Colombia’s New Labor Reform: Key Changes and Implications

Colombia has taken a major step toward reshaping its labor landscape with the recent approval of President Gustavo Petro’s labor reform. The legislation, passed by Congress in August 2025, introduces sweeping measures aimed at strengthening workers’ rights, improving job security, and expanding protections to groups historically excluded from the formal labor market.

While hailed by unions and social organizations as a historic victory for employees, the reform has raised concerns among business associations, particularly small and medium-sized enterprises, who anticipate increased labor costs. Several of the provisions will come into effect immediately after presidential sanction, while others will be implemented gradually over the coming years.

Below are the most relevant changes and their broader implications:

1. Stronger Job Security through Permanent Contracts

The reform establishes open-ended contracts as the default form of employment. Fixed-term contracts are still permitted but limited to a maximum duration of four years, even in cases of specific projects or temporary work. This shift is designed to curb the excessive use of short-term agreements, which have long been criticized for creating precarious conditions for Colombian workers.

2. Redefined Night and Holiday Pay

Significant adjustments have been made to overtime and holiday compensation.

• Night shifts: The night work period will now begin at 7:00 p.m. instead of 9:00 p.m., entitling workers to a 35% surcharge two hours earlier than before. This measure will come into force six months after the law is enacted.
• Sundays and holidays: Payment for work on these days will increase progressively from 80% (2025) to 90% (2026), and eventually 100% (2027) above the ordinary salary rate. The reform thereby restores the original full compensation that had been reduced in previous decades.

3. Reduced Workweek and Limits on Overtime

The maximum legal workweek is now 42 hours, down from the previous 44, to be distributed over five or six days, ensuring one mandatory day of rest. Daily shifts may not exceed eight hours, and overtime is capped at two hours per day and 12 per week. This brings Colombia closer to international labor standards and responds to long-standing demands from unions to reduce excessive working hours.

4. New Paid Leave Provisions

In addition to existing entitlements, workers will now benefit from new categories of paid leave. Employees may take time off for medical appointments with specialists (including treatments for conditions such as endometriosis), urgent healthcare needs, and to attend school-related obligations. These measures aim to support work-life balance and address issues of gender equity in the workplace.

5. Protection and Inclusion of Vulnerable Workers

A central objective of the reform is the formalization of vulnerable and informal labor groups:

• Domestic workers: Employers must formalize domestic service with written contracts registered in the official social security system.
• Platform workers (e.g., delivery apps like Rappi): Workers may operate as either employees or independent contractors. In the latter case, platforms must cover 60% of health and pension contributions, plus 100% of workplace risk insurance.
• Apprentices and medical interns: Apprentices under the National Training Service (SENA) will now receive 75% of the minimum wage during their academic phase and 100% during their practical phase, with full social security coverage. Medical interns, who had traditionally gone unpaid, will now receive at least the minimum wage and benefits.
• Workers with disabilities: Companies must meet specific hiring quotas to integrate persons with disabilities into their workforce.
• Rural and female workers: New policies will guarantee recognition and pay for rural women’s contributions in agriculture, caregiving, and food production.

6. Other Notable Provisions

The reform also includes:

• A day of paid leave every six months for employees who commute by bicycle.
• Authorization for service animals or emotional support animals in workplaces with proper certification.
• A government-backed program, Crea Empleo, to subsidize employers who hire women, young people, and older adults while unemployment remains above the OECD average.
• Measures to protect workers from automation-related job losses, requiring the state to design policies to manage technological disruption.
• The formal inclusion of mothers and school meal workers under the Colombian Family Welfare Institute and Ministry of Education, respectively.

Challenges and Outlook

While the reform signals a profound cultural and economic shift, employers warn of higher labor costs that could impact competitiveness, particularly in sectors such as hospitality, agriculture, and retail. Business associations predict that companies may be forced to increase consumer prices to offset these rising expenses.

According to Chaux Jaramillo Abogados, “the changes introduced by the reform show a promising outlook for workers. Although some provisions will be phased in over several years, certain industries have already indicated that price adjustments will be necessary to counterbalance the additional hiring costs.”

For workers, however, the law represents a significant expansion of rights, protections, and benefits, and positions Colombia closer to international labor standards. Whether these advances will successfully balance social justice with economic sustainability will depend on careful implementation and monitoring in the years ahead.