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Closing a Colombian operation and the workforce: labor ministry authorization, collective dismissal thresholds, severance indemnity and the priority of workers' claims

Last verified: 2026-10-27 · Status: Stable

A Colombian employer cannot close the business or carry out a collective dismissal without prior authorization from the Ministry of Labor, which has two months to decide; dismissals without it have no effect. Once authorized, affected workers receive the indemnity for dismissal without just cause (halved if the employer's taxable net equity is under 1,000 minimum wages), and unpaid wages and benefits at termination trigger a daily penalty. Workers' claims rank first, ahead of every other creditor, and opening a judicial liquidation terminates contracts without separate authorization.

USD figures use the TRM (tasa representativa del mercado) of COP 3,157.94 per US dollar valid 27 October 2026, from the official TRM series certified by the Superintendencia Financiera and published on datos.gov.co. Conversions are for orientation only.

Key facts

Monthly minimum wage 2026	1750905 COPDecreto 1469 de 2025, as of 2026-10-27 · in force
Ministry of Labor deadline to decide a closure or collective dismissal request	2 monthsLey 50 de 1990 art. 67 num. 7, as of 2026-10-27 · in force
Taxable net equity below which the closure indemnity is halved	1000 monthly minimum wagesLey 50 de 1990 art. 67 num. 6, as of 2026-10-27 · in force
Indemnity payable by small employers on authorized closure	50 % of full indemnityLey 50 de 1990 art. 67 num. 6, as of 2026-10-27 · in force
Maximum temporary closure that suspends contracts	120 daysCST art. 466, as of 2026-10-27 · in force
Dismissal indemnity, first year, worker under 10 minimum wages	30 days of salaryCST art. 64, as of 2026-10-27 · in force
Dismissal indemnity, each later year, worker under 10 minimum wages	20 days of salaryCST art. 64, as of 2026-10-27 · in force
Maximum period of daily salary penalty for unpaid final wages	24 monthsCST art. 65, as of 2026-10-27 · in force

The rule

1. Employment contracts end, among other causes, on the final liquidation or closure of the company or establishment, or on suspension of activities by the employer for more than 120 days; in both cases the employer must ask the Ministry of Labor for permission and inform the workers in writing, and the Ministry must decide within two months.Código Sustantivo del Trabajo (art. 61 subrogated by Ley 50 de 1990 art. 5), Art. 61 num. 1 lit. e and f, num. 2, 1991-01-01 official text · verified 2026-10-27

2. Companies that are not public services may not close totally or partially, permanently or temporarily, without prior Ministry of Labor authorization, except force majeure, and must inform workers in writing when applying. Temporary closure of up to 120 days suspends the contracts, and on reopening the employer must rehire the laid off staff first.Código Sustantivo del Trabajo (art. 466 modified by Ley 50 de 1990 art. 66), Art. 466, 1991-01-01 official text · verified 2026-10-27

3. Collective dismissals or partial or total closure for causes other than just cause require prior authorization, with financial, technical or commercial evidence; a dismissal or suspension without it has no effect. A dismissal is collective only if within six months it affects 30 percent of staff in companies with more than 10 and fewer than 50 workers, 20 percent (50 to 100), 15 percent (100 to 200), 9 percent (200 to 500), 7 percent (500 to 1,000) and 5 percent above 1,000. Authorized workers receive the indemnity for dismissal without just cause, or 50 percent of it if the employer's taxable net equity is below 1,000 monthly minimum wages. The Ministry must decide within two months.Ley 50 de 1990 (replacing Decreto Ley 2351 de 1965 art. 40), Diario Oficial 39.618 of 1 January 1991, Art. 67 num. 1 to 7, 1991-01-01 official text · verified 2026-10-27

4. For indefinite term contracts the indemnity is, for workers earning under 10 monthly minimum wages, 30 days of salary for the first year and 20 more days for each later year (pro rata); for those earning 10 minimum wages or more, 20 days for the first year and 15 more per later year. For fixed term contracts it is the salary for the remaining term.
Example: Worker earning COP 5,000,000 a month (below 10 minimum wages, COP 17,509,050) with four years' service: 30 + 3 x 20 = 90 days, COP 15,000,000; if the employer's taxable net equity is under 1,000 minimum wages (COP 1,750,905,000), 50 percent: COP 7,500,000. / Salary US$1,583; indemnity US$4,750, or US$2,375 for small employers.Código Sustantivo del Trabajo (art. 64 modified by Ley 789 de 2002 art. 28), Art. 64, 2002-12-27 official text · verified 2026-10-27

5. If wages and benefits are unpaid at termination, the employer owes one day's salary per day of delay for up to 24 months; if by then the worker has not sued or no judgment has been issued, the employer owes default interest at the maximum certified rate from month 25 until payment. Workers earning one minimum wage or less keep the original rule of one day's salary per day of delay until payment.Código Sustantivo del Trabajo (art. 65 modified by Ley 789 de 2002 art. 29), Art. 65 num. 1, 2002-12-27 official text · verified 2026-10-27

6. Workers' claims for wages, severance, other benefits and indemnities belong to the first class of credits of Civil Code art. 2495 and have an exclusive privilege over all others; where insolvency forces dismissals they are paid as preferential expenses. In judicial liquidation, opening the process terminates employment contracts with payment of the indemnities, without any administrative or judicial authorization.Código Sustantivo del Trabajo (art. 157 modified by Ley 50 de 1990 art. 36); Ley 1116 de 2006, CST art. 157; Ley 1116 art. 50 num. 5, 2006-12-27 official text · verified 2026-10-27

7. The 2026 monthly minimum wage is COP 1,750,905 from 1 January 2026.Decreto 1469 de 2025 (Diario Oficial 53.350 of 29 December 2025), Art. 1, 2025-12-29 official text · verified 2026-10-27

Workforce	Share of staff dismissed
More than 10 and fewer than 50	30 percent
50 to 100	20 percent
100 to 200	15 percent
200 to 500	9 percent
500 to 1,000	7 percent
More than 1,000	5 percent

When a dismissal counts as collective (within six months)

Worked example

Four year employee on COP 5,000,000 per month: indemnity COP 15,000,000 (US$4,750) on an authorized closure, plus accrued severance, interest, bonus and vacation; a small employer pays COP 7,500,000 as indemnity.

Step by step

Decide whether the closure or headcount reduction reaches the collective thresholds or is a full closure.
File the Ministry of Labor request with evidence and inform workers in writing the same day.
Do not terminate before authorization; the Ministry has two months.
Calculate final settlements and indemnities; pay everything at termination to avoid the daily penalty.
If insolvent, judicial liquidation terminates contracts and workers rank first.

Common traps

Dismissals in a collective dismissal or closure without prior authorization have no effect, so salaries keep accruing.
Spreading dismissals over time does not avoid the six month count.
Unpaid final wages and benefits trigger a penalty of one day's salary per day for up to 24 months.
Protected workers (union leaders, pregnant workers, workers with health conditions) need special handling; see the labor section.

Sources

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