1. 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.
On legal grounds one can find those termination grounds which are unrelated to the behavior of the employee, but rather the operation of the law that mandates the termination of the contract. In this case one can find the death of the employee, the expiration date of the term initially agreed in a fixed-term contract and/or the meeting of the condition or culmination of the task in the employment contracts by a definite task. In this case, as the employment contract ends because of the operation of the law, the employee or his survivors are not entitled to a severance payment.
(ii) Termination with a fair cause.
The termination with a fair cause refers normally to situations related to gross misconduct by the employee, with the exception of the recognition of the invalidity or old age pension. These fair cause grounds are defined explicitly by law and the parties cannot add supplementary grounds as a basis for the contract to be terminated. However, the parties do have the possibility, through the contract or the Company manual, to define situations that by their nature can be considered as serious misconduct.
(iii) Termination without a fair cause.
The termination without a cause includes all situations that are not considered as a legal cause or a fair cause. Only in the termination of an employment contract considered as without a cause, is the employee entitled to a severance payment in accordance to the law. The termination without a cause does not require a period of notice, but finds limitations for its use in situations that might be considered arbitrary or infringes upon a superior hierarchical right normally related to employees under special protection (i.e. Union representatives, pregnant employees, disabled persons).
2. Collective Dismissals
For a Company to proceed with a collective dismissal, it needs, beforehand, to receive authorization from the Ministry of Labor.
The requirements for a collective dismissal, which in Colombia, applies to a dismissal that affects, in a period of six months, a number employees equal to:
• 30% of the total employees in Companies with a total share of employees higher than 10 but lower than 50;
• 20% of the total employees in Companies with a total share of employees higher than 50 but lower than 100;
• 15% of the total employees in Companies with a total share of employees higher than 100 but lower than 200;
• 9% of the total employees in Companies with a total share of employees higher than 200 but lower than 500;
• 7% of the total employees in Companies with a total share of employees higher than 500 but lower than 1000 and;
• 5% of the total employees in Companies with a total share of employees higher than 1000.
3. Individual Dismissals
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.
a. 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.
4. Separation Agreements
a. 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.
b. What are the standard provisions of a Separation Agreement?
The standard provisions are: (a) A clause where the employee grants general release to the employer, his subsidiaries and/or headquarters from any claim that might arise from the employment contract with the Company and specifically the situation in discussion; (b) In order for the agreement to have a res judicata effect, mutual concessions must be made between the parties, which normally means a clause acknowledging an amount of money to be recognized to the employee, its form of payment and instalments (if applicable).
c. Does the age of the employee make a difference?
d. Are there additional provisions to consider?
If the intention, through the Separation Agreement, is for such document to have a res judicata effect, the agreement must be made by a “transacción” contract or a “conciliación” contract; both require mutual concessions by the parties.
5. 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.
6. Whistleblower Laws
The 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.