Colombia Severance Pay Calculator
Work out what an employee is owed when employment ends in Colombia. Enter the salary, length of service, termination month, contract type and reason for termination to see the liquidación (cesantías, interest, prima and vacation pay) and any indemnización, using the latest rates.
- Indemnity: Art. 64 CST
- Just cause: Art. 62 CST
- Late cesantías: Art. 99, Law 50/1990
Employee Details
< 10 SMMLV (COP 17,509,050) — Standard indemnity formula. For typical pay by role, see average salaries in Colombia.
Employment ends on the last day of this month. Cesantías and interest are owed for this calendar year, the prima for this semester.
Contrato a término indefinido
Indemnity applies
Applies when salary ≤ 2 SMMLV (COP 3,501,810)
2026 rates: SMMLV COP 1,750,905, transport allowance COP 249,095, high-salary threshold COP 17,509,050 (10 SMMLV). Service is counted on a 360-day year. For estimation only.
Severance Estimate
Indefinite contract, 3y 6m of service, ending September
- Cesantías
- Interest
- Prima
- Vacaciones
- Indemnización
| CesantíasBase × 270 days this year ÷ 360 | COP 3,750,000 |
|---|---|
| Interest on Cesantías12% a year, for 270 days | COP 337,500 |
| Prima de ServiciosBase × 90 days this semester ÷ 360 | COP 1,250,000 |
| VacacionesSalary × 180 days since the anniversary ÷ 720 | COP 1,250,000 |
| Liquidación | COP 6,587,500 |
| Dismissal Indemnity80 days of salary | COP 13,333,333 |
| Total payout | COP 19,920,833 |
What the employer owes at termination, with the 2026 SMMLV of COP 1,750,905. Cesantías for earlier years are already in the employee’s Fondo de Cesantías. Vacation assumes the leave for each completed year of service was taken. See how each figure is worked out.
- Days worked this year, 360-day year
- 270
- One day of salary
- COP 166,667
Salary base and service
What each component is calculated on
| Monthly salary | COP 5,000,000 |
|---|---|
| Transport allowanceNot added above 2 SMMLV | — |
| Base for cesantías and prima | COP 5,000,000 |
| Base for vacation and indemnitySalary only | COP 5,000,000 |
The transport allowance counts toward cesantías, interest and prima when the salary is up to 2 SMMLV. It is not included in vacation pay or indemnización.
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- Indefinite-term contract under the Código Sustantivo del Trabajo and Law 2466 of 2025
- Payroll in COP, with EPS, pension fund, ARL and Caja de Compensación registration
- Cesantías deposited by February 14, interest paid by January 31, prima in June and December
How it is computed
How these numbers were worked out
Each figure above, computed from a monthly salary of COP 5,000,000 and 3 years 6 months of service ending in September, using the 2026 SMMLV.
Cesantías
- Days worked this year: from January 1 to the end of September, 9 months × 30 = 270 days.
- Base: the COP 5,000,000 salary. It is above 2 SMMLV (COP 3,501,810), so no transport allowance is added.
- COP 5,000,000 × 270 ÷ 360 = COP 3,750,000.
- Cesantías for earlier years were deposited in the employee’s Fondo de Cesantías each February 14. The employee withdraws them from the fund, so they are not part of this payout.
Source: Base salary × days worked ÷ 360. At termination the employer pays any cesantías not yet deposited directly (Law 50 of 1990, art. 99).
Interest on cesantías
- 12% a year on this year’s cesantías, pro-rated for the days worked this year:
- COP 3,750,000 × 270 × 12% ÷ 360 = COP 337,500.
- Paid with the final settlement. While employed, it is due by January 31 each year.
Source: 12% annual interest on cesantías (Law 52 of 1975). Unpaid interest is owed again as a penalty.
Prima de servicios
- One month’s salary per year, paid by semester, on the same base as cesantías.
- This semester: from July 1 to the end of September, 90 days.
- COP 5,000,000 × 90 ÷ 360 = COP 1,250,000.
- Earlier semesters were paid by June 30 and December 20.
Source: Prima de servicios: 30 days of salary per year, paid by June 30 and December 20 (CST art. 306).
Vacaciones
- 15 working days of paid vacation a year, on the salary only, without the transport allowance.
- Earned since the last work anniversary: 6 months × 30 = 180 days.
- COP 5,000,000 × 180 ÷ 720 = COP 1,250,000.
- This assumes the vacation for each completed year of service was taken. Each untaken vacation day from earlier years adds one day of salary, COP 166,667.
