The Changes to the Pension Reform That Will Affect Independent Contractors

Labor attorney Camilo Cuervo was interviewed by Asuntos Legales about the impact of the new pension reform on independent contractors in Colombia. He explained that these workers must allocate 40 percent of their income for health, pension and risk contributions, with payments currently handled through direct deductions from fees paid by companies contracting for their services. Under the changes introduced in the reform, employers will be responsible for deducting and transferring these payments to social security entities. Mr. Cuervo provided a hypothetical scenario to illustrate how this would work.

"They offer me $10 million for a service contract. First, by law, independent contractors must contribute a minimum of 40 percent of the contract value. So, in this case, they contribute $4 million. From that $4 million, they must make contributions to health, pension and risk funds. The worker is responsible for these contributions, but in this case, they will be paid through direct deductions made by the employer from their fees," he said.

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