COLOMBIA: An Introduction to Labour & Employment
The year 2020 generated a turning point at the global level, which put the economy, the markets and the resilience of human beings to the test and generated profound social, economic and labour changes. Colombia was no exception.
With an economic contraction of 6.8% for the previous year, the country entered a recession that it had not experienced during its recent history. That is why 2021, although a year of uncertainty, will mark the beginning of a path to recovery in which the lessons learned will determine the strategies to achieve said recovery.
Although Colombia began its vaccination plan slowly, it has managed to implement it efficiently, which in turn has allowed it to initiate an economic reactivation process in order to overcome the crisis caused by COVID-19. The latter was exacerbated by the civil unrest in this year's second quarter, which exposed the country's structural problems that it had as a society and that came to the fore with the pandemic.
After the implementation of biosafety protocols, modifications of work schemes, new shift implementations, adjustments in office facilities and the permanent monitoring of contagion, companies and the country in general have been launched into the recuperation of daily normal life, with the intention being to achieve step-by-step economic growth. The economic growth outlook for this year is 5%, if the new Coronavirus Delta variant does not generate a new epidemiological peak in October or September, which will make the country introduce a new mandatory lockdown.
The most important challenge for Colombia is the generation of economic growth in order to decrease unemployment, the rate of which stood at 14.4% in July 2021. To reduce this figure, the national government is implementing, as part of a shock plan, strategies to generate formal employment for the young and the continuation of assistance policies for companies, such as the payroll and legal bonus subsidies, among others.
While COVID-19 has been a strange and painful phenomenon, it has also become a scenario for opportunity. One of the most important examples is in labour law, which has come to the fore in relation to the other branches of law because of its greater leverage when overcoming the crisis. Contractual labour relations, human resources, human capital and the conditions in which labour relations take place have become a topic of public interest, and have taken over both legislative and media agendas.
Today, the country is aware of the need to reform labour law in order to acknowledge new forms of organisation, productive work, the implementation of information technologies in the ordinary course of labour relations, new models and the 360-degree turn that the IT-based service model has taken, as well as the social security payment system based on hours, among others. Our labour statute was passed in the 1950s, when a different business model operated that was based on rigid organisational schemes and a different relations model in which the employer had greater control over the productive processes. In a ruling this year (Ruling SL 1944-2021), the Labour Appeals Court of the Supreme Court of Justice urged Congress to update labour legislation because it is not adequately aligned with real labour relations in Colombia, both individually and collectively.
Although this structural task is pending, the truth is that the pandemic gave rise to an unusual amount of legislative activity in this field, with the enactment of various regulatory provisions. The opportunity to generate a consistent and easy-to-implement legal framework that would promote a strong business recovery, however, has unfortunately been lost.
Among these provisions, it is worth mentioning, for example, Act 2088 on Work at Home and Act 2121 on Remote Work. Although legislators took a step towards recognising the evolution of the digital age which has become central to setting the pace in some labour relations, the two foregoing provisions create a series of unnecessary requirements, burdens and conditions on the parties' ability to define the best conditions for developing an employment contract.
Another recently issued regulation is Act 2101 of 2021, which shortened the working day, and which should be gradually implemented from 48 hours of work a week to 42 hours over the course of five years.
Another relevant change that took place during this year is Act 2114 of 2021, which extends paternity leave to two weeks, creates shared leave between parents and creates flexible part-time parental leave. It also authorises an extension to double one's leave in exchange for a part-time job during leave. The aim of this law is for men to have greater and improved participation in unpaid activities at home, as well as to promote gender equality in the workplace.
Continuing with the recent labour transformations in gender equality, it is worth highlighting Ruling C 038 of 2021, issued by the Constitutional Court, which declared a provision of the Labour Code unenforceable. This provision established that among the minimum guidelines that internal labour regulations had to have was the possibility for companies to regulate the tasks that women should not perform. The Court, correctly, deemed this provision discriminatory, since it promoted harmful gender-based behaviours, thus generating unjustified asymmetries in labour relations through alleged conditions of weakness.
In the judicial sphere, it seems that technology is here to stay. Last year, a decree was issued which established that the measures to implement information technologies in judicial proceedings, streamline processes and make the justice service more flexible, had to be adopted in two years. This has undoubtedly been one of the most important legal revolutions in the country. A challenge that nobody in 2020 dared to say was achievable. Today, after an immense effort, it is a reality and there are more successes than mistakes, to the point that officials of the judicial branch have requested the Superior Council of the Judiciary to implement judicial practice in the online virtual sphere permanently, as it streamlines and facilitates the court process, reduces costs and increases access to justice. The country is still slowly advancing on this front, but the most important thing has already been achieved, which is to understand that online work works and that its implementation generates many advantages. Now we must implement, without delay, the strategic plan for digital transformation that Colombia hatched a long time ago.
Regarding collective bargaining, the pandemic affected the possibility of conducting face-to-face negotiations, however, so far this year a hybrid model has been resumed and the adoption of information technologies has been implemented in order for trade unions to continue to uphold their rights within the framework of collective bargaining.
It is important to highlight the enormous effort made by the Colombian government in sustaining public policies that support formal employment via a new payroll subsidy programme that promotes job creation for the young; this is a joint initiative between the national government and Bogotá's mayor.
President Iván Duque has one last year of government left. We are in a pre-election year, both for the presidential and congressional campaigns, a circumstance that will make the situation for companies that want to resume growing much more complex. In addition, a tax reform bill is about to be approved by Congress that, in general terms, includes the agreement of the private sector, and which will levy a greater tax burden in order to finance the economic recovery plan that the country requires.
With this brief description, we intend to present a broad overview of the Colombian labour market and how from our field of action as lawyers, we must render legal advice and support the national productive sector in order to assist clients to make good decisions. This in turn will help the economic recovery and lead companies to have a greater capacity in the generation of formal employment, so the economy will grow and the country's inequality will decrease, also reducing the poverty rates that afflict us today.
Juan Fernando Escandón García
Partner