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Employer of Record (EOR) in Colombia

VERDICT: The Best Employer of Record in Colombia in 2024 is Horizons. Horizons stands apart from its competitors in Colombia with its global network of entities and its in-depth understanding of hiring and onboarding in Colombia

Best Colombia Employer of Record

  • We tested 43 Colombia Employers of Record (EOR), and the following five came out on top: Horizons, Talent500 Ongresso, Deel and Atlas.

What Is a Colombia Employer of Record?

A Colombia EOR is a service provider or organization that assists companies in employing workers in Colombia. 

When a company wants to expand its operations into Colombia, it may establish a legal entity in the country, such as a subsidiary or branch office. However, this process can be complex, time-consuming, and expensive. Alternatively, companies can engage an EOR service in Colombia to act as the legal employer of their workers on their behalf. The EOR handles all employment-related tasks, including payroll administration, benefits management, compliance with labor laws, tax withholding, and other HR responsibilities. Essentially, the EoR acts as a local employer for the workers, even though they ultimately work for the client company.

By utilizing an EOR service, companies can mitigate the legal and administrative burdens of establishing their own legal entity in Colombia. It allows them to have a presence and hire employees in the country quickly and efficiently. This can be particularly beneficial for businesses that want to test the market, engage in short-term projects, or avoid the complexities of local employment regulations.

A Colombia EOR is sometimes called a Colombia Professional Employer Organization (Colombia PEO).

It’s important to note that the specific services an EOR offers may vary among providers. Some EoRs may provide additional services such as recruitment, onboarding, and Colombia work visa support, while others may focus primarily on the administrative aspects of employment.

The demand for EOR providers is increasing as companies recognize the benefits of business in and hiring in Colombia.

Colombia as Your LatAm Base of Operations

Top 5 Leading Colombia EOR Providers

  1. Horizons: Horizons is an international Employer of Record with a strong presence in South America and Colombia. With a global entity network (coverage in 180+ locations), as well as recruitment and contractor options, Horizons is the ideal choice for any business looking for a hiring partner in Colombia. 

  2. Talent500: Talent500 is a global EOR and talent acquisition platform that supports you through the entire employee life cycle. For access to top Colombia talent, and a platform utilizing the latest AI technology through the recruitment process, Talent500 is an ideal EOR. 

  3. Ongresso: Ongresso are latin america market entry experts with special expertise in supporting companies to enter the Colombian market. As well as EOR and PEO services, they also support international companies moving into the Colombian marketplace through comprehensive recruiting, tax, company formation and consultancy services. 

  4. Deel: Deel serves as an EOR in over 150 countries, including Colombia. Their platform streamlines the hiring, onboarding, and payroll processes. This is particularly useful in Colombia, where the varying regional labor laws and practices may pose a challenge for companies unfamiliar with the local landscape. Find out more about how Deel can help your business in Colombia in our 2023 Deel HR analysis and service breakdown. 

  5. Atlas: Atlas (also known as ‘Atlas HXM’) simplifies the process of hiring in Colombia by handling employment contracts, payroll, and ensuring compliance with local employment laws. Their expertise in the nuances of Colombian employment regulations helps companies avoid potential pitfalls and ensures a compliant, efficient hiring process. Read more about this provider in our 2023 Atlas HXM review. 

What Services Does a Colombia Employer of Record Provide?

A Colombia EOR provides various services to assist companies in employing workers in Colombia. Here are some of the key services typically offered by a Colombia EOR:

  1. Payroll administration

    The EOR handles payroll processing, including salary calculations, deductions, and tax withholding, in compliance with local labor laws and regulations.
  2. Benefits management

    The EOR manages employee benefits, such as health insurance, pension contributions, and other statutory benefits required by Colombian law.
  3. HR and personnel administration

    This includes managing employment contracts, maintaining employee records, handling employee inquiries, and ensuring compliance with labor regulations regarding working hours, leaves, and other employment matters.
  4. Compliance and legal support

    The EOR ensures employment practices and procedures comply with Colombia’s labor laws, including employment contracts, terminations, severance, and employee rights.
  5. Tax administration

    The EOR handles tax-related matters, including withholding and remittance of payroll taxes, social security contributions, and other applicable taxes.
  6. Work permits and visas

    If your company needs to hire foreign workers in Colombia, the EOR can assist with work permit applications, visa processing, and compliance with immigration regulations.
  7. Employee onboarding and offboarding

    The EOR helps with the onboarding process for new employees, including verifying documentation and conducting necessary background checks. Similarly, they handle offboarding, ensuring proper termination procedures and adherence to legal requirements.
  8. Risk and compliance management

    The EOR helps minimize compliance risks by staying up to date with changes in labor laws, regulations, and employment practices in Colombia.
  9. Local support and advice

    EORs often offer guidance and consultation on matters related to labor laws, HR practices, and employment regulations in Colombia. They will update you on any new developments, such as the new Colombia digital nomad visa regulations. 

