In this opportunity we update you on the most relevant aspects of the recently approved pension reform and on the most important points in the progress of the labor reform.
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I. Approval of the pension reform
On June 14, 2024, the plenary of the House of Representatives approved the text of the pension reform previously approved by the Senate, pending presidential approval of the bill.
In this regard, we will review the most important aspects of this reform.
- ¿What will be the structure of the Integral Social Protection System for old age, disability and death?
The System will consist of four pillars: Solidarity Pillar, Semi-contributory Pillar, Contributory Pillar composed of an average premium component and an individual savings component, and the Voluntary Savings Pillar.
(i) Solidarity Pillar: It is comprised of people living in extreme poverty, poverty and vulnerability and whose benefits will be financed jointly and severally with resources from the General Budget of the Nation and the Subsistence Subaccount of the Pension Solidarity Fund.
A basic solidarity income will be guaranteed for those who meet the following requirements:
- Men at least 65 years old and women at least 60 years old.
- Men over 55 years of age with a disability or women over 50 years of age with a loss of working capacity equal to or greater than 50%.
- Integrate the group of extreme poverty, poverty and vulnerability.
- Not being a pension creditor.
In accordance with the regulations to be issued, persons belonging to indigenous peoples and black, Afro-Colombian, Raizal and Palenquero peoples who are in the registered census will also be beneficiaries. Likewise, persons belonging to the peasant communities that are in the Administrative Registry of Peasantry to be created by the Ministry of the Interior. Finally, caregivers of people with disabilities will be beneficiaries, provided they can prove the age and targeting requirements of the solidarity pillar.
(ii) Semi-contributory Pillar: It will be comprised of persons affiliated to the system who at 65 years of age men and 60 years of age women have not met the requirements to access a contributory pension and will have access to an Economic Benefit that will be financed with the contributions made and resources from the General Budget of the Nation.
Beneficiaries must have contributed between 300 and less than 1,000 weeks to the System and, in order to determine the life annuity, it will depend on whether or not they are eligible for the solidarity pillar.
This pillar also includes people who are in the BEPS Periodic Economic Benefits Program.
(iii) Contributory Pillar: It is aimed at dependent and independent workers, public servants and people with the capacity to pay, by virtue of which they will have access to an old age, disability or survivor's pension and other benefits regulated by law. It is composed of two components:
Average premium component: Comprised of all persons affiliated to the system and will receive contributions for income between 1 and 2.3 SMLMV. It will be administered by COLPENSIONES.
Complementary individual savings component: Comprised of all persons affiliated to the system whose income is higher than 2.3 SMLMV and will receive the contributions of the income exceeding this threshold and up to 25 SMLMV.
The pension granted by the Contributory Pillar is only one and will correspond to the sum of the values determined in both components. However, a benefit may not be granted in the supplementary individual savings component without meeting the age and weeks of contribution requirements of the average premium component, i.e., 62 years for men, 57 years for women and 1,300 weeks of contribution, without prejudice to the exceptions for certain groups of women.
Thus, once the amounts in the two components of the contributory pillar have been determined, a single pension will be integrated, which will be recognized and paid by COLPENSIONES -or through the mechanism defined by the Government- with the resources obtained from the common fund with respect to the benefit generated in this average premium component and will be complemented with the payment of the transfer of the resources made by the administrator of the individual savings component of the life annuity that has been generated by said component.
(iv) Voluntary Pillar: It will be comprised of individuals who make voluntary savings through the mechanisms existing in the financial system. The principles and provisions of the Reform do not apply to this pillar.
- What are the general characteristics regarding affiliation and contribution to the System and what are the benefits that will be recognized?
In terms of affiliation, the following are highlighted:
- Affiliation is mandatory for all dependent workers, self-employed workers, and capital annuitants in the Contributive Pillar, in the average premium component and, insofar as the IBC exceeds 2.3 SMLMV, in the complementary individual savings component.
- There is no maximum age to access the System.
- Affiliation is voluntary for Colombians abroad, regardless of their migratory status, when they do not have the status of mandatory affiliates and are not expressly excluded by law. It is also voluntary for foreigners who, by virtue of an employment contract, remain in the country and are not covered by any regime in their country of origin or any other.
