Colombia Severance Pay Calculator
Calculate liquidación (cesantías, interest, prima, vacaciones) and indemnización for Colombian employees. Updated with 2026 SMMLV.
Colombian Severance Pay Explained
When employment ends in Colombia, the employer must pay a liquidación that includes several mandatory components. If the termination is without just cause, an additional indemnización may apply.
1. Cesantías (Severance Savings)
Cesantías are a mandatory savings benefit equivalent to one month's salary per year of service. The employer must deposit them into a Fondo de Cesantías by February 14 each year. Upon termination, any undeposited cesantías for the current period are paid directly to the employee. The formula is: base salary × days worked ÷ 360.
2. Intereses sobre Cesantías (Interest on Severance)
Employers must pay 12% annual interest on accumulated cesantías, due by January 31 each year. At termination, proportional interest is calculated as: cesantías × days worked × 12% ÷ 360. Late payment triggers a penalty of one day's salary per day of delay.
3. Prima de Servicios (Service Bonus)
The prima is a mandatory bonus equal to one month's salary per year, paid in two installments: by June 30 and December 20. Upon termination, the proportional amount for the current semester is included in the liquidación. The formula mirrors cesantías: base salary × days worked ÷ 360.
4. Vacaciones (Vacation Pay)
Colombian employees earn 15 working days of paid vacation per year. Upon termination, unused vacation is compensated. Unlike other components, vacation pay is calculated on the base salary only (no transport allowance): salary × days worked ÷ 720.
5. Indemnización por Despido (Dismissal Indemnity)
Indemnización is only owed when the employer terminates without just cause or when the worker terminates due to employer fault. The amount depends on the contract type, salary level, and tenure. For indefinite contracts, the law distinguishes between employees earning above or below 10 SMMLV.
Indemnización by Salary Level
For indefinite contracts terminated without just cause, the indemnity formula depends on whether the employee earns above or below 10 times the minimum wage.
| Component | < 10 SMMLV ($ 17.509.050) | ≥ 10 SMMLV ($ 17.509.050) |
|---|---|---|
| First Year | 30 days of salary | 20 days of salary |
| Each Additional Year | 20 days of salary per year | 15 days of salary per year |
| Fractional Year | Proportional (20 days × months/12) | Proportional (15 days × months/12) |
| Legal Basis | Art. 64, CST | Art. 64, CST |
2026 SMMLV: COP 1.750.905 per month. The high-salary threshold (10×) is $ 17.509.050. The transport allowance is $ 249.095, applicable to employees earning up to $ 3.501.810.
Colombia Severance Pay FAQ
Common questions about liquidación, cesantías, and indemnización.
Cesantías are a mandatory savings benefit equal to one month's salary per year of service, deposited annually to a pension fund by February 14. Indemnización is a penalty payment the employer owes only when terminating without just cause. Every employee earns cesantías; not every employee receives indemnización.
Under Article 99 of Law 50/1990, if the employer fails to deposit cesantías to the fund by February 14, the employee is owed one day of salary for each day of delay (sanción moratoria). This penalty accrues until the deposit is made.
Yes. If the employee earns up to 2 SMMLV (COP 3,501,810 in 2026), the transport allowance (COP 249,095) is added to the base salary for calculating cesantías, interest on cesantías, and prima de servicios. It is NOT included in vacation pay or indemnización.
For fixed-term (término fijo) and project-based (obra o labor) contracts terminated without cause before their end date, the indemnity equals the salary the employee would have earned for the remaining contract period. There is no day-based formula — it is simply the remaining months multiplied by the monthly salary.
Article 62 of the Código Sustantivo del Trabajo lists just cause grounds including: systematic underperformance after written warnings, serious misconduct, criminal acts, revealing trade secrets, substance abuse on the job, and more than 3 consecutive unexcused absences. The employer must follow a disciplinary hearing (descargos) process.
Cesantías and their interest are generally exempt from income tax up to 2,880 UVT annually when withdrawn for housing or education. Indemnización is taxable as employment income, though the first 7,500 UVT portion is exempt. Prima and vacation pay are subject to standard payroll retention thresholds.
The 2026 SMMLV is COP 1,750,905 (a 9.53% increase), and the transport allowance is COP 249,095. This raises the threshold for transport allowance eligibility to COP 3,501,810 and the high-salary indemnity threshold to COP 17,509,050 (10 SMMLV). All calculations in this tool use the 2026 figures.
