Colombian labor law (Código Sustantivo del Trabajo, CST) defines an employment relationship by three elements (Art. 23): personal service, continuous subordinación, and agreed compensation. If those three are present, it is an employment relationship by law — regardless of what the contract is called.
The subordinación test (the one that matters)
Subordinación is the ability of the employer to give the worker instructions on how, when and where to work. In practice, courts and Mintrabajo look at:
- Fixed working hours imposed by the contracting party.
- Reporting to a manager of the contracting party.
- Exclusivity — the worker has no other clients.
- Use of company email, equipment, tools, brand.
- The role is core to the business of the contracting party.
If two or more of these are present, the risk of reclassification is material. If four or five are present, reclassification is highly likely.
Cost comparison
| Item | Contractor | Employee (CST) |
|---|---|---|
| Health (EPS) employer contribution | None (worker self-pays) | 8.5% (exempt under Law 1607 if < 10 SMLMV in a juridical person) |
| Pension (AFP) | None | 12% |
| ARL (workers' comp) | None | 0.522%-6.96% by risk class |
| SENA / ICBF / Cajas (parafiscales) | None | 9% (SENA+ICBF exempt under Law 1607 if applicable; Cajas always 4%) |
| Cesantías / Intereses / Prima / Vacaciones | None | ~21.8% combined |
| Severance on termination without cause | None | CST: 30 days + 20 days per year of service (< 10 SMLMV) |
IP enforceability
In an employment relationship (CST Art. 20), work product is owned by the employer by default. In a contractor relationship, IP ownership requires explicit written assignment in the services agreement. Founders planning to fundraise typically want IP assignment language signed before the contractor starts.
What to do
Run the Decision Tool. It runs the subordinación test for your specific scenario and suggests a path: contractor, EOR, or direct hire.
This page offers general guidance based on public information valid as of 2026-05-23. It does not constitute legal, tax, or labor advice. Hiring decisions should be validated with a Colombian labor attorney or accountant before execution. NominaCheck is not a party to any resulting contractual relationship.
This page may contain affiliate links. We may receive a commission at no extra cost to you. Provider order is based on fit, not on payout.