Colombia: The six labor amendments in the National Development Plan (NDP)

1. Termination of penalty proceedings by mutual agreement, initiated by the Ministry of Labor

Under the NDP, the Ministry of Labor may suspend or terminate administrative penalty proceedings by mutual agreement.

Termination may take place when the party under investigation i) acknowledges its failure to comply with the labor or social security laws and ii) guarantees the implementation of measures aimed at correcting the causes that gave rise to the investigation.

Suspension may take place when the party under investigation i) acknowledges its failure to comply with the law and, ii) makes a commitment to implement corrective measures by means of an improvement plan that does not exceed one (1) year. Upon implementation of the entire improvement plan, the proceedings are concluded.

A reduction in penalties has been established as follows: i) if the suspension by mutual agreement takes place during the preliminary investigation phase, no penalty will be imposed; ii) if suspension takes place after charges have been filed and before release, the penalty will be reduced by half; and iii) if it takes place between the evidence phase and the presentation of allegations, the penalty will be reduced by one third.

In the event of failure to comply with the improvement plan, the suspension will be lifted and the process will continue.

2. New obligations for employment and placement agencies

Article 195 of the NDP establishes new obligations for employment and placement agencies: i) integration within the network of public employment service providers and ii) reporting of vacancies to the information system managed by the Special Administrative Unit of the Public Employment Service (UAESPE).

3. Working practice will be included as working experience

Article 192 of the NDP states that periods of working practice carried out by students in technical, technological, professional and post-graduate programs will count as labor experience.

It also extends this benefit to practice during the 24 months prior to the entry into force of the NDP.

4. Creation of subsidized housing for people with income under the minimum salary

All workers bound by an employment contract or services agreement that earn less than the minimum salary must join the Social Protection Housing System comprised of: i) a subsidy regime in the General Social Security and Health System, ii) the Periodical Financial Benefits Social Supplementary Service, iii) a comprehensive insurance policy that protects workers from work-related risks and illnesses covered by the BEPS.

In such cases, the contribution to the Periodical Financial Benefits System (BEPS) must be entirely paid by the employer or contracting party and will be equivalent to 15% of the worker or contractor’s monthly earnings.

5. Extension of the BEPS to Colombians resident overseas

The Periodical Financial Benefits System (BEPS), defined by the National Government as a voluntary savings program designed for people without the financial capacity to contribute to a pension plan for a minimum salary or more, now extends to Colombians resident overseas that do not contribute to the Colombian social security system.

6. Apparent amendment of the social security contributions made by independent contractors

Article 224 of the NDP states that independent workers under a services agreement with net income equal to or less than the minimum salary must pay monthly contributions in arrears to the social security system on a minimum base of 40% of the monthly value of the contract, without including Value Added Tax (VAT).

It should be pointed out that Decree 1273 of 2018 established that, as of the month of June 2019, contracting entities are required to withhold and pay contributions to the social security system on behalf of their contractors.

The new regulation has given rise to doubts as to whether the contributions to be made by contractors must be made by the contracting entity, after withholding the amounts, or by the contractor.