It’s worth noting that an EOR’s services may vary depending on the provider and the specific agreement between the EoR and the client company.

Colombia EOR
How Colombia EOR Works

What Are the Benefits of a Colombia Employer of Record?

Engaging a Colombia EOR can offer several benefits for companies looking to expand their operations in Colombia. Here are some of the advantages of using a Colombia EOR:

  1. Quick market entry

    Setting up a legal entity in Colombia can be time-consuming and complex. Using an EOR allows companies to enter the Colombian market swiftly without establishing their local entity. This will enable businesses to start operations, hire employees, serve clients, or conduct projects promptly.
  2. Compliance and legal support

    Colombia has specific labor laws and regulations that companies must comply with when employing workers. EORs have in-depth knowledge of local employment laws and ensure that all employment practices and procedures comply with the legal requirements. This minimizes the risk of non-compliance, penalties, and legal disputes.
  3. Administrative efficiency

    Managing payroll, benefits, taxes, and HR-related tasks in a foreign country can be time-consuming and burdensome. Employers of Record take care of these administrative responsibilities on behalf of the company. They handle payroll processing, tax withholding, benefits administration, employment contracts, and other HR-related paperwork, saving the company’s time and resources.
  4. Local expertise and support

    EORs strongly understand the local labor market, employment practices, and cultural nuances. They can provide valuable insights and advice on hiring practices, local employment customs, and employee management. This expertise ensures that companies make informed decisions and navigate the Colombian employment landscape effectively.
  5. Flexibility and scalability

    Engaging an EOR allows companies to scale their workforce up or down quickly. Whether expanding the team for a new project or downsizing due to changing business needs, the EoR can adapt to these fluctuations and handle the necessary HR processes seamlessly.
  6. Risk mitigation

    By partnering with an EOR, companies can mitigate risks associated with labor disputes, incorrect payroll calculations, non-compliance with employment regulations, and other legal issues. The EOR manages these risks, allowing the company to focus on its core operations.
  7. Cost savings

    Engaging an EOR in Colombia can be more cost-effective than establishing a legal entity. Companies can avoid the expenses associated with company registration, office setup, hiring HR staff, and maintaining ongoing compliance. EoRs often offer transparent pricing models, allowing companies to forecast and manage their employment costs more effectively.

Using a Colombia EOR allows companies to streamline their expansion into the Colombian market, maintain compliance with local employment laws, and focus on their core business activities while leaving HR and administrative tasks to the experts.

What are the Disadvantages of a Colombia Employer of Record?

While engaging a Colombia EOR can bring many benefits, it’s also essential to consider the potential disadvantages. Here are some of the drawbacks associated with using a Colombia EOR:

  1. Limited control over employment matters: When employing workers through an EOR, the client company may have less direct control over HR and employment-related decisions. The EoR acts as the legal employer, which means they have authority over certain aspects of employment, such as payroll, benefits, and HR processes. This reduced control may not align with the company’s desired level of involvement in HR management.
  2. Higher costs compared to self-employment: Engaging an EOR involves additional costs beyond the employees’ salaries. The EoR charges a fee for their services, impacting overall employment costs. While this cost may be justifiable due to the expertise and convenience offered, it is important to evaluate the financial implications and compare them with the expenses of establishing a legal entity in Colombia.
  3. Potential cultural differences: EORs often deeply understand the local culture and employment practices. However, in some cases, there may still be cultural differences or nuances that could impact the company’s operations or employee management. Maintaining open communication and addressing cultural discrepancies is essential to ensure a cohesive working environment.
  4. Dependency on the EoR: When relying on an EOR for employment services, the client company depends on its performance and reliability. If the EOR fails to deliver the expected quality of service or experiences financial difficulties, it can disrupt the company’s operations and HR processes. Thorough due diligence and continuous monitoring of the EoR’s performance are essential to mitigate this risk.
  5. Potential legal and compliance risks: While EORs aim to ensure compliance with local labor laws, the ultimate responsibility for legal compliance still rests with the client company. It’s crucial to stay informed about employment regulations and actively collaborate with the EOR to ensure all employment practices align with the current legal requirements. Failure to do so may expose the company to compliance risks and legal consequences.

