21 Jun MAIN ASPECTS OF THE LABOR REFORM IN COLOMBIA
The new government of Gustavo Petro, president of Colombia since August 2022 for a four-year term, has proposed some legislative reforms to modify the pension, health, and labor system. One of these reforms is the labor reform, which was submitted to the Senate on March 16, 2023, for consideration and approval by the senators. This labor reform would change the Labor Code in several aspects that will redefine the labor relationship between companies and their employees.
This reform, which seeks to modernize the labor market and improve the working conditions of employees, has generated great expectations in the business and labor sectors.
The most critical points of the labor reform include changes in the contractual modalities, working hours, compensation for unjustified dismissal and paternity license, and introducing new concepts such as the termination notice, salary readjustment, and an established disciplinary process.
The labor reform has received criticism from companies concerned about the future of the labor system and how the hiring and stability of the employees within a company could be affected by the changes proposed in the reform.
Experts have said that the proposal is well-intentioned, but it does not measure the impact and effects on Colombia’s economy and explain that considering that the reform places a heavier labor regime, it could produce the opposite effect to the one intended: instead of protecting the employee, it may discourage hiring by small business owners.
As the reform continues to be debated and evaluated, policymakers must consider the insights provided by experts and representatives from various sectors. This includes conducting comprehensive studies and impact assessments to understand the potential effects on different industries, job creation, and overall economic stability. In addition, engaging in open dialogue and seeking input from small business owners, industry associations, and labor unions can help shape a reform that balances protecting employees’ rights and creating an environment conducive to sustainable business growth.
While the timeline for the final decision on the labor reform remains uncertain, it is encouraging to see the ongoing discussions and the recognition of the need to consider the potential consequences of any changes carefully. It is essential to ensure that the reform, if implemented, considers the unique characteristics and challenges of the Colombian economy and promotes an environment where businesses can thrive and create employment opportunities.
By fostering collaboration and seeking comprehensive solutions, policymakers can work towards a labor reform that strikes the right balance between protecting employees’ rights and supporting the growth and development of businesses, tiny enterprises that play a vital role in driving economic activity and job creation.
Niella Sabatino, CLO
June 21, 2023