US vs Colombia dismissal: at-will meets the article 64 indemnity

Across most US states the default relationship is terminable at will, which means an employer may let someone go on short or no warning, for a good reason, a poor one or none, provided the reason is not itself illegal. The limits come from outside the at-will rule itself, from anti-discrimination and anti-retaliation statutes, from public policy exceptions recognised by state courts, and from any contract or collective agreement that promises more.

Severance in the US is therefore mostly a matter of choice. Companies pay it to secure a release of claims, to protect their reputation or because a policy or contract says so, but in the ordinary case no federal statute sets an amount. Notice obligations exist mainly for large layoffs, not for individual terminations.

Many US employers also rely on short written separation agreements, offering a sum in exchange for a release, and treat the amount as a commercial judgement made at the time. The figure varies by seniority, by state and by how much litigation risk the company sees.

That model shapes how US managers plan headcount: a role can be removed quickly, and the cost of doing so is something the company negotiates. Neither assumption holds for a Colombian employee, even one who works entirely for a US team.

A Colombian employer can end an indefinite contract in only two ways on its own initiative: with a just cause from the closed list in the Labour Code, or without one by paying the indemnity set by statute. There is no third route of the at-will kind.

The just causes in article 62(A) of the Código Sustantivo del Trabajo run to 15 items. Among them: lying with forged papers at hiring, assault or grave misconduct, deliberate damage, leaking secrets, a serious breach of the worker’s obligations, more than 30 days in detention, under-performance that persists after a warning, chronic failure to do the work, and an illness unrelated to work that lasts beyond 180 days. The list is exhaustive; a reason that is not on it is not a just cause, however sound commercially.

Restructuring, a cancelled project or a change of strategy are therefore dismissals without just cause in Colombian terms. They are allowed, but they carry the indemnity. Our article on termination in Colombia covers the just-cause route in more depth, including the evidence an employer needs.

On a permanent contract two inputs set the amount: years of service, and which side of the 10 SMMLV line (COP 17,509,050 a month this year) the pay falls on. Ley 789 de 2002 gave article 64 its current table.

Suppose a developer earning COP 8,000,000 monthly is let go, with no just cause, on their third anniversary. Year one is worth 30 days, years two and three 20 days each, so 70 days are owed. On a daily rate of COP 266,667 that comes to about COP 18,666,667. In a US at-will setting, the same exit could cost nothing in statutory terms.

Fixed-term and project contracts follow different rules. Cut a fixed-term contract short with no just cause and the employer owes every remaining salary payment up to the agreed end date; for a project contract, the salary for the time left on the project, with a minimum of 15 days. A shrinking group, those already ten years in post by 27 December 2002, still benefits from the pre-2002 scale.

Two practical points affect the daily rate. The calculation uses the salary in force at the time of dismissal, and where pay includes regular variable elements, such as commissions or habitual overtime, the base may need averaging, so the exact figure depends on the pay history. Anyone on a salario integral earns at least 13 SMMLV by definition, so the upper band of the table governs their case.

An employee who walks out because the employer gave them just cause, unpaid wages being the classic case, collects that indemnity too. A US habit of making a role so uncomfortable that the person leaves does not avoid the cost in Colombia; it can trigger it.

Notice in Colombia depends on who ends the contract and on what ground. The rules are short, but they do not resemble the two-week convention common in US practice.

• Staff resigning from a permanent role owe the employer thirty calendar days’ warning; any clause fining them for leaving early is unenforceable.
• Where the employer’s own conduct justified the resignation, the employee may leave at once.
• An employer relying on poor performance, systematic non-compliance, incompetence, prolonged illness and the other causes in numerals 9 to 15 of article 62(A) must give at least 15 days’ notice.
• For the remaining just causes, such as violence or dishonesty, no notice is required.
• Fixed terms roll over for an identical period unless one side sends written notice of non-renewal 30 days or more before the end date.
• Inside a written trial period, which may last 2 months at most, the contract can be ended by employer or employee with neither notice nor indemnity.

The fixed-term rule catches US managers out more than any other. A contract left to run past its end date without a non-renewal letter is renewed, and ending it a week later is an early termination that costs the salary for the whole new term. Our guide to employment contracts in Colombia explains the renewal limits introduced in 2025.

For several groups, paying the indemnity is not enough: the Ministry of Labour must authorise the dismissal first, and dismissing without that authorisation adds a further indemnity. This reinforced job protection (estabilidad laboral reforzada) has no direct US equivalent.

