Choosing between an employment agreement and an independent services agreement requires reviewing how the relationship will operate, not merely the document’s title. Under Article 23 of Colombia’s Labor Code, an employment relationship exists when personal service, ongoing subordination and remuneration are present.
What distinguishes employment?
In employment, the employer may issue instructions regarding how, when and how much work is performed, within legal limits. In addition to salary, obligations arise concerning statutory benefits, vacation, social security, occupational health and safety, and other applicable protections.
When are independent services appropriate?
A services agreement is civil or commercial and requires the contractor’s technical and administrative autonomy. Coordination and deliverables may be agreed, but there should be no permanent subordination or integration equivalent to an employee. The contractor organizes the activity and assumes the obligations assigned by law.
Risks of misclassification
If actual performance contains the elements of employment, a court may recognize the real relationship over the contract’s label. Depending on the facts, this can lead to claims for compensation, benefits, contributions and statutory payments. Exclusivity, schedules, tools, reporting, continuity and effective control should also be reviewed.
A practical review for companies
Before engagement, define the need, degree of autonomy, deliverables and reasonable oversight. During performance, verify that practice remains consistent with the agreement and document changes. If the operation requires continuous direction or integrates the individual into the organization, an employment arrangement should be assessed.
Official sources consulted: Article 23 of Colombia’s Labor Code and the Ministry of Justice LegalApp guidance on services agreements. The specific assessment depends on the facts and current law.
