Prima Time! That wonderful time that comes around twice a year and means a nice little bonus pay if you are employed here in Colombia. Want to know more about primas, what are primas in Colombia, who gets primas, when do you get your prima, and how much do you get for your prima? Read on in this practical guide to prima bonus payments in Colombia.
What are Primas?
Primas are a legally required bonus payment made twice annually to most employees in Colombia. They are part of what is often referred to collectively as “prestaciones sociales” which include cesantías (read more about cesantías here), health insurance, and pension fund payments (read more about pensions in Colombia here).
Who Gets Primas in Colombia?
All workers with a work contract, whether it is a fixed term or indefinite contract, are entitled to a prima.
Note that these only apply to workers with a work contract as an employee. Independent contractors or people who have contracts known as “prestación de servicios” do not receive primas, or the other prestaciones sociales for that matter.
However, domestic workers, even those without formal contracts, are entitled to primas. So, if you work as a maid, driver, gardener, or nanny, you should receive a prima. Likewise, if you employ a maid, driver, gardener, or nanny, you should pay them a prima. This is according to the 2016 Law 1788.
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When Are Primas Paid?
Primas should be paid on or before June 30 and on or before December 20 (the middle and end of the year). They may be included in your last paycheck before those dates or they may arrive as a separate payment.
Special Note for 2020
Due to the economic troubles brought on by the Covid-19 pandemic, the government instituted a special decree that allows for the June 2020 prima to be delayed and/or paid in up to 3 equal installments. All of it must be paid out before December 20 (along with the other prima).
However, the employee must agree to this arrangement. Without a previous agreement, a business cannot unilaterally decide to pay out the prima delayed or in installments and must pay like normal.
Note, if you are a business owner, you can get up to a 50% subsidy to pay the primas or your employees that make under 1 million pesos under the Programa de Apoyo para el Pago de la Prima de Servicios (also full disclosure: I am not an accountant or professional and nothing here should be considered financial advice, so please consult and double check with a professional).
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How Much Should My Prima Be?
Primas should be equal to 15 days of salary. In other words it should be equal to half of a monthly salary. However, you have to have worked for the entire half year to fully qualify.
If you have not worked the full 6 months of the year, you are still entitled to a prima, but proportionally, according to the time you have worked.
Let’s say for example, you started working on April 1. You would get 1/4 of a salary on June 30 or 1/2 of the normal amount since you had worked 3 of the 6 months.
This applies the same if your your contract ends or you leave a job early during the year. So, keeping with the same example, if you worked at another place of business from January to the end of March, they would also need to pay you 1/4 of a salary as you also worked for 3 of the 6 months there. In that case, they should pay you when you leave, not in June or December, in what is commonly referred to as the liquidación.
That example is pretty easy with the math. Here is a formula to determine exactly how much you should get in your prima:
Salary x (days employed) ÷ 360 = amount for your prima
Note, the days are calendar days, not work days (ie if you were under contract from March 1 to March 30, it is 30 days).
A few notes to keep in mind for the calculation of your prima:
- If your monthly pay varies, it is calculated using the average during the period.
- It is calculated using only parts of your pay that are considered salary. For example, if you get a housing allowance or some other regular payment not considered salary, it does not factor in to the calculation of your prima.
- The except to this is the Auxilio de Transporte, a subsidy to employees who make less than 2 minimum salaries, does count towards the calculation of the prima.
- Overtime, holidays worked, and commissions do count toward the prima.
- The prima itself is not considered salary, and does not count towards the calculation of the other prestaciones sociales like pension and cestantías payments.
- However, it does count towards the income you pay taxes on and will influence your withholding tax known as retención en el fuente.
There you have it, a complete practical guide to understanding the semi-annual prima bonuses in Colombia. I hoped it help you understand what you are entitled to and that when you get your prima, you can put it to good use!
Cheers and Happy Pay Day!