A woman may not be dismissed for pregnancy or breastfeeding without prior authorisation based on a just cause. The law assumes discrimination if the dismissal falls in pregnancy or the following 18 weeks, and skipping the authorisation adds 60 days’ pay to whatever else is due. A dismissal notified during maternity leave has no effect at all. Expectant fathers share that shield, including the 60-day payment, when the mother has no formal employment of her own.

Ley 361 de 1997 protects workers with a disability in a similar way: no dismissal on that ground without official authorisation, and 180 days’ pay as an extra indemnity if it happens anyway. Illness interacts with the just-cause list too: a non-occupational illness becomes a cause only after 180 days without cure, with 15 days’ notice. How the months of absence are paid before that point is explained in sick pay in Colombia.

Every exit, friendly or not, ends with a liquidación: pay up to the final day, the semester’s share of prima, the year’s cesantías with interest, and cash for vacation not taken. Paying it late is expensive. Article 65 charges a full day’s pay for every day it is late, capped at two years, after which interest takes over; the rule protects anyone paid above the minimum wage.

Contributions must be up to date as well. A further trap: if the last quarter’s contributions and levies are unpaid when the contract ends, the termination is suspended in effect until the employer pays them. Withholding tax applies to an indemnity at the employee’s average rate.

Timing the settlement is a matter of days, not weeks. Prepare the calculation before the last working day, check it against the payroll record, and pay it with the final salary. Any cesantías balance not yet deposited in the fund for the current year is paid to the employee directly as part of the settlement.

Process matters before the decision, not only after it. The 2025 reform turned discipline into a formal file: charges in writing, the evidence disclosed, and five days or more for the employee’s answer. Where a dismissal rests on conduct, hearing the worker first is the prudent course. On request, the employee is also entitled to a certificate stating length of service, the job and the salary. Claims can be brought for 3 years from when an obligation fell due. The full text is in the official Labour Code compilation.

US teams new to Colombia will find the hiring route itself in our overview for American employers.

A US company with Colombian staff needs a separate exit playbook, built on the assumption that every termination without just cause has a known statutory price and a fixed set of documents. Mutual agreement is one of the ways a contract can end under article 61, and a negotiated exit is common, but it is negotiated on top of what the law already guarantees, not instead of it.

• Budget the article 64 indemnity for each role at the start, alongside salary.
• Check for protected status, such as pregnancy, a spouse’s or companion’s pregnancy, or a disability, before any decision is communicated.
• Diarise fixed-term expiry dates at least 30 days ahead.
• Have the final settlement calculated before the last day, so it can be paid on time.
• Keep evidence and a written record of any hearing when relying on a just cause.

Communication matters too. A US-style same-day exit, with access cut and a box of belongings, sits badly with a process that may need a hearing, a notice period or a Ministry decision first. Agree internally who speaks to the employee, in which language and on what date, and keep the Colombian steps in that order.

Where an EOR employs your Colombian staff, you decide whether a role continues and the EOR runs the Colombian procedure. Employer of Record Colombia calculates the indemnity and the liquidación, prepares the documents and keeps the contribution record clean. For the full division of labour between client and EOR, read what an EOR covers in Colombia.

Q01Can a Colombian employer let someone go at will, US style?+

A.No. There is no Colombian at-will. Ending a permanent contract needs one of the 15 just causes in the Labour Code, or else payment of the article 64 indemnity.

Q02How much severance does a Colombian employee get if dismissed without cause?+

A.Under 10 SMMLV the table gives 30 days’ pay for year one, then 20 per year, prorated for part-years. From 10 minimum wages, 20 days and then 15 days a year. Fixed-term contracts pay the salary for the remaining term.

Q03Does a Colombian employee have to give notice when resigning?+

A.Yes: a month, counted in calendar days, when leaving a permanent contract. A contractual penalty for skipping it would be void, and someone resigning because of the employer’s own fault can go immediately.

Q04Can I dismiss a pregnant employee in Colombia?+

A.Only with prior Ministry of Labour authorisation based on a just cause. Skip that step and 60 days’ pay is added to the bill; notice served while she is on maternity leave is simply ineffective.

Q05What is the liquidación?+

A.It is the closing payment on any Colombian contract, covering unpaid days, the prestaciones accrued so far and unused vacation. Each day of lateness costs a day’s wage, for as long as two years.