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Severance is deposited every year, not only paid on dismissal

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

Abroad, severance is usually paid only when a job ends; in Colombia every employer owes cesantía of one month of salary per year, settled each 31 December and deposited in a severance fund before 15 February. The employer also pays the worker 12 percent a year interest on the cesantía in January. Late deposit costs one day of salary per day of delay, and late interest doubles the interest owed.

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

Key facts

Annual cesantía deposited in a severance fund	30 days of salary a yearCST art. 249; Ley 50 de 1990 art. 99, as of 2026-10-27 · in force
Deadline to deposit the cesantía	Before 15 February of the following year dateLey 50 de 1990 art. 99, as of 2026-10-27 · in force
Interest on cesantía paid to the worker	12 % a yearLey 50 de 1990 art. 99; Decreto 116 de 1976 art. 1, as of 2026-10-27 · in force
Penalty for late deposit	One day of salary per day of delay textLey 50 de 1990 art. 99, as of 2026-10-27 · in force
TRM used for conversions on this page	3157.94 COP per USDTRM certified by the Superintendencia Financiera, valid 27 October 2026, as of 2026-10-27 · in force

The rule

1. Every employer must pay its workers, at the end of the employment contract, a cesantía of one month of salary per year of service, and proportionally for fractions of a year.
Cost to do it: One month of salary a year, about 8.33 percent of annual salary.
Example: A worker on COP 3,000,000 a month plus COP 249,095 of transport allowance earns COP 3,249,095 of cesantía for a full year. / About US$1,029 a year.Código Sustantivo del Trabajo, Art. 249, 1951-06-07 official text · verified 2026-10-27

2. Under the severance fund regime, the cesantía is settled definitively each 31 December for the year or fraction, and the amount must be deposited before 15 February of the following year in an individual account in the severance fund the worker chooses. The employer that misses the deadline must pay one day of salary for each day of delay. The employer also pays the legal interest of 12 percent a year on the amount settled.
Cost to do it: Deposit of one month of salary per worker each February plus 12 percent interest; one day of salary per day of delay.
Example: For 2026, the COP 3,249,095 cesantía must reach the fund by 14 February 2027; depositing it 10 days late costs COP 1,000,000 more (10 days of a COP 100,000 daily salary). / About US$317 of penalty for 10 days.Ley 50 de 1990 (28 December 1990), Art. 99, 1990-12-28 official text · verified 2026-10-27

3. The 12 percent annual interest on cesantía balances at 31 December, at termination or at a partial settlement must be paid to the worker in January of the following year, at termination, or within the month after a partial settlement. An employer that does not pay the interest on time owes, as compensation and for each breach, an additional amount equal to the interest.
Cost to do it: 12 percent of the cesantía, paid directly to the worker; double if late.
Example: Interest on COP 3,249,095 is COP 389,891, payable in January 2027; paid late, the employer owes another COP 389,891. / About US$123 of interest.Decreto 116 de 1976 (23 January 1976), regulating Ley 52 de 1975, Art. 1 and art. 5, 1976-01-23 official text · verified 2026-10-27

4. The cesantía is calculated on the last monthly salary if it did not vary in the last three months; otherwise, and for variable salaries, on the average earned in the last year or in the whole period served if shorter. Employers may not make partial payments of cesantía before termination except in cases expressly authorised; unauthorised payments are lost and cannot be recovered.
Cost to do it: No fee; unauthorised advances are paid twice.
Example: An employer that advances COP 2,000,000 of cesantía to help a worker buy a car, outside the authorised cases, still owes the full deposit. / About US$633 at risk.Código Sustantivo del Trabajo, art. 253 (Decreto 2351 de 1965 art. 17) and art. 254, Art. 253 and art. 254, 1951-06-07 official text · verified 2026-10-27

Date	Obligation	Source
31 December	Definitive settlement of the year's cesantía	Ley 50 de 1990 art. 99 num. 1
By 31 January	Pay 12 percent interest to the worker	Decreto 116 de 1976 art. 1
Before 15 February	Deposit cesantía in the worker's fund	Ley 50 de 1990 art. 99 num. 3

Annual cesantía calendar

Worked example

A subsidiary with 50 employees averaging COP 4,000,000 a month must deposit about COP 200,000,000 of cesantía before 15 February and pay about COP 24,000,000 of interest in January, on top of December payroll and the December prima. Cash planning should treat January and February as heavy months.

Step by step

Accrue cesantía and interest monthly in the books.
Collect each worker's choice of severance fund at hiring.
Pay interest in January and deposit cesantía before 15 February.
Pay any undeposited balance directly to the worker at termination with interest.

Common traps

The penalty for late deposit is a full day of salary per day, which quickly exceeds the amount due.
Cesantía is owed on top of any dismissal indemnity; it is not the dismissal compensation.
Partial payments outside authorised cases are lost.

Sources

← A legal bonus of one month of salary a yearDismissal without just cause costs a legal indemnity →