It’s important to carefully evaluate these potential disadvantages and conduct thorough research when selecting a Colombia EOR. Assessing your company’s needs, priorities, and risk tolerance will help determine whether engaging in an EOR is the most suitable option for your business in Colombia.

How to engage a Colombia Employer of Record?

Engaging a Colombia EOR involves several steps to ensure a smooth and compliant employment process. Here’s a general guide on how to engage a Colombia EOR:

  1. Research and selection. Start by researching and identifying reputable EORs that operate in Colombia. Look for providers with experience in the country, a good track record, and positive client reviews. Consider factors such as the range of services offered, pricing, expertise, and customer support.
  2. Initial consultation. Contact the selected EORs to schedule an initial consultation. During this discussion, explain your company’s requirements, objectives, and the scope of services you need. The EOR will provide information on their capabilities, processes, fees, and any additional details related to their services.
  3. Service agreement. Once you have chosen an EOR, they will typically present you with a service agreement or contract. Review the agreement carefully, paying attention to the services, pricing structure, terms of engagement, and any additional provisions. Seek legal advice to ensure the deal aligns with your company’s needs and complies with applicable laws.
  4. Due diligence and onboarding. Before engaging the EOR, conduct due diligence to verify their credibility, such as checking their reputation, licenses, and compliance records. Provide the necessary company and employee information to the EOR for onboarding purposes. This includes details about your company, the employees to be onboarded, employment contracts, and any relevant documentation.
  5. Establishing the employment relationship. The EOR will proceed with the necessary steps to establish the employment relationship with the workers on your behalf. This includes issuing employment contracts, registering employees for payroll and benefits, and ensuring compliance with local labor laws.
  6. Ongoing collaboration. Throughout the engagement, maintain regular communication with the EOR to address concerns, provide updates on employee status or changes, and collaborate on HR-related matters. The EOR will handle payroll processing, benefits administration, compliance, and other HR tasks while keeping you informed and seeking your input when required.

Remember that engaging a Colombia EOR should be done by local laws and regulations. It’s advisable to consult with legal and HR professionals with expertise in Colombia’s employment landscape to ensure compliance and smooth operations.

Engaging a Colombia EOR — choose wisely

Engaging a Colombia EOR can be a strategic choice for companies looking to expand their operations in Colombia. While there are potential disadvantages, the overall benefits make it an attractive option for many businesses.

By partnering with a Colombia EOR, companies can navigate the complexities of the local labor market, ensure compliance with employment laws, and efficiently manage HR and administrative tasks. The EoR’s expertise and local knowledge allow quick market entry, administrative efficiency, and risk mitigation. Companies can focus on their core operations while leaving HR-related responsibilities to the EOR.

Our picks for the top Colombia EOR companies in 2024 are Horizons, Talent500, Ongresso, Deel, and Atlas

Colombia Business Guides

FAQs

While staffing agencies and outsourcing providers may assist with recruitment and hiring processes, a Colombia EOR takes on a more comprehensive role. EoRs act as the legal employer of the workers, assuming responsibility for payroll, benefits, compliance with labor laws, tax withholding, and other HR tasks. They handle ongoing employment administration, ensuring compliance with local regulations, whereas staffing agencies typically focus on sourcing and placing candidates. EoRs provide a more holistic employment solution, offering end-to-end HR and compliance services for companies expanding into Colombia.

Yes, it is possible for a company to transition from using a Colombia EOR to establishing its own legal entity in the country. Engaging an EOR can be an efficient entry strategy, allowing companies to quickly establish a presence in Colombia. However, as the company grows and establishes a stable presence, it may choose to establish its own legal entity for greater control and flexibility. This transition involves legally registering a subsidiary or branch office, complying with local company registration requirements, and taking on the full responsibility of employment and HR management. The process can vary in complexity and should be undertaken with careful planning and legal guidance.

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