In relation to the contribution, this will be mandatory in the Contributive Pillar for those who earn income equal to or higher than 1 SMLMV. Regarding the responsibility for the payment of the contribution, the reform establishes that the employer and/or the contractor for the rendering of services will be responsible for making the contribution to the System and for assuming and deducting the corresponding percentage, at the time of payment and if applicable, from the salary and/or fees of the respective workers or contractors.
At the same time, the amount of the current contribution is maintained, as it will be 16% of the IBC, of which employers will pay 75% and workers the remaining 25%.
It also regulates the additional contribution to the Pension Solidarity Fund to be made by a certain group of people depending on their IBC.
Finally, the Comprehensive Social Protection System for the Elderly will recognize the following benefits: old age pension, disability pension, survivors' pension, funeral allowance, substitutive indemnity and/or refund of contributions for disability and death pensions and the payment of disability benefits in accordance with the regulations in force.
- How will the quotation work on a daily or weekly basis?
Dependent workers or contractors who are employed for periods of less than one month or for days, by virtue of a part-time job, or independent workers who receive a monthly income of less than 1 SMLMV will make contributions in accordance with the regulations issued by the Government: (i) To the Social Security Health System, in accordance with the corresponding regulations; (ii) To the Contributory Pillar of the Comprehensive Social Protection System for Old Age, in which the employer and the dependent or independent worker shall contribute in the percentages established to make the contributions.
Contributions may be made on a daily or weekly basis in accordance with the following table:
|
Days worked in the month |
Quote |
|
Between 1 and 7 |
A minimum weekly quotation |
|
Between 8 and 14 |
Two minimum weekly contributions |
|
Between 15 and 21 |
Three minimum weekly contributions |
|
More than 21 days |
Four minimum weekly contributions |
- What are the old-age pension requirements?
In the average premium component, in order to be entitled to an old age pension, the member must meet the following conditions: To have reached 57 years of age if female or 62 years of age if male, as well as to have contributed a minimum of 1300 weeks at any time.
However, it is clarified that the minimum weeks of contribution required for women to obtain the old age pension as of January 1, 2025 will be reduced to 1000 weeks of contribution, as follows:
|
Year |
Weeks |
Year |
Weeks |
|
2025 |
1.275 |
2031 |
1.125 |
|
2026 |
1.250 |
2032 |
1.100 |
|
2027 |
1.225 |
2033 |
1.075 |
|
2028 |
1.200 |
2034 |
1.050 |
|
2029 |
1.175 |
2035 |
1.025 |
|
2030 |
1.150 |
2036 |
1.000 |
In any case, it is reiterated that the old age pension granted by the Contributory Pillar regulated in the Pension Reform is only one and will correspond to the sum of the values determined both in the average premium component -Colpensiones- and in the individual savings component.
Thus, once the amounts of the two components of the contributory pillar have been determined, a single pension will be integrated, which will be recognized and paid by Colpensiones or through the mechanism defined by the Government.
In addition, three benefits are proposed for the old-age pension:
- Benefit for mothers or fathers with an invalid or disabled child: The working mother or father whose child suffers from a permanent physical or cognitive disability of 50% or more, duly qualified by the competent entity, and until the child remains in this condition and continues as a dependent of the mother or father, will be entitled to receive the Special Old Age Pension, at any age, provided that he/she has contributed to the System at least the minimum number of weeks required for the average premium component.
- Benefit of weeks for women with children: In the average premium component of the contributory pillar, as of the effective date of the law, for women who meet the minimum age to access the pension and do not have enough weeks, they may obtain the benefit of reducing the number of weeks required by 50 weeks for each child born alive or adopted, up to 850 weeks for a maximum of 3 children.
- Early old age benefit: Members who are not in the transition regime and who reach 62 years of age if female or 65 years of age if male, after the entry into force of this law and who after making use of the actuarial equivalence system do not meet the minimum weeks to access the old age pension of the contributory pillar and have more than 1,000 weeks contributed, will be able to enjoy the early old age pension. The pension will be paid according to the same rules, but on a proportional basis, and the requirements must be met before January 1, 2036.
- How was just cause for pension recognition and the employer's request for the benefit regulated?
The approved reform establishes that the fulfillment of the requirements to access the old age pension, after inclusion in the pensioners' payroll, is a just cause to terminate the employment contract or the legal and regulatory relationship.
