Colombia Update: Challenges of the labor reform

The drafting of the labor reform is not the most fortunate, harming entrepreneurs and MSMEs.

One of the great challenges of the labor reform is to break with the classic labor formality in Colombia so that our legislation evolves and adapts to the trends of a globalized world. However, evolving is not an easy task and bringing our labor law to the trends of the XXI century is not either.

With the filing of the labor reform, we had a golden opportunity to change those traditional paradigms of labor law and that labor relations in Colombia become more efficient and competitive with other countries in the region, not to compare ourselves with other more developed countries. Unfortunately, the wording of the labor reform is not the most fortunate, whose proposals can mainly harm entrepreneurs and MSMEs.

In several scenarios I have proposed that, in order to arrive at a modern labor law adapted to many of the trends of the twenty-first century, what we should think about is how we simplify labor standards, which are the first barrier faced by local and foreign investors. However, the labor reform limits flexibility in the modalities of hiring staff, increases labor costs and restricts flexibility for people to provide services on digital platforms.

One of the most worrying aspects is the lack of clarity in the drafting of the labor reform. Although there are many financial analyses of the increase in labor costs and compensation tables for termination of the employment contract, one of the aspects that strikes me most is that the reinforced labor stability is not exhaustive, which opens the door to the development of more privileges than those that exist today. This will undoubtedly result in greater legal uncertainty and a significant increase in labor lawsuits and tutela actions, which in turn is a greater investment for employers who must meet these requirements.

Additionally, the labor reform lacks an analysis and proposals to understand that each employer has a different economic capacity. Neither the Substantive Labour Code nor the labour reform make any distinction when imposing labour charges. One of the great proposals of the labor reform that the country needs is to impose differential burdens and obligations for MSMEs over those of large companies in the country.

I believe that guaranteeing workers’ rights does not mean that we create adequate space for investors and achieve much simpler labour standards than we have today. To the extent that the government encourages more restrictive labor standards, we discourage business creation.

By LLOREDA CAMACHO & CO, Colombia, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact colombia@transatlanticlaw.com 

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 42 Brook Street, London W1K 5DB, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.