Running payroll in Colombia: a complete guide from gross pay to PILA

Payroll in Colombia in 2026 starts from a monthly minimum wage of COP 1,750,905, a 23% increase on 2025. Most Colombia payroll thresholds are multiples of that number: the transport-allowance limit, the minimum and maximum contribution base, the solidarity-fund bands, the parafiscal exoneration and the minimum all-inclusive salary. In addition to the monthly salary, an employer owes a fixed set of percentage contributions, statutory benefits paid on their own calendar, and three separate monthly filings. This guide shows how to run payroll in Colombia from contract to payslip, with a full gross-to-net and employer-cost example.

The legal framework and the 2026 reference values

Three laws govern Colombian payroll (nómina). The Código Sustantivo del Trabajo (CST, the labour code) defines salary, working time and the employee benefits known as prestaciones sociales. Ley 100 de 1993 sets up the social-security system: health, pension and occupational risk. The Estatuto Tributario (ET, the tax code) sets income-tax withholding on wages.

Two recent laws change working time in 2026. Ley 2101 de 2021 cut the maximum ordinary week to 42 hours from 15 July 2026. The 2025 labour reform, Ley 2466 de 2025, moved the start of night work to 7 p.m. and raised the surcharge for Sunday and holiday work to 90% from 1 July 2026 and 100% from 1 July 2027.

The reference values for 2026:

The minimum wage itself has been in court all year. The government set it by decree in December 2025, after the tripartite wage commission failed to agree. In February 2026 the Consejo de Estado (the supreme administrative court) suspended that decree and ordered the government to replace it, which the government did with Decreto 159 de 2026 at the same COP 1,750,905. In July 2026 the court's Second Section revoked the suspension, so the original decree is back in force. The nullity case, which also covers the transport-allowance decree, continues: in early October the court closed the evidence stage and moved to a final ruling. Until that ruling, COP 1,750,905 is the figure to pay. The minimum wage is set every December, so the 2027 value and every threshold in the table change on 1 January.

What counts as salary: ordinary salary, salario integral and the non-salary limit

Whether a payment counts as salary determines how the payment is taxed and whether it is included in the contribution base (the IBC, ingreso base de cotización) and in the base for the prestaciones. Under CST Art. 127, salary is not only the agreed monthly amount but everything the employee receives as direct payment for work: overtime, Sunday and night surcharges, commissions and habitual bonuses.

CST Art. 128 lists what is not salary: occasional bonuses given at the employer's discretion, tools and expenses the employee needs to do the job, and the prestaciones themselves. Employer and employee can also agree in writing (a pacto de exclusión salarial) that certain benefits, such as food vouchers or an extra-legal bonus, do not count as salary.

Ley 1393 de 2010, Art. 30 limits how far that agreement can reduce the health and pension base: non-salary payments cannot exceed 40% of total remuneration. Any excess is added to the IBC.

Take an employee paid COP 10,000,000 a month in total: COP 5,000,000 in salary and COP 5,000,000 in benefits agreed as non-salary. The 40% limit is COP 4,000,000. The COP 1,000,000 excess is added to the salary, so health and pension are calculated on an IBC of COP 6,000,000, not COP 5,000,000.

The UGPP, the agency that audits social-security contributions, checks this limit and looks at what a payment is, not what the contract calls it. When a payment is reclassified, the employer owes the missing contributions plus interest and penalties.

Salario integral (an all-inclusive salary) is the alternative for senior staff. Under CST Art. 132, an employee earning more than 10 SMMLV can agree in writing to a single salary that already compensates the prestaciones (the service bonus, the severance savings and their interest) and the overtime and night surcharges. The minimum is 10 SMMLV plus a benefit factor of at least 30%, which makes 13 SMMLV (COP 22,761,765) in 2026. Vacation is still owed, and contributions are calculated on 70% of the total: a salario integral of COP 30,000,000 has an IBC of COP 21,000,000.

Employee deductions: health, pension, the solidarity fund and retención en la fuente

Four amounts are withheld from an ordinary employee's pay. The three contributions are calculated on the IBC, which can never be below 1 SMMLV or above 25 SMMLV for a full month:

• Health (salud): 4%, paid to the employee's chosen health provider (EPS). Ley 100 Art. 204 sets the total at 12.5%; the employer pays the other 8.5%.
• Pension (pensión): 4%, paid to Colpensiones (the public fund) or a private fund (AFP). The total is 16%; the employer pays 12%.
• Pension solidarity fund (Fondo de Solidaridad Pensional, FSP): an additional employee-only contribution of 1% once the IBC reaches 4 SMMLV, rising in steps from 16 SMMLV to 2% above 20 SMMLV (Ley 100 Art. 20, as amended by Ley 797 de 2003, Art. 7, and Art. 27).
• Income-tax withholding (retención en la fuente): calculated monthly under ET Arts. 383 to 388.

