an employee with just cause, they need substantial evidence and documentation to support that the dismissal is warranted.
- When employers terminate workers without just cause, they need to provide severance pay.
Terminating an employee in Colombia isn’t as cut-and-dry as having a conversation and filling out some paperwork. Colombian labor laws provide strong employee protections, requiring employers to properly justify terminations and to follow strict procedures when letting someone go.
Whether you already have employees in Colombia or want to extend your hiring search there, it’s crucial to brush up on the country’s termination laws to ensure you’re in compliance.
Understanding Colombia’s Labor Laws
At-will employment is not recognized in Colombia, so you cannot terminate an employee without legitimate grounds. The country's labor system is structured to shield workers, obliging employers to observe rigorous rules and ensure fairness throughout employment, including dismissal.
At-will employment doesn’t exist in Colombia, which means you can’t terminate an employee without a valid reason. The country’s labor system is designed to protect workers by default, so employers are expected to follow strict rules and treat employees fairly throughout the entire employment lifecycle, including termination.
Employment relationships in Colombia are governed by the Colombian Labor Code, which was recently updated through Law 2466 of 2025 to further strengthen employee protections.
Indefinite-term Contracts Are the Default
Law 2466 of 2025 made indefinite-term contracts the new standard in Colombia, guaranteeing workers more job stability and security.
Companies hiring for temporary roles can use fixed-term contracts for up to 4 years, provided a written agreement is in place specifying the reason and any possible extensions.
This must be a written agreement that clearly outlines the reason for the limited duration and specifies whether extensions are permitted.
Certain Employees Receive Special Protections
There are a few categories of Colombian workers who are entitled to enhanced job protections, including:
- Pregnant employees
- Employees on parental leave
- Employees with disabilities or serious health conditions
- Unionized employees
Workers who fall into these categories are protected from automatic dismissal, meaning employers must obtain authorization from the Ministry of Labor to terminate them.
Types of Employee Termination in Colombia
Colombia recognizes four forms of employee termination, each with distinct legal and financial consequences for employers. Here’s a breakdown:
Termination With Just Cause
When an employer dismisses someone for a clear, significant reason, this is termination with just cause. Common examples include:
- Gross misconduct (e.g., fraud or inappropriate or violent behavior)
- Disciplinary violations
- Breach of company policies or contract terms
- Repeated failure to meet job responsibilities or performance expectations
To justify termination for cause, clear evidence and proper documentation are required, along with fair disciplinary procedures giving employees a chance to respond.
Without proper documentation or procedures, employers risk wrongful termination claims. If, however, an employee’s termination is documented and found to be justified, you don’t have to pay them severance.
Makes sense when: An employee has violated their contract or misbehaved.
Termination Without Just Cause
In Colombia, termination without just cause applies to any situation outside just cause scenarios. These terminations usually stem from company restructuring, budget reductions, mergers, or leadership shifts.
Termination without just cause is common in Colombia. It’s legal, flexible, and doesn’t require justification documentation.
There are just two caveats:
- You can’t terminate people who belong to a protected group (like pregnant workers or people with serious health conditions) and
- You have to provide severance.
Makes sense when: You don’t have a strong legal reason to let someone go.
Termination by Mutual Agreement
Termination by mutual agreement occurs when both the employer and the employee agree to end their working relationship, usually to avoid a legal dispute.
Maybe an employee isn’t meeting performance expectations due to factors beyond their control, such as unclear role expectations, insufficient training, or personal circumstances. In these cases, pursuing termination for just cause could be legally too risky for the employer.
Ending employment by mutual agreement requires negotiating exit terms and signing a written agreement.
Makes sense when: You don’t have just cause for a termination, but want to ensure a smooth end to the working relationship.
Legal Grounds Termination
Sometimes, termination is dictated by legal circumstances unrelated to employer or employee actions. Legal grounds include cases such as contract expiration or employee death. In these events, no severance is owed to the employee or their family.
Legal Requirements When Terminating an Employee in Colombia
Employers are responsible for issuing final pay on time, providing severance when required, and, in some cases, providing advance notice. Here’s what employers need to know:
Notice Periods
Notice is not legally required for indefinite-term contracts, but a 15-day courtesy period is common.
