Labor Reform: What Companies Must Adjust Starting July 2026
Starting in July 2026, Colombia’s labor reform will have a direct impact on payroll, employment contracts, internal work regulations, and the way companies manage labor relations.
Below are the key aspects companies should consider.
1. Sunday and Holiday Premium Increases to 90%
Effective July 1, 2026, the premium for work performed on mandatory rest days or public holidays increases to 90% of the ordinary hourly wage. Beginning July 1, 2027, it will reach 100%. Employers may adopt the 100% rate earlier.
This requires reviewing work shifts, payroll budgets, weekend scheduling, continuous-operation contracts, and service costs.
2. 42-Hour Workweek and Hourly Rate Recalculation
As of July 15, 2026, the maximum workweek is 42 hours, distributed over five or six days without reducing employees' salaries.
Companies should recalculate the ordinary hourly rate, update payroll software, review contracts, schedules, internal policies, and variable compensation models.
3. Fixed-Term and Project-Based Contracts
Indefinite-term employment becomes the general rule. Fixed-term contracts remain valid if executed in writing and may not exceed four years including renewals. Contracts shorter than one year may not be renewed for periods shorter than one year after the fourth renewal.
- Initial date.
- Renewals.
- Expiration dates.
- Contract type.
- Objective justification.
- Risk of conversion into an indefinite-term contract.
4. Internal Work Regulations and Disciplinary Procedures
Law 2466 requires minimum due-process guarantees and requires employers to update Internal Work Regulations within twelve months of the law entering into force.
5. Conclusion
- Calculate the real hourly labor cost.
- Identify unnecessary overtime.
- Reorganize work shifts.
- Review employment contracts.
- Assess profitability and pricing after implementing the labor changes.
Prepared by: Diego Sanabria Parra – Founding Partner.
THIS DOCUMENT REPRESENTS THE OPINION OF OUR FIRM. THE LABOR AUTHORITIES MAY NOT AGREE WITH OUR POSITION. SHOULD YOU WISH TO EXPLORE THIS MATTER FURTHER OR REQUIRE SPECIALIZED ADVICE, PLEASE DO NOT HESITATE TO CONTACT US. WE WILL BE PLEASED TO ASSIST YOU.
