Colombia Vacation Pay: How Payroll Accruals Work

A company employing staff in Colombia does not only pay a monthly salary. While every contract stays active, a separate liability grows in parallel: vacation pay, severance (cesantías), severance interest, a statutory service bonus and, for some workers, work uniforms. Getting any one of these accruals wrong is easy to miss month to month, until a large, mistimed payment lands and forces a scramble.

At Soulbit Academy we cover the calculation and monthly accrual of these benefits from the finance team's side, not the paperwork a worker files to take leave or withdraw a benefit. This guide focuses on the live employment relationship: how much to accrue each month, which formula applies, and which legal deadline governs each item. The end of the employment relationship, with the severance-pay indemnity and late-payment penalty that only appear when a contract terminates, is a separate topic already covered in terminating an employee in Colombia: severance pay.

What a Colombia employer accrues while a contract is active

A Colombia employer accrues five things while a contract stays active: vacation pay, severance, severance interest, the service bonus and, when applicable, work uniforms. The first four are salary-based percentages that build up month by month in the books, even though the external payment falls on specific calendar dates. Work uniforms are different: they are a physical benefit delivered three times a year, not a salary percentage.

These five items sit alongside the social security contributions reported monthly through PILA, but each one comes from a separate rule in Colombia's Labor Code. Skipping the monthly accrual for any of them does not change what the company ultimately owes; it only changes whether the finance team is prepared or blindsided when the legal deadline hits.

Is accruing these benefits the same as settling them at termination?

No. Accruing is the monthly bookkeeping entry for a liability that grows with every payroll run while the contract is active. Settling is the final calculation done when a contract ends, adding up the proportional share of each benefit through the exit date. A company that accrues correctly every month arrives at any settlement with the right number already calculated, with no last-minute surprises.

How vacation pay is calculated: the Article 186 formula

A worker in Colombia earns 15 consecutive business days of paid vacation for every year of service, under Article 186 of Colombia's Labor Code. Days are counted Monday through Saturday, so Sundays and public holidays inside the period do not subtract from the total, unless the contract states otherwise.

The calculation base for vacation pay is the worker's basic salary, without adding the transportation allowance, unlike severance and the service bonus, which include it when the worker qualifies. When an employer cashes out part of the vacation period instead of granting leave, the proportional formula is basic salary multiplied by days worked and divided by 720, the same formula used in a final settlement.

A worked example: a worker with a basic salary of 4,000,000 pesos who has worked 180 days since the last vacation accrual date has a proportional value of 4,000,000 times 180 divided by 720, or 1,000,000 pesos, if that period were cashed out. The same calculation over a full 360-day year comes to 2,000,000 pesos, exactly half a month of salary, which is what 15 business days represent over a 360-day commercial year.

Benefit	Formula	Includes transportation allowance
Vacation pay (proportional cash-out)	Basic salary x days worked / 720	No
Severance (cesantías)	(Salary + allowance) x days in the year / 360	Yes, when it applies
Severance interest	Cesantías x 12% x days in the year / 360	Yes, via the cesantías base
Service bonus (prima de servicios)	(Salary + allowance) x days in the half-year / 360	Yes, when it applies

When leave must be granted and the limit on cashing it out

A Colombia employer must set the vacation date no later than one year after the worker accrued the right to it, under Article 187 of Colombia's Labor Code. The law requires giving the worker at least 15 days' notice of the granted date, whether the employer sets it on its own or the worker requests it, without disrupting the business or the actual rest.

If that one-year window closes without the employer granting leave, the worker can demand it immediately, and the accrued liability keeps growing with every additional period that builds up unused. Letting vacation days pile up across several years is not illegal by itself, but it is a signal that the monthly accrual is not being used to actually plan the team's rest.

Can vacation days be cashed out instead of taken as leave?

Yes, but only up to half of the accrued days, through a written agreement between employer and worker and always at the worker's request, under Article 189 of Colombia's Labor Code, as amended by Law 1429 of 2010. The other half, at least six consecutive business days, must be taken as actual rest; the employer cannot unilaterally decide to cash out the full period, even with a worker's verbal agreement.

Severance and severance interest: the monthly accrual that avoids the February crunch

Severance, cesantías, works out to roughly one month of salary per year of service, and it accrues monthly even though the external deposit into the worker's chosen fund only happens once a year, by February 14. Severance interest is a separate obligation, 12% annual interest on the cesantías balance as of December 31, which the employer pays directly to the worker by January 31.

