Legal service bonus

1.     Service bonus

The service bonus is a social benefit to which every worker is entitled as a dependent employee with an employment relationship, regardless of the type or duration of the contract, and which every employer, whether a company or a natural person, is obliged to recognise and pay. The value of this benefit corresponds to one month's salary for each year of services rendered and proportionally for each fraction of a year, and is regulated by article 306 of the substantive labour code.

Domestic service workers, who perform cleaning, cleaning, cooking, farm care among others, are entitled to the recognition and payment of the service bonus, the law 1788 of 2016 is the law that guarantees the right to this social benefit.

1.1. Workers not entitled to service bonuses

It is not paid to workers who provide services through contracts for the provision of services, as they are included in the category of independent workers. Nor is it paid to apprentices under apprenticeship contracts, since, as indicated above, it is received by dependent workers.

For workers whose salary type is Integral, the service bonus shall not be paid, this value shall be included in the 30% of the benefit factor, this salary shall not be less than 13 legal minimum salaries in force.

1.2 Time limits for payment of the legal service bonus

In accordance with Colombian regulations, the service bonus corresponds to thirty (30) days of salary per year of service. This payment shall be made in two periods during the year and shall be proportional to the days worked per semester. Its recognition shall be carried out as follows. 

• First period: from 1 January to 30 June (last payment deadline).
• Second period: from 1 July to 30 December (payment deadline 20 December).

If the employment relationship ends before the payment deadlines, this value must be included in the settlement of the employment contract.

1.3 Calculation of the legal service bonus

To settle the bonus, all the wages earned by the worker in the period to be settled are taken as a basis and averaged for the days worked in the six-month period.

• When the worker receives payments of a salary nature, these must be included in the calculation of the bonus: surcharges, overtime, commissions, bonuses and/or salary allowances.

The following formula is used to calculate the service bonus:

• Semester worked

• Proportional to the time worked (when less than 180 days have been worked in the six-month period)

Note: The number of days worked cannot exceed 180, as recognition and payment is made on a half-yearly basis.

1.4 Withholding tax on the service bonus

The service bonus, being an employment income, must be subject to withholding at source as wages or employment income. This withholding will depend on the withholding procedure used, of which there are two: procedure 1 and procedure 2.

• When procedure 1 is used, it must be carried out separately, deducting 25% for exempt income from the labour income, to the resulting base apply the table as indicated in article 383 of the E.T. to obtain the value to be withheld.
• When procedure 2 is used, the value of the service bonus is included in the total labour payments, and the fixed withholding percentage is applied, without having to make a separate settlement or apply the table of Article 383 of the E.T.E.

1.5. Penalties for non-payment of the Premium

Penalties for non-payment of premiums include:

• Imposition by the Ministry of Labour of fines, penalties and other measures in the exercise of its function of surveillance and control of compliance with the rules of labour law (Articles 485 and 486 of the CST).
• Failure to pay the bonus may give rise to a motivated resignation on the part of the worker (Article 62, part ‘B’ of the CST) and give rise to a unilateral termination of the employment contract without just cause, which will entitle the worker to claim the corresponding compensation for damages before the labour court (Article 64 of the CST).

On the other hand, if at the end of the employment contract, the employer does not pay the worker the service bonus due, such non-compliance may give rise to the late payment penalty referred to in Article 65 of the CST.

1.6. Attachment of the service bonus

As a general rule, social benefits are non-attachable (Article 344 of the CST), i.e. no precautionary measure can be ordered to retain their value in order to ensure the satisfaction of an obligation. 

However, the aforementioned provision also provides that in the case of debts in favour of legally authorised savings and credit cooperatives or maintenance obligations, a judge may order an attachment or withholding on the worker's service bonus or severance pay, up to a maximum of 50% of the value of the respective benefit.

1.7. Service bonus during the period of incapacity of the worker

During the period of incapacity of the worker, the service bonus continues to be paid in the normal way, since incapacity is not a cause for suspension or termination of the employment contract.

Incapacity, whether of common or occupational origin, does not affect the calculation of social benefits. These must be calculated on the basis of the last basic salary earned by the worker prior to the start of the period of incapacity.

1.8. Service bonuses during suspension of employment contract

During the suspension of the employment contract, the employment obligations between the employer and the employee are temporarily interrupted, during which time the employee does not receive remuneration in return for the services for which he/she was hired.

However, during the period of suspension, some of the employer's obligations remain in force, such as social security contributions. In the case of social benefits, periods of suspension of the employment contract can be deducted when calculating severance pay and holidays. However, during the suspension, the contract remains in force for the payment of the service bonus.