Before any withholding rate applies, the salary is reduced to a taxable base, a step called depuración (literally, purification). Under Procedimiento 1, the method most employers use, the order is:

1. Start from the month's taxable labour payments.
2. Subtract the employee's mandatory health, pension and FSP contributions, which the law treats as non-taxable income.
3. Subtract the deductions the employee has documented under ET Art. 387: up to 10% of gross for dependants (capped at 32 UVT a month), mortgage interest, and prepaid health plans (capped at 16 UVT a month).
4. Subtract 25% of what remains as exempt labour income, capped at 790 UVT a year (about 65.8 UVT, or COP 3.45 million, a month).
5. Check the global limit: deductions plus exempt income cannot exceed 40% of the amount from step 2 (ET Art. 388) or 1,340 UVT a year (Decreto 1625 de 2016, Art. 1.2.4.1.6).
6. Convert the base to UVT and apply the Art. 383 table.

The Art. 383 table is progressive. Nothing is withheld on a base up to 95 UVT (COP 4,975,530 in 2026). From 95 to 150 UVT the marginal rate is 19%, and from 150 to 360 UVT it is 28% plus 10 UVT. The higher bands are taxed at 33%, 35% and 37%, and the top rate is 39% above 2,300 UVT.

Procedimiento 2 is the alternative. Every June and December the employer calculates a fixed withholding percentage for each employee from the previous twelve months' pay, then applies that percentage for the next six months. Under Procedimiento 1, withholding on the prima de servicios is calculated separately from the monthly salary.

In practice, a salaried employee with no documented deductions has nothing withheld until gross pay reaches roughly COP 7.3 million a month. The contributions and the 25% exemption exclude close to a third of gross before the table applies.

Employer contributions: social security, parafiscales and the Article 114-1 exoneration

The employer pays the following contributions in addition to the salary. None of them is withheld from the employee's pay.

SENA, ICBF and the caja are the parafiscales: payroll levies that fund training, child welfare and the family compensation funds. The compensation funds pay family subsidies and run recreation, housing and credit programmes for workers.

The ARL rate depends on the risk class of the work under Decreto 1295 de 1994, Art. 26. The initial rates set by Decreto 1772 de 1994, Art. 13, are: class I (office and administrative work) 0.522%; class II 1.044%; class III 2.436%; class IV 4.350%; class V (mining, heavy construction, security) 6.960%. The ARL, the occupational-risk insurer, can later reassign an employer within a minimum-to-maximum band for its class based on its accident record. An employer with more than one work centre can have a different risk class for each (Decreto 1295 de 1994, Art. 25).

The Article 114-1 exoneration is the largest single reduction in employer costs in Colombia. Under ET Art. 114-1, companies and other legal entities that file income-tax returns do not pay the employer's 8.5% health contribution, the 2% SENA levy or the 3% ICBF levy for each employee earning less than 10 SMMLV. Individual employers qualify if they employ at least two workers. Entities in the special tax regime for non-profits do not qualify. Pension, ARL and the caja are always due.

The exoneration applies employee by employee, and the 10 SMMLV limit has no phase-out. At COP 17,509,050 a month, the full 13.5% applies to the whole salary: roughly COP 2.36 million a month more in employer contributions than for a colleague paid a few thousand pesos less. If I were reviewing a client's salary bands, the ones just above 10 SMMLV are where I would look first. Every salario integral employee earns at least 13 SMMLV and is therefore outside the exoneration.

The 2024 pension reform: what changes on 1 April 2027

Ley 2381 de 2024 reforms the pension system. The law was due to start on 1 July 2025, but in June 2025 the Constitutional Court suspended the reform (Auto 841 de 2025) over a defect in the final debate in the House of Representatives. On 25 August 2026, in Sentencia C-264 de 2026, the Court upheld most of the law on procedural grounds and ruled that the upheld provisions take effect on 1 April 2027.

The Court returned pending amendment proposals on nine articles, and one proposed new article, to the House for a fresh vote within 30 business days. The returned text includes the whole of the article that reduces by 50 per child the weeks of contributions required of women. On 22 September 2026 Colpensiones asked the Court to move the start date to 1 April 2028; as of mid-October 2026 the Court had requested information from the government and Colpensiones and had not decided. Until the reform takes effect, the Ley 100 rules described above apply.

