Fixed-Term Employment Contract in Colombia After the Labor Reform
Since Law 2466 of 2025, the indefinite contract is the general rule in Colombia and a fixed-term contract cannot exceed four years. This guide covers extensions, notice, conversion to indefinite and what each contract costs to end.
A foreign company that employs people in Colombia through a local subsidiary often picks the contract type by habit. That choice decides what it costs to end the relationship. A fixed-term contract that is extended without tracking, or never signed, can become indefinite and make an exit far more expensive than budgeted.
At Soulbit Academy we read the labor reform from the finance desk. This guide asks one question: how does each contract type behave after Law 2466 of 2025? We do not repeat the general reform checklist, which is in the employer checklist for Law 2466.
Fixed-term employment contract in Colombia: what Law 2466 of 2025 changes
A fixed-term contract sets an end date from day one, and since Law 2466 of 2025 it cannot run longer than four years. Article 6 of the law replaced Article 46 of the Labor Code (CST) and set that ceiling, the written form requirement and the extension rules. The text of Law 2466 of 2025 is in the government's Gestor Normativo.
Article 6 holds four rules a finance team should keep at hand. The first is the term: no longer than four years. The second is the form: the contract must be in writing. The third is the penalty: without those conditions it is treated as indefinite from the start of the relationship. The fourth is renewal: it cannot go on indefinitely.
The same article covers the project-based contract (obra o labor). It must be written and must define the task precisely. If those requirements are unmet, it is treated as indefinite from the start. The same applies if work continues after the task ends, unless a new, distinct project is formalized in writing under Article 6.
One rule protects the employee under both types. A person on a fixed-term or project contract is entitled to vacation and social benefits in proportion to time worked, however short. Accruals are not optional because a contract is brief. The mechanics are in vacation and benefits in Colombia.
Indefinite contracts as the general rule
The indefinite contract is the ordinary way to hire in Colombia under Law 2466 of 2025. Article 5, which amended Article 47 of the CST, states that employees are hired under an indefinite-term contract. Fixed-term, project and occasional contracts remain lawful.
Indefinite does not mean the contract cannot end. It means there is no expiry date, and ending it without just cause triggers the Article 64 indemnity, which grows with seniority. For a finance team, the exit cost of an indefinite contract depends on when the exit happens.
Article 5 also covers resignation. The employee may end the contract with 30 calendar days' notice so the employer can find a replacement, and the law says no penalty may ever be agreed for an employee who skips that notice. The notice does not apply when the employee leaves over a serious breach by the employer.
Table 1 compares the three contract types that most often appear on a Colombian payroll, using the rules in the text of the law.
| Contract type | Term and form | How it ends | If the employer fails the rules |
|---|---|---|---|
| Fixed term | Up to 4 years including extensions; must be written | Term expires, with non-renewal notice 30 days before | Treated as indefinite from the start if not written |
| Project (obra o labor) | Lasts as long as the task; written, task defined | Task ends | Treated as indefinite if the form is not met or work continues after the task |
| Indefinite | No expiry date; general rule | Resignation with 30 days' notice, mutual agreement or employer termination | Termination without just cause triggers a growing indemnity |
Extensions of a fixed-term contract and conversion to indefinite
Extensions of a fixed-term contract are lawful but carry two limits: the contract cannot be renewed indefinitely and the total term cannot exceed four years. For initial terms shorter than one year, after the fourth agreed extension no renewal may last less than one year. The fourth automatic extension itself lasts one year.
Automatic renewal works like this. If neither party states an intention to end the contract 30 days before the agreed expiry, it renews for a period equal to the initial term or the previous extension, as applicable, within the four-year ceiling.
Does the initial term count toward the four years?
Yes. Article 6 bars exceeding four years even through extensions. For contracts already in force before the reform, it counts the ceiling from the law’s effective date. Seek Colombian labor advice before deciding on termination.
Article 6 does not specify the consequence of exceeding that ceiling. Do not assume another valid renewal or terminate the relationship without reviewing the case with a labor lawyer.
An illustration with assumptions made for this article, unrelated to any client. A Colombian subsidiary hires a data analyst on 1 October 2026 for 12 months. Its four-year ceiling falls on 30 September 2030, and every extension must fit within that ceiling.
What happens to contracts signed before the reform
For contracts already in force, Article 6 provides that the four-year limit is counted from the date the law took effect. The clock on older contracts does not start on the day they were signed.
That gives room, but it forces a choice: move the employee to indefinite, keep the fixed term inside the ceiling, or end it with notice. A foreign parent that inherited staff in an acquisition should run this review first.
Notice and non-renewal: ending a fixed term without indemnity
An employer ends a fixed-term contract without indemnity by letting the term expire and giving notice of non-renewal 30 days before. The law speaks of stating the intention to end the contract 30 days ahead of the agreed expiry. It does not expressly require writing, but a letter with proof of receipt is prudent.
The usual mistake is late notice. A notice arriving 20 days before expiry is late, triggering the applicable automatic extension.
Does a fixed-term contract that expires with notice create an indemnity?
In principle, no. Timely notice allows expiry without a dismissal indemnity, while accrued salary and benefits remain payable. Reinforced protection, including pregnancy, can change the outcome; seek legal advice before acting.
