Severances in Colombia: How they are calculated and key points every worker should know
Severances are equivalent to one month's salary per year worked and are deposited in authorized funds. Photo: Istock
TL;DR
- Severances function as a mandatory savings fund for workers, primarily for unemployment, education, or housing.
- The calculation is based on the annual salary and days worked: (Base Salary x Days Worked) / 360.
- Recent legislation (Law 2466 of 2025) allows for monthly payment agreements of interest on severances (1%) and early monthly consignments (8.33% of salary).
- Workers can use severances for unemployment, housing purchase/improvement, or education, provided they meet specific legal requirements and provide supporting documents.
- Employers must consign severances to the chosen fund by February 14th of the following year; failure to do so incurs penalties such as fines or late interest.
- Interest on severances (12% annually) must be paid directly to the worker by January 31st, unless a written agreement for monthly payment exists.