Grounds for Termination
In Colombia, employment contracts may be terminated by any of the parties at any moment with immediate effects (as a period of notice is only needed for fixed-term contracts when ended by the expiration date) and without it being necessary to mention the reasons that led to the termination, unless a fair cause is alleged for the dismissal. Grounds for termination in Colombian legislation can be divided into three categories: (i) Legal grounds. (ii) Termination with a fair cause. (iii) Termination without a fair cause.
As mentioned before, employees are also entitled to terminate the employment contract at any moment, for any reason, or alleging a fair cause. In case the employee opts to terminate his employment contract, alleging a breach by the employer (fair cause), the Labor Code mandates the obligation to pay a severance payment as if the contract were terminated without a fair cause.
The 50 Act of 1990 establishes the requirements for a collective dismissal, which in Colombia, applies to a dismissal that affects, in a period of six months, the percentage of the number of employees are defined by certain equations set out in the act. The percentages of the equations are only calculated when considering terminations without a fair cause, not those alleging a legal ground or a fair cause. For a Company to proceed with a collective dismissal, it needs, beforehand, to receive authorization from the Ministry of Labor. For a Company to proceed with a collective dismissal, it needs, beforehand, to receive authorization from the Ministry of Labor.
Individual dismissals, unlike the collective dismissals, do not require a previous authorization by any authority, as the employer is free to terminate the employment contract at any time. However, for the dismissal of an employee under some types of special protection, an authorization from the labor inspectorate is needed (pregnant women, disabled employees). In the case of employees under special protection for their unionized condition (“fuero sindical”) a previous authorization is required by the Labor judge. A termination with or without cause should be communicated to the other party in writing and entitle the employee to the payment of his salary and social benefits until his last day of work, and depending on his termination grounds, a severance payment might be paid.
Is severance pay required?
Only for a dismissal without a cause. The amount of the severance payment differs in several factors such as Seniority, type of contract and amount of the salary. Severance payment in Colombia does not have a limitation in the amount to be recognized by the employer. Colombian legislation provides a fixed system of calculation for the severance payment. Nonetheless, employees can claim moral damages in addition to the severance payment provided by law.
Is a Separation Agreement required or considered best practice?
Colombian Labor law does not require a separation agreement to terminate a contract. Nevertheless, it allows its application. These kinds of agreements are not only widespread in the labor market, but are generally recommended to terminate the contract of high executives and employees under special protection.
Separation agreements are binding for the parties in those rights which are not considered as “true and certain” as these rights are neither renounceable nor negotiable by the employee. For example, an employer can negotiate, in a separation agreement, the damages caused from a late payment of salaries and/or social benefits to his employees, but cannot sign a separation agreement to renounce his obligations with regards to the mandatory contributions he must pay, for an employee, to the social security system.
Remedies for employee seeking to challenge wrongful termination
Wrongful termination claims are analyzed by the judge as the competent authority. Wrongful termination based on a legal ground (i.e. alleging the absence of a cause for the termination) leads to the recognition of the severance payment the employee would be entitled to if his contract would be terminated without a cause.
Wrongful termination based on the breach of a fundamental right (i.e. discrimination grounds and/or harassment) might lead to the reinstatement of the employee in the position he was in before being dismissed, or an equivalent one, plus the payment of the salaries and benefits for the period he remained dismissed, because of the employer’s wrongful termination.
Colombian labor law does not include any special provisions or protections for whistleblowers. However, employees who served as witnesses in a claim of harassment cannot be dismissed without a fair cause in the following six months after the formal complaint, as long as the claimant is effectively considered a victim of harassment.