On the other hand, the employer may request the pension on behalf of the worker if 30 days after the minimum requirements have been met, the worker does not request it.
- What is the Transition Regime like?
Those persons who, upon the entry into force of the Comprehensive Social Protection System for the Elderly, have 750 weeks of contributions in the case of women and 900 weeks of contributions in the case of men, will continue to be subject to the full provisions of Law 100 of 1993.
For the purpose of calculating the number of weeks, the following will be taken into account: the weeks contributed in any of the pension systems of Law 100 of 1993, Solidarity of Average Premium with Defined Benefit or Individual Savings with Solidarity, to the Social Security Institute or to any fund, fund or entity of the public or private sector, or the time of service as public servants, regardless of the number of weeks contributed.
Those who do not have at least 750 weeks of contributions in the case of women and 900 weeks of contributions in the case of men will be subject to the provisions of the approved Pension Reform.
The persons currently affiliated to COLPENSIONES without transition regime who contribute more than 2.3 SMLMV must select an administrator of the complementary component of individual savings within 6 months following the issuance of the law. If they fail to do so, they will be randomly assigned.
- How does the relocation opportunity work?
Women with 750 weeks of contributions and men with 900 weeks of contributions and who are less than 10 years away from the pension age, will have 2 years from the enactment of this law to transfer to another regime with respect to the previous regulations, after the double counseling referred to in Law 1748 of 2014. If the affiliate reaches the transition regime only for the time of effectiveness, he/she would have 1 year.
If the person only reaches the transition regime at the time the law enters into force, that is, July 1, 2025, then he/she will have to count the time remaining to complete the 2 years from the enactment of the law to be able to make use of the benefit of fund transfer - window of opportunity.
- What matters are subject to regulation?
- Actuarial equivalency system
- Redemption of pension bonds under previous pension plans
- Linkage through the Ministry of Labor for solidarity pillar
- Fixing the extreme poverty line for Basic Income
- Inclusion of indigenous, raizal, palenqueros, peasants and caretakers in the solidarity pillar.
- Targeting of vulnerable and extremely poor groups.
- Among others.
II. Advances in Labor Reform
After debating the 98 articles proposed by the Government of the Labor Reform, the Seventh Commission of the House of Representatives, in its first debate, approved 75 of them. However, it is important to remember that 3 more debates are still pending, starting in the next legislature that begins on July 20, 2024.
In this regard, some of the most important points are the following:
- Enhanced Job Stability
Indefinite term contract: The general rule of hiring through indefinite term employment contracts is maintained, notwithstanding that exceptionally fixed term contracts or contracts for the duration of the work or labor may be entered into.
Fixed-term contracts: They may not be entered into for a term of more than 4 years; when the initial term is less than 1 year, the parties may extend it as many times as they deem convenient; however, after the third extension the contract may not be extended for a shorter period.
Contract for work or labor: It must be executed in writing and indicate clearly and in detail the work or labor contracted, because if this condition is not met or if the worker continues to provide services after the work is completed, the contract will be understood to be for an indefinite term.
Disciplinary process: In order to impose disciplinary sanctions or to terminate the employment contract with just cause, the guarantees of due process must be applied, so the process must contain as a minimum: (i) Formal communication of the opening of the process; (ii) The indication of facts or conduct that motivate the process; (iii) The transfer to the worker of all evidence supporting the facts; (iv) The indication of a term during which the worker may manifest himself, controvert the evidence and submit the evidence he considers; (v) The final pronouncement duly motivated; (vi) The imposition of a proportional sanction; and (vii) The possibility of the worker to challenge the decision. In all cases, the employee shall have the right to be advised by a person representing his interests.
Compensation for unjustified dismissal:
- In fixed term contracts, the indemnity will correspond to the value of the salaries of the time remaining to fulfill the term stipulated in the contract or its extension. In no case shall it be less than 30 days of salary.
- In employment contracts for the duration of the work or labor contracted, the indemnity shall correspond to the time remaining to complete the work or labor, and may not be less than 30 days' salary.
- Indefinite term contracts shall be paid as follows:
- 45 days of salary when the employee has a service time of no more than 1 year.
