On February 1, 2021, the “Social Protection Floor” began to operate, a figure created and regulated by the National Government through Decree 1174 of 2020, in order to alleviate, support, and provide all those who earn less than one current legal monthly minimum wage with an alternative protection regarding health, old age, and risks arising from labor activity.
First, it is necessary to indicate that the Social Protection Floor is aimed at those who earn less than one current legal monthly minimum wage, as a result of part-time dedication to the work, trade, or activity performed by the person. That is, these people work and carry out the activities corresponding to their positions for periods shorter than the maximum legal working day, that is, 8 hours a day and 48 hours a week, in accordance with the provisions of Article 161 of the Substantive Labor Code.
Well, the Social Protection Floor is composed of three services, namely: the Subsidized Regime of the General Social Security System in Health, the Complementary Social Service of Periodic Economic Benefits (BEPS), and the Inclusive Insurance; each with a different purpose: health protection, old age protection, and protection of the worker against risks arising from their work activities, respectively. Additionally, the National Government provided through the aforementioned Decree that dependent workers may access the Family Subsidy System, eventually and when it is regulated.
On the other hand, the aforementioned Decree specifically sets out who must be linked -mandatorily- to the system and who may do so voluntarily. The first case was established for persons who had one or more part-time employment relationships; those who had one or more contracts for the provision of services; and persons who had one or more employment relationships, together with one or more contracts for the provision of services, and who, in all cases, received in total an income lower than one current legal monthly minimum wage. And, in the second case, all those who, despite not having an employment relationship or not having signed a contract for the provision of services, received a total monthly income lower than one minimum wage may join the Social Protection Floor. The latter includes persons belonging to the agricultural sector.
As for the manner in which the contribution must be made, Article 2.2.13.14.3.1 of the aforementioned Decree establishes that for persons who are required to join, the employer or contractor will make the contribution, which will be equivalent to 15% of the monthly income. This percentage is additional and independent of the amount that the employer or contractor has agreed to pay the worker or contractor for the development of the activity. That is, the 15% will not be deducted from the total income that the worker or contractor earns monthly to make the contribution, but rather it will correspond to an additional amount that the employer or contractor must pay in full, through the channels designated by the BEPS administrator. In contrast, in the case of persons who voluntarily join the Social Protection Floor, they themselves must make the contribution of the same percentage -15%- of their monthly income.
Given the above, it is possible to indicate how the 15 percentage points contributed to the Social Protection Floor will be distributed: 14 points will be allocated directly to the individual savings account of the affiliate, and the remaining point will be allocated to the payment of the Inclusive Insurance premium, in accordance with the provisions of Article 2.2.13.14.3.3 of the aforementioned Decree.
Now, the worker or contractor -who meets the conditions already developed here- to access the Periodic Economic Benefits, must inform their various employers and/or contractors of the circumstance of receiving a total income lower than one minimum wage, as a result of their part-time dedication in their various positions and activities. In other words, it is the worker or contractor who must actually communicate the situation, so that their employer or contractor links them to the Social Protection Floor and makes contributions proportional to what the worker earns. Likewise, the employer or contractor, when making the contribution for their worker or contractor to the Social Protection Floor, must register with the BEPS administrator, through the mechanisms that the latter provides for such purpose.
It is worth mentioning that the affiliate to the Social Protection Floor may make additional contributions to those due, to their individual BEPS savings account. However, such additional contributions will be governed by the same minimum and maximum cap provisions established by the BEPS Administrator, which, until 2020, were $5,000 and $1,260,000, respectively. In the event that the affiliate has reached the aforementioned annual maximum cap, the administrator will inform the affiliate and the employer or contractor of such situation, and the contributions that continue to be made to their account
individual savings will be counted for the following calendar year; this, in accordance with Article 2.2.13.14.3.6 of the Decree in question.
In short, based on the foregoing, it is possible to affirm that Decree 1174 of 2020 brought with it relief, not only for workers, contractors, or independent workers who are in a situation of informality due to earning a salary below the legal minimum, but also for employers and contractors who, for various reasons, were also not in a position to contribute for their workers in the Contributory Regime of the Social Security System, on -at least- one current legal monthly minimum wage.
Although completely eradicating labor informality in Colombia is a fairly large challenge, diligently applying the provisions for the Social Protection Floor could create an opportunity not only to improve the Social Security outlook for such workers, but also to continue seeking and promoting the creation of mechanisms that allow Colombians to reach old age with sufficient savings to live with dignity.
Author: Alexandra Alvarez R. – AZC Attorney