In the past month, there have been several labour and employment law developments, chief among them: i) Colombia is under mandatory isolation until April 26 – 11:59 p.m.; ii) recommendations published to be implemented by employers in order to protect employment; iii) benefits for people whose income has been affected by the COVID-19 crisis; iv) contributions to social security during the months of April and May; and v) government imposes mandatory contribution to public workers that have high incomes and on high monthly pension allowances.
I. Colombia is under mandatory isolation until April 26
Through Decree 457 of 22 March 2020, the National Government ordered mandatory and permanent isolation for the entire Colombian population from 25 March 2020 until 13 April 2020 as a measure to prevent the spread of COVID-19 throughout Colombian territory. However, through Decree 531 of 8 April 2020 the President ordered the extension of the mandatory and permanent isolation until 26 April 2020 – 11:59 p.m.. The abovementioned decree determined which sectors and workers were exempt from these measures, as their productive activities were of vital importance.
II. Ministry of Labour publishes recommendations to be implemented by employers in order to protect employment.
The Ministry of Labour issued Newsletter 021 on 17 March 2020, in which it determined guidelines regarding measures that employers can implement in order to protect employment.
These measures include working from home, telework, flexible hours, paid vacation leave (annual, anticipated, or collective), paid leave and salary without the provision of service.
Furthermore, newsletter 022 of 19 March 2020 from the Ministry of Labour determined the implementation of a Rigorous Labour Audit concerning inspection, vigilance and control over all measures taken by employers towards employment contracts during the course of the current Health Emergency and Social, Economic and Ecological Emergency, declared by the President.
III. Government has determined benefits for people whose income has been affected by the crisis. Additionally it determined how Labour Risk Insurance companies must invest their resources obtained from payments made by clients.
Through Decree 488 of 27 March, the government implemented certain measures in order to mitigate the effects caused by the COVID-19 pandemic.
Furthermore, said decree allows for employees whose monthly income has been reduced due to the current Health Emergency and Social, Economic and Ecological Emergency, to retrieve a monthly payment from their severance assistance fund, as long as their employer certifies this reduction.
Moreover, this Decree determined how the Labour Risk Insurance companies must invest their resources, obtained from contributions made by clients regarding labour risk payments. These companies must invest these resources in prevention activities, as well as in providing protective equipment and making contributions to a special fund. These payments must be made, taking into consideration if the client’s employees are exposed or susceptible to COVID-19 infection. Also, the government has expanded these norms to publicly-owned Labour Risk Insurers through Decree 500 of 31 March 2020.
In conclusion, the Decree also determined that independent and dependent workers who had contributed to the Family Welfare Fund for at least one (1) year during the past five (5) years, would be eligible to receive a payment of two (2) monthly minimum wages.
IV. Government has determined measures regarding the contributions to social security during the months of April and May
The government, through Decree 558 of 15 April 2020, determined some measures regarding the contributions to be made to the social security system by employees and employers during the months of April and May, which have to be paid in May and June.
Said measure was issued with the objective of alleviating the economic impact of the crisis generated by the COVID-19 pandemic on employers and employees in Colombia, therefore giving greater liquidity to employers. It applies to affiliates to the Pension System, private and public employers, dependent and independent workers, pensioners affiliated to the Colombian Social Insurance or to the Mandatory Individual Accounts, and to all companies that administer pensions in Colombia.
If the company decides to apply the measures determined in Decree 558 of 2020, they must be made in the following way:
- Employers and workers will only pay a contribution equivalent to 3% percent of the worker’s base income:
- 75% must be paid by the employer and the remaining 25% will be paid by the worker.
- The contribution base income remains unchanged.
- Colombian Social Security and Mandatory Individual Accounts must take into account the weeks during this period, in order for these weeks to be taken into account for the worker’s benefits.
The Decree also issued dispositions regulating pensioners under programmed retirement modality who do not have enough resources in their accounts to continue with the benefit, in order that they can continue to receive it. The measure also established ways for enabling the necessary resources to ensure that these pensions can be covered, regulated a special payment mechanism for these benefits and ensured the institutional capacity for covering the distribution of the resources and the benefits established in the Decree.
V. Government has imposed a mandatory contribution to public workers that have high incomes and on high monthly pension allowances
Through Decree 568 of 15 April, the government established a mandatory contribution that has to be made by public employees who have a monthly income higher than 10 million Colombian pesos. Also, the contribution must be made by all pensioners who have monthly pension allowances higher than 10 million Colombian pesos. This has been established with the objective of ensuring the necessary resources to finance investment on public policy, directed towards vulnerable middle class persons and informal workers affected by the economic crisis caused by COVID-19.
The rate to be paid by reason of this mandatory tax is progressive and will be determined according to the public employee’s, or the pensioner’s, monthly income, using the criteria established in the Decree.
The measure also regulates the mechanism for the collection of the contribution and a non-mandatory contribution for public service workers who have monthly incomes lower than 10 million Colombian pesos. Medical workers who contribute to the fight against COVID-19 do not have to pay this tax.
The measure will enter in force as from 1 May 2020 and will remain in effect until 31 July 2020.
For additional information on any matter related to labor issues in Colombia, please contact Alejandro Castellanos (Partner) of López & Asociados at email@example.com or visit www.lopezasociados.net
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