Termination cost by contract type: Article 64
The indemnity for ending a contract without just cause is set by Article 64 of the CST, which Law 2466 of 2025 did not change, and the formula depends on the contract type. In a fixed-term contract, the employer pays the salary for the time that was left. In a project contract, it pays the time left, with a floor of 15 days. In an indefinite contract, it pays days based on seniority. The Labor Code is published by the Senate.
For an indefinite contract below 10 monthly minimum wages, Article 64 grants 30 days of salary for the first year and 20 days for each additional year, prorated for fractions. At 10 minimum wages or more it is 20 days for the first year and 15 for each additional one. Each formula is worked through in our guide to severance pay for unfair dismissal.
Table 2 compares the cost of ending four cases early, using assumed amounts that match no real case and are not Soulbit prices.
| Case (assumptions) | Article 64 rule | Calculation | Indemnity (COP) |
|---|---|---|---|
| Fixed term, 4,500,000, 1 Oct 2026 to 30 Sep 2027, dismissed 31 Jan 2027 | Salary for the time left | 8 months × 4,500,000 | 36,000,000 |
| Fixed term, same salary, dismissed 31 Jul 2027 | Salary for the time left | 2 months × 4,500,000 | 9,000,000 |
| Indefinite, 4,500,000, 3 years of service | 30 days first year, 20 per extra year | 70 days × 150,000 | 10,500,000 |
| Indefinite, 4,500,000, 5 years and 6 months | 30 + 20 × 4.5 | 120 days × 150,000 | 18,000,000 |
The table shows a useful paradox for budgeting. A fixed term is expensive early and cheap late, because the indemnity shrinks every month. An indefinite contract is cheap early and costly over the years.
These figures cover only the indemnity. The ordinary settlement of benefits comes on top, as explained in our guide to terminating an employee in Colombia. For the effect on total employment cost, see the cost of employing in Colombia after the reform.
What an employer should do with existing contracts
An employer should audit every live contract against four questions: is it in writing, how many years and extensions does it carry, when does it expire, and does the type match the real need? The answers show whether a contract is safe, needs regularizing or is already indefinite without anyone deciding so.
- Inventory. A matrix with employee, contract type, start date, initial term, extensions and expiry. Without it, the rest is guesswork.
- Written form. Confirm the signed contract and each extension exist. An unwritten fixed term is treated as indefinite from the start.
- Four-year clock. For pre-reform contracts, count from the date the law took effect; for new ones, from the start date. Record the ceiling date.
- Notice calendar. Mark each date 30 days before expiry and decide in time whether to renew, convert or end.
- Real need. If the role is permanent, make it indefinite. If it is temporary, document why.
- Budget. Provision the possible cost of each exit with the Article 64 formula.
After these steps each contract sits in one of three states: within limits, to regularize or already indefinite. That sorting prevents surprises at an exit.
What Soulbit does today and what it does not
Soulbit does not draft contracts, choose the type of hire or calculate settlements or indemnities. That stays with the employer, its accountant or payroll software, and its labor lawyer. What Soulbit does is disburse payments you have already calculated.
With Soulbit Salaries, an employer holds a balance in stablecoins such as USDC and USDT, or in fiat, and disburses payroll on a recurring or batch basis to Colombian bank accounts, using a local Colombian bank rail, institutional custody with MPC, KYB processes and AML/KYT monitoring. The payroll disbursement process is explained in how to pay payroll in Colombia.
Some limits are worth stating plainly. Soulbit's mobile apps are not yet available. Soulbit offers human support but not labor, tax or accounting advice, and it does not guarantee that the amount you disburse is correctly calculated. A fast payment of a wrongly calculated indemnity is still a wrong payment.
Frequently asked questions
What is the maximum length of a fixed-term employment contract in Colombia?
A fixed-term employment contract in Colombia may not run longer than four years, according to Article 6 of Law 2466 of 2025, which replaced Article 46 of the Labor Code. The text adds that the four-year ceiling can never be exceeded. For contracts already in force, the limit is counted from the date the law took effect.
How many times can a fixed-term contract be extended in Colombia?
The law bars indefinite renewal of a fixed-term contract but sets no closed number of extensions. For an initial term shorter than one year, after the fourth agreed extension no renewal may last less than one year; the fourth automatic extension itself lasts one year. The four-year ceiling always applies. An employer that extends repeatedly should track the total elapsed term.
What happens if a fixed-term contract in Colombia is not in writing?
A fixed-term contract that is not put in writing is treated as indefinite from the start of the employment relationship, under Article 6 of Law 2466 of 2025. The employer loses the expiry date it assumed it had. Keeping the signed contract and every extension in each employee file avoids that outcome.
How much notice is needed not to renew a fixed-term contract in Colombia?
Notice of non-renewal must be given 30 days before the agreed term ends. If neither party states an intention to end the contract in that window, it renews automatically for a period equal to the initial term or the previous extension, as applicable, within the four-year ceiling. The law does not expressly require written notice, but keeping a written record is prudent.
Does Soulbit calculate severance or advise on employment contracts?
No. Soulbit is not a labor adviser, does not draft contracts and does not calculate severance or indemnities. With Soulbit Salaries, an employer disburses in batch, to Colombian bank accounts, a net amount already calculated by its accountant or payroll software, from a balance held in stablecoins or fiat.
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