- If the employee has more than 1 year of service and less than 5, 15 days of salary will be added to the 45 basic days of salary for each of the years subsequent to the first year and proportionally for each fraction.
- If he has between 5 and 10 years of continuous service, he will be paid an additional 20 days of salary over the 45 basic days for each of the years subsequent to the first and proportionally for each fraction.
- If he has 10 or more years of continuous service, he will be paid an additional 40 days of salary over the 45 basic days for each of the years subsequent to the first and proportionally for each fraction.
Reinforced labor stability: (i) Women in a state of pregnancy and up to 6 months after delivery, whose protection shall also apply in favor of the spouse, partner or permanent partner if she does not have a formal job and is their beneficiary in the health system. (ii) Pre-pensioners, who may only be dismissed with just cause or legal cause.
- Journey
Day and Night Work: Day work is the work performed between 6:00 a.m. and 7:00 p.m. and night work is the work performed between 7:00 p.m. and 6:00 a.m.
Maximum Legal Workday: The maximum daily workday is 8 hours, without prejudice to the provisions of Law 2101 of 2021 on the gradual reduction of the workday. The maximum weekly working day may be distributed, by mutual agreement, in 5 or 6 days a week.
The obligation of employers to promote and manage a semi-annual day for workers to share with their families -family day- is maintained, as well as the obligation to allocate 2 hours of the working day to recreational, cultural, sports or training activities when the companies have more than 50 workers working the maximum working day.
List of overtime hours: The employer shall keep a record of the supplementary work of each worker specifying the name, activity and number of hours worked and shall be obliged to deliver to the worker who requests it, the list of overtime hours worked. Likewise, and if required, the employer will be obliged to provide before the judicial and administrative authorities the record of overtime, under penalty of the penalties that may apply. The limit of 2 hours of overtime per day and 12 hours of overtime per week is maintained.
Remuneration on mandatory rest days: Work on mandatory rest days is remunerated with a surcharge of 100% of the ordinary salary in proportion to the hours worked, which will be implemented gradually.
When reference is made to "Sunday", it shall be understood in all cases to mean "mandatory day of rest", for which reason the parties may agree in writing that their day of rest shall be a day other than Sunday.
Leaves of absence: Paid leave is added to numeral 6 of article 57 of the CST to attend scheduled medical appointments or emergency medical appointments, to attend school obligations as guardians of minor children and to attend to matters related to judicial, administrative, medico-legal or any other type of situation related to gender-based violence.
- Learning
The apprenticeship contract is a special fixed-term labor contract governed by the rules of the CST, taking into account the following characteristics:
- It will be executed strictly within the stipulated time and may not exceed 36 months in two stages, teaching and practical.
- During the entire term, the apprentice-worker shall receive a remuneration that in no case shall be less than the minimum wage.
- Minors will require authorization from the Ministry of Labor.
- Affiliations to the General Social Security System shall be made in accordance with the provisions of the regulations governing the matter.
- The apprenticeship contract may deal with semi-skilled occupations that do not require a degree or skilled occupations that require a degree from complementary training programs offered by higher education schools, undergraduate higher education programs, education programs for work and human development, programs of the Subsystem of Training for Work, as well as the offer of comprehensive vocational training of SENA.
Regarding monetization, companies obliged to comply with the apprenticeship quota will have to pay SENA a monthly amount corresponding to 1.8 SMLMV for each apprentice they do not hire. In case the monetization is partial, it will be proportional to the number of apprentices that do not do the internship in order to comply with the mandatory minimum quota.
- Outsourcing and intermediation
Independent contractors: Article 34 of the CST shall read as follows:
- Contractors and subcontractors are natural or legal persons who contract for the benefit of third parties, whatever the act that gives rise to it, the execution of works, works or the provision of services, for a determined price, assuming all the risks, to perform them with their own means and with technical and managerial freedom and autonomy. Consequently, in order to be considered true employers and not mere intermediaries, contractors and subcontractors, individually considered, must have their own business organization specialized in the contracted service or product, which they must sufficiently prove in case they are required to do so by the judicial and administrative authorities.