The reform's payroll rules from April 2027:

• The total pension rate stays at 16%, split 12% employer and 4% employee.
• Contributions on earnings up to 2.3 SMMLV go to Colpensiones, and the part above that threshold goes to an individual-savings administrator (Ley 2381, Art. 23). An employee earning more than 2.3 SMMLV contributes to both funds at the same total rate. Employees in the transition regime (women with 750 weeks and men with 900 weeks of contributions when the reform takes effect) stay under the current rules.
• Solidarity-fund rates increase. Employees with an IBC from 4 to 7 SMMLV pay 1.5% instead of 1%, and 1.8% from 7 to 11 SMMLV, with further bands above.

The ruling examined only the voting procedure. Other pending challenges to the law are suspended until 1 April 2027, so the reform could still be modified after it takes effect.

Prestaciones sociales: prima, cesantías, interest, vacation and dotación

The prestaciones sociales are statutory benefits an employer owes in addition to salary. Prestaciones are not contributions and are not reported through PILA (the monthly contributions return described below); the employer pays them directly, or into the employee's fund, on fixed dates. Counting vacation, the prestaciones add about 21.8% to an ordinary salary.

• Prima de servicios (service bonus): 30 days of salary a year, paid in two halves: by 30 June and within the first 20 days of December (CST Art. 306). Employees who worked part of a semester receive a proportional amount.
• Cesantías (severance savings): one month of salary per year of service (CST Art. 249), deposited into the employee's chosen severance fund before 15 February of the following year. A late deposit costs one day's salary for each day of delay (Ley 50 de 1990, Art. 99).
• Intereses sobre cesantías (interest on severance): 12% a year on the cesantías balance at 31 December, paid directly to the employee in January (Ley 52 de 1975).
• Vacaciones (vacation): 15 business days of paid leave per year of service (CST Art. 186), paid at the ordinary salary.
• Dotación (work clothing): one pair of work shoes and one work outfit, delivered on 30 April, 31 August and 20 December, to employees earning up to 2 SMMLV with more than three months of service (CST Arts. 230 and 232).

Employees earning up to 2 SMMLV also receive a transport allowance of COP 249,095 a month for commuting. The allowance is not salary, so it is excluded from the IBC and from vacation pay, but it is included in the base for prima and cesantías.

An employee on the minimum wage receives COP 1,750,905 in salary and COP 249,095 in transport allowance, COP 2,000,000 in total. Health and pension are calculated on COP 1,750,905 only. The June prima for a full semester is (COP 1,750,905 + COP 249,095) × 180 ÷ 360 = **COP 1,000,000**, with the allowance included.

Worked example: gross to net and total employer cost on COP 8,000,000

Take an employee on an ordinary monthly salary of COP 8,000,000, in an office job (ARL class I), employed by a company that qualifies for the Art. 114-1 exoneration. The employee reports no dependants, mortgage or prepaid health plan. At 4.57 SMMLV, the salary is below the exoneration limit and above both the solidarity-fund threshold and the transport-allowance limit, so neither the allowance nor dotación applies.

Step 1: employee contributions. The IBC is the full COP 8,000,000.

• Health: 8,000,000 × 4% = COP 320,000
• Pension: 8,000,000 × 4% = COP 320,000
• Solidarity fund: 8,000,000 × 1% = COP 80,000
• Total: COP 720,000

Step 2: the withholding base.

• Gross less contributions: 8,000,000 − 720,000 = COP 7,280,000
• 25% exempt income: 7,280,000 × 25% = COP 1,820,000 (below the monthly cap of about COP 3.45 million and below the 40% limit of COP 2,912,000)
• Taxable base: 7,280,000 − 1,820,000 = COP 5,460,000, which is 104.25 UVT

Step 3: withholding. The base is in the 19% band, so only the amount above 95 UVT (COP 4,975,530) is taxed: (5,460,000 − 4,975,530) × 19% = 484,470 × 19% = COP 92,049.

Step 4: net pay. 8,000,000 − 720,000 − 92,049 = COP 7,187,951.

Step 5: employer contributions. Each contribution paid through PILA is rounded up to the next multiple of COP 100.

• Health: COP 0 (exonerated)
• Pension: 8,000,000 × 12% = COP 960,000
• ARL class I: 8,000,000 × 0.522% = COP 41,760, rounded to COP 41,800
• Caja de compensación: 8,000,000 × 4% = COP 320,000
• SENA and ICBF: COP 0 (exonerated)
• Total: COP 1,321,800 a month

Step 6: the annual cost.

The cash cost is 1.34 times the salary. Vacation adds no cash when the employee takes the leave, because the salary simply continues. Untaken days are paid out at termination, so employers usually provision half a month's salary a year for vacation. With that COP 4,000,000 provision, the cost is COP 132,821,600, or 1.38 times salary.