For fixed-term contracts, employers must give 30 days’ notice before ending; otherwise, the contract may auto-renew.
Final Payments
When you let an employee go in Colombia, you’re required to issue their final paycheck and pay out any unused time they’ve accrued, no matter how they were terminated. Final payments include:
- Outstanding salary
- Vacation pay
- Severance (more on that below)
Employers must also pay proportional bonuses (Prima de Servicios). This is a mandatory extra month of wages to which all employees are entitled, paid in two installments: one in June and the other in December.
You must pay terminated employees on their last working day. Failure to do so may result in penalties, including fines, severance interest, and Ministry of Labor inspections.
Severance Pay in Colombia
Severance is a key component of employee termination in Colombia, but it’s important to distinguish between statutory severance savings (cesantías) and severance pay upon termination (liquidación).
Statutory Severance Savings
Statutory severance savings (cesantías) are a type of unemployment insurance that all Colombian workers receive. Employers are required to contribute one month of an employee’s salary per year to a cesantías account, with the contribution deposited by February 14. Employers also pay interest on employees’ cesantías, around 12% a year (1% a month).
When an employee is terminated, they’re entitled to cesantías, regardless of the type of termination.
Severance Pay
You need to provide severance pay in Colombia (liquidación) in two cases: when you terminate an employee without just cause and when you end a fixed-term contract early.
For employees terminated before their fixed-term contract ends, the severance amount is the salary they would have received had they worked through the end of the contract.
For employees on indefinite-term contracts, severance generally equals one month’s salary for every year an employee has worked for the company, but the exact amount depends on an employee’s seniority and salary.
There are three severance frameworks based on an employee’s hire date:
- Employees hired before 1981 generally cannot be terminated without just cause, except in limited circumstances. In those cases, severance is 45 days of salary for the first year of service and 30 days for each additional year, calculated pro rata.
- Employees hired before 1992 receive 45 days of salary for their first year of service and 40 days for each subsequent year, calculated pro rata.
- Employees hired after 1992 receive severance pay based on their salary. If employees earn less than 10 times Colombia’s minimum monthly wage, it’s 30 days of salary for the first year of service and 20 days for each subsequent year. For employees who earn 10 times the country’s minimum monthly wage (or more), severance equals 20 days of salary for the first year of service and 15 days for each subsequent year.
Alternatives to Employee Termination
Before moving forward with termination, employers might want to consider exploring these alternatives:
1. Performance Management
If an employee has a great attitude but isn’t performing at the level you expected, consider creating a performance management plan (PIP) of three to six months. Implementing a PIP gives you an opportunity to set expectations with an employee regarding their performance, identify specific goals they should achieve, and measure results.
2. Corrective Actions
An employee may perform well overall but still make a poor decision or show problematic behavior. In these cases, corrective action can be more effective than termination. Options include issuing a formal warning, providing targeted training, or placing the employee on disciplinary probation.
3. Role or Contract Adjustments
Rather than parting ways with a strong performer due to restructuring or budget constraints, try reassigning them to a role that’s not being targeted by budget cuts, or reducing their hours or workload.
Termination Mistakes to Avoid in Colombia
Complying with dismissal laws in Colombia is essential, especially since courts tend to side with workers over employers.
Here are five mistakes you don’t want to make when firing employees in Colombia:
- Misclassifying termination as “just cause” without evidence
- Failing to document employee performance or misconduct
- Delaying final payments
- Ignoring special protections for certain employees
- Not following proper contract terms
How RemoFirst Simplifies Employee Management in Colombia
Keeping up with Colombia’s strict termination requirements can be challenging, especially for international companies unfamiliar with Colombian employment law. That’s where RemoFirst comes in. We help companies hire, manage, and terminate employees in Colombia — legally and without establishing a local entity.
RemoFirst helps you stay compliant with Colombian labor laws at every stage of the employment process, including:
- Creating employment contracts
- Managing payroll and employee benefits, including offering private health insurance
- Providing guidance on just cause vs. no-cause termination
- Making final severance settlements and payments
If you have valuable team members in Colombia or want to tap into the country’s talent, we’re here to help. Schedule a demo today.