- The natural or legal persons that contract or subcontract the performance of works or services shall be jointly and severally liable with the contractor for the value of the salaries and the benefits and indemnities to which the workers are entitled, unless the work is outside the normal activities of their company or business. Solidarity does not prevent the beneficiary from stipulating with the contractor the guarantees of the case or for the beneficiary to recover against the contractor the amount paid to those workers.
Temporary Service Companies: The user companies may not enter into commercial contracts with the CSP to develop situations different from those established in Article 77 of Law 50 of 1990; if after the term stipulated in the regulation has expired, the original cause of the specific service in the development of that contract subsists in the user company, the latter may not extend the contract or enter into a new one with the same or a different CSP for the rendering of such service.
The employment contract of the employee on assignment must specify the cause that gave rise to his engagement, in the development of the commercial relationship between the user company and the EST.
If these limits are not complied with, the user company will be understood as the real employer.
- Other relevant aspects
Paternity leave: It will be progressively increased to 6 weeks in 2026, as follows: in 2024 it will increase to 3 weeks, in 2025 to 4 weeks and in 2026 it will reach 6 weeks.
Hiring of disabled persons: Companies with 100 or more workers must hire or keep hired at least one (1) worker with disability or disability pension beneficiaries of any social security system, for every 100 workers, in relation to the total number of permanent workers. Persons with disabilities must have the disability certification indicated by the corresponding norms of the Ministry of Health.
Teleworking: It regulates transnational teleworking, establishing that the employer will be responsible for having an insurance that covers at least the health care benefits in case of accident or illness. Likewise, it is established that the connectivity allowance will replace the transportation allowance in the applicable cases. It also promotes telecommuting, since companies will be able to access the incentives regulated by the Government within the year following the approval of the reform.
- Collective Law
Guarantees of the right to union association:
- Union leave: The representatives and leaders of the union organizations shall be entitled to paid union leave and commissions to enable them to effectively perform their duties during their working hours. These leaves may be established in collective bargaining agreements or other agreements entered into between the parties.
- Communication with company management and establishment of spaces for dialogue: Periodic spaces will be set up, at least every six months, to allow communication and dialogue between company management and representatives of trade union organizations.
- Access to information: Workers' organizations have the right to know the social and economic situation of the company.
- Access and facilities for communication with workers: Employers shall facilitate spaces and channels of communication, both physical and virtual, between union representatives and workers.
- Protection against acts of discrimination: All workers enjoy this protection under ILO Convention 98.
Anti-union conduct:
- Dismiss, demote or in any way harm leaders because of their union membership;
- Encourage the creation of employer-controlled unions;
- To intimidate, coerce, offer or give gifts so that the worker does not join or disaffiliates from a union;
- Unjustifiably refusing to negotiate a list of demands or requests.
- Retaliation of any kind against workers who have testified against the employer in administrative investigations, judicial or arbitration proceedings that are not obviously reckless;
- Prevent or disrupt meetings or assemblies of union members;
- Establish special rules or differences in salaries or other benefits in favor of non-unionized workers;
- Intervening or interfering in the constitution, operation or administration of a labor union;
- Unjustifiably refusing to grant union leave;
- Unjustifiably refusing to provide trade union organizations with information that is not subject to confidentiality or that is not of a confidential nature;
- Denigrate trade unions and disseminate defamatory information about them, among their members, among the workers of the companies and the community in general;
Complementary measure to the bylaws: Article 362 of the CST adds issues related to the operation of the assembly, such as its exclusive powers, use of technological means, meeting times, rules of representation of members, meeting rules, quorum, debates and voting.
Parity and/or proportional representation in the organizations. Trade unions and employers' organizations shall promote the participation and inclusion, under equal conditions, of women in order to progressively achieve their equal representation and/or representation proportional to the integration of the sector.
Likewise, they will promote equal participation and inclusion of young people, people with sexual diversity and people with disabilities.
Collective Bargaining Agreements: When the union or unions group more than one third of the workers of a company, the company may not enter into collective bargaining agreements or extend those in force.
Failure to comply with this prohibition will be subject to investigation and possible fines by the Ministry of Labor of up to 5,000 SMLMV, as established in Article 486 of the CST. In any case, due process will be guaranteed and the dosage of the sanction must be based on objective criteria such as the seriousness of the infraction, recidivism, among others.
If you have any further questions or doubts, we invite you to contact us through our usual channels.