For the same employee at an employer that does not qualify for the exoneration, such as a non-profit in the special tax regime, health (COP 680,000), SENA (COP 160,000) and ICBF (COP 240,000) add COP 1,080,000 a month, or COP 12,960,000 a year. The salary is identical; the cost is about 10% higher.

Monthly filings for payroll in Colombia: PILA, Form 350 and nómina electrónica

A Colombian employer makes three filings every month, in three different systems and on three different calendars, and the figures in all three must agree.

PILA (Planilla Integrada de Liquidación de Aportes) is the single form through which the employer reports and pays health, pension, ARL, the caja, SENA and ICBF, together with the employee's withheld health, pension and FSP contributions. The employer submits one form (planilla) and one payment through an authorised operator, which distributes the money to each fund. Each employee's record shows the IBC, the days contributed, and change codes (novedades) for hires, terminations, leave, incapacity and salary changes.

PILA payment is due in the following month, on a business day set by the last two digits of the employer's tax ID (NIT). The range runs from the 2nd business day for NITs ending 00 to 07 to the 16th business day for 94 to 99 (Decreto 780 de 2016, Art. 3.2.2.1, as substituted by Decreto 1990 de 2016). Late payment accrues interest, and the UGPP cross-checks PILA against the employer's tax filings.

Form 350 (declaración de retención en la fuente) reports and pays the income tax withheld from employees, together with any other withholding the company made that month. The return and the payment go together: a return filed without payment has no legal effect under ET Art. 580-1. The due date is set by the last digit of the NIT in DIAN's annual tax calendar; for January 2026 withholding, the dates ran from 10 to 23 February. Employers also issue each employee an annual certificate of income and withholding (Form 220) by the last business day of March (Decreto 1625 de 2016, Art. 1.6.1.13.2.40).

Nómina electrónica (documento soporte de pago de nómina electrónica) is an XML document per employee, sent to the tax authority (DIAN), listing every earning and deduction for the month. Resolución DIAN 000013 de 2021, Art. 8 (now compiled as Art. 1.5.3.4.1.1 of Resolución DIAN 000227 de 2025), requires transmission within the first ten days of the month following the payment. The resolution does not say which kind of days; DIAN reads them as business days under Art. 62 of Ley 4 de 1913 (Oficio DIAN 901476 de 2022). No payment is due with the document. The nómina electrónica supports the deduction of payroll costs in the employer's income-tax return, so payroll that is never transmitted is at risk of losing that deduction.

The Colombian payroll calendar: pay periods and annual dates

Salary is paid at the end of each period: at most monthly for salaried staff and weekly for day-rate workers (CST Art. 134). Many employers pay in two fortnightly instalments (quincenas), but PILA, Form 350 and the nómina electrónica are monthly, filed in the following month.

The annual dates:

• 1 January: new minimum wage, transport allowance and UVT take effect.
• 31 January: interest on cesantías paid to employees.
• Before 15 February: cesantías deposited in each employee's fund.
• Last business day of March: Form 220 certificates issued to employees.
• 30 April: first dotación delivery.
• 30 June: first half of the prima de servicios.
• 1 July: Sunday and holiday surcharge increases under Ley 2466 (90% in 2026, 100% from 2027).
• 31 August: second dotación delivery.
• 20 December: second half of the prima and third dotación delivery.
• December: the next year's minimum wage is announced, by agreement in the wage commission or, failing agreement, by decree.

2027 adds one date: 1 April 2027, when the pension reform is scheduled to take effect and the solidarity-fund rates change, unless the Constitutional Court grants Colpensiones' request to defer it.

Summary

Colombia payroll in 2026 is based on a COP 1,750,905 minimum wage that is still before the Consejo de Estado, a COP 249,095 transport allowance up to 2 SMMLV, and a UVT of COP 52,374. Employees pay 4% health, 4% pension and, from 4 SMMLV, 1% to the solidarity fund; income tax is withheld on the depuración base. Employers pay 12% pension, ARL and 4% to the caja for every employee, plus 8.5% health, 2% SENA and 3% ICBF where the Art. 114-1 exoneration does not apply. The prestaciones add about 21.8% to salary. An employee on COP 8,000,000 takes home COP 7,187,951 and costs about 1.34 times salary in cash. PILA, Form 350 and the nómina electrónica must reconcile every month.

Almost every figure in this guide is reset each January, and the minimum wage and the pension reform both changed legal status in court this year. Flux applies the current values, and every threshold derived from them, on every pay run, so partners can give their Colombian clients payroll that matches the law in force that month.