This guide does not repeat the full detail of deadlines, penalties and regimes for cesantías; that is covered at length in cesantías in Colombia: a severance guide for employers. What matters here is that severance and its interest are the largest single piece of the group of benefits that accrue monthly, alongside the service bonus, and all three share the same accounting logic: a liability that builds with every payroll run, not an expense that appears out of nowhere on the payment date.

Service bonus: the Article 306 formula and the June and December calendar

The service bonus, prima de servicios, adds up to 30 days of salary a year, paid in two equal installments, under Article 306 of Colombia's Labor Code, as amended by Article 1 of Law 1788 of 2016. The first installment, covering the first half of the year, is due by June 30, and the second, covering the second half, is due by December 20.

The calculation base for the service bonus is the same as for severance: monthly salary plus the transportation allowance when the worker qualifies for it, multiplied by days worked in the current half-year and divided by 360. A worker earning 6,000,000 pesos a month, above the threshold for the transportation allowance, who worked the full half-year, receives 3,000,000 pesos at each cutoff, half of one month's salary, twice a year.

Is the service bonus always paid in full even if a worker joins or leaves mid-year?

No. When a worker joins or leaves partway through a half-year, the service bonus is prorated to the days actually worked in that period, using the same formula as the full calculation. A worker who works only 90 days of a 180-day half-year receives half of the bonus that a full half-year would have paid.

Work uniforms (dotación): who qualifies and when it must be delivered

Dotación is the free delivery of one pair of shoes and one work outfit that a Colombia employer must make every four months to workers earning up to two monthly minimum wages, under Article 230 of Colombia's Labor Code, as amended by Article 7 of Law 11 of 1984. A worker needs more than three months of service at the time of each delivery to qualify.

The three delivery dates are April 30, August 31 and December 20 every year, regardless of company size. With Colombia's monthly minimum wage set at 1,750,905 pesos for 2026, under Decree 1469 of 2025, the two-minimum-wage threshold to qualify for dotación works out to 3,501,810 pesos a month.

Can work uniforms be replaced with a cash payment?

No. Colombia's Labor Code expressly bars paying cash instead of delivering the shoes and work outfit. Unlike vacation pay, which does allow a partial cash-out by written agreement, dotación is an in-kind obligation with no cash alternative.

Legal payment calendar and monthly accrual: what Soulbit automates

The calendar for these five obligations does not converge on a single date; each one falls due at a different point in the year, and tracking them separately is a common cause of late payment. Vacation pay, severance, severance interest, the service bonus and dotación each carry their own legal deadline, independent of the others.

Benefit	Paid to	Deadline
Vacation pay	Worker's rest (or cash, up to half)	Within one year of accrual
Severance deposit	Fund the worker chose	February 14
Severance interest	Directly to the worker	January 31
Service bonus (first half)	Directly to the worker	June 30
Service bonus (second half)	Directly to the worker	December 20
Work uniforms (dotación)	In-kind delivery to the worker	April 30, August 31 and December 20

A common payroll accounting practice is to book a percentage of salary each month for every benefit, rather than waiting for the external payment date to calculate it in one lump sum. Severance is typically accrued at around 8.33% of salary plus the transportation allowance. The service bonus is accrued at that same 8.33%, because it also equals one month of salary per year. Severance interest is accrued at close to 1% a month on the accrued cesantías balance. Vacation pay is accrued at 4.17% of the basic salary, excluding the transportation allowance, because 15 business days equal half a month of salary a year. Dotación is not accrued as a percentage; it is budgeted from the unit cost of the shoes and work outfit multiplied by the number of qualifying workers, three times a year.

Should a company accrue these benefits monthly or is it enough to calculate them when payment is due?

They should be accrued monthly in the books, even when the external payment or deposit only happens once or twice a year. Waiting until the payment date to calculate them usually creates a gap against the real accrued balance, plus an avoidable cash spike in February, June and December, the months when most of these deadlines fall.

Soulbit does not calculate or accrue vacation pay, severance, severance interest, the service bonus or dotación; that calculation stays with the employer or its local payroll provider, as covered in payroll software in Colombia: what to check. What Soulbit automates is the step after the calculation: holding balances in stablecoins such as USDC and USDT and in fiat currencies including COP, USD, EUR and GBP, converting between them, and disbursing the already-calculated net amount to each worker's Colombian bank account, with KYB and anti-money-laundering processes in place. That flow covers a monthly salary payment the same way it covers the June service bonus or the February severance deposit, as detailed in how to pay payroll in Colombia. A worked example of how these costs add up for a real company is in the case of a 30-employee Colombian SMB.