Source: 15 working days of paid vacation per year (CST art. 186), paid in cash pro rata at termination (Law 995 of 2005).
Indemnización
- Salary below 10 SMMLV (COP 17,509,050): 30 days for up to one year of service, plus 20 days for each year after the first, prorated for part of a year.
- One day of salary: COP 5,000,000 ÷ 30 = COP 166,667.
- Service after the first year: 2.5 years × 20 days = 50 days, on top of the first 30.
- Total: 80 days × COP 166,667 = COP 13,333,333.
Source: Art. 64, Código Sustantivo del Trabajo (CST).
Late deposit penalty
- If the employer misses the February 14 deposit, the employee is owed one day of salary for each day of delay (sanción moratoria).
- For this salary that is COP 166,667 a day.
- It accrues until the deposit is made.
Source: Article 99 of Law 50/1990.
How it works
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; earlier years stay in the fund, and the employee withdraws them from it. The formula is: base salary × days worked this year ÷ 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 on the current year's cesantías is calculated as: cesantías × days worked this year × 12% ÷ 360. An employer that does not pay the interest owes the same amount again as a penalty (Law 52 of 1975).
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 this semester ÷ 360.
Like Brazil's 13th salary, the prima is a 13th month bonus paid in two installments. To work out Brazil's, use our Brazil 13th salary calculator.
4. Vacaciones (Vacation Pay)
Colombian employees earn 15 working days of paid vacation per year. Upon termination, unused vacation is compensated in cash, in proportion to the time worked. Unlike other components, vacation pay is calculated on the base salary only (no transport allowance): salary × days of vacation not yet taken ÷ 720. The calculator assumes the leave for each completed year was taken and pays the vacation earned since the last work anniversary.
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. For fixed-term contracts it is the salary for the rest of the term, and for project-based contracts the salary for the rest of the work, never less than 15 days.
Severance works differently elsewhere in Latin America. In Peru, dismissal without cause triggers indemnity of 1.5 monthly salaries per year of service, capped at 12 months, and employers deposit CTS, a severance savings fund, twice a year. In Chile, termination for company needs carries severance of one month's salary per year of service, capped at 11 months, and in Argentina employees dismissed without just cause receive one month's salary for each year of service. Our guides to hiring through an Employer of Record in Peru, an Employer of Record in Chile and an Employer of Record in Argentina cover each country's termination rules.
Indemnity formulas
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 (COP 17,509,050) | ≥ 10 SMMLV (COP 17,509,050) |
|---|---|---|
| Up to 1 Year of Service | 30 days of salary | 20 days of salary |
| Each Year After the First | 20 more days of salary per year | 15 more days of salary per year |
| Part of a Year After the First | Prorated (20 days × months ÷ 12) | Prorated (15 days × months ÷ 12) |
| Legal Basis | Art. 64, CST | Art. 64, CST |
A salary of COP 5,000,000 is below 10 SMMLV, so the < 10 SMMLV column applies.
2026 SMMLV: COP 1,750,905 per month. The high-salary threshold (10×) is COP 17,509,050. The transport allowance is COP 249,095, applicable to employees earning up to COP 3,501,810.
To employ someone in Colombia without opening a local entity, an Employer of Record in Colombia calculates and deposits cesantías, pays the prima de servicios and handles termination compliance, including the liquidación.
More tools for hiring in Latin America and beyond
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 each year in the employee’s Fondo de Cesantías (severance 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. For a project-based contract the indemnity is never less than 15 days of salary.
Article 62 of the Código Sustantivo del Trabajo lists the just causes, including false certificates used to get hired, violence or serious indiscipline, intentional damage, criminal acts at work, revealing trade secrets, uncorrected poor performance, and any serious breach of the duties and prohibitions in articles 58 and 60, such as missing work without permission or coming to work drunk. No number of absences is set. For causes 9 to 15 the employer gives 15 days’ notice; the reason must be stated, and the worker heard first (descargos).
Cesantías and their interest are tax-exempt when the employee’s average monthly income over the last six months is up to 350 UVT (COP 18,330,900; the 2026 UVT is COP 52,374). Above that the exempt share falls in steps, to zero from 650 UVT (Estatuto Tributario art. 206, num. 4). The dismissal indemnity is taxable; for employees earning over 204 UVT a month the employer withholds 20% (art. 401-3). Prima and vacation pay are ordinary labor income: 25% is exempt up to 790 UVT a year (art. 206, num. 10), within the overall 40% and 1,340 UVT cap (art. 336).
The 2026 SMMLV is COP 1,750,905 (a 23% increase on the 2025 SMMLV of COP 1,423,500), 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.
