On February 19, 2018, the Second Section of the Contentious Administrative Chamber of the Council of State declared the nullity of articles 2, 4, 5, 9 and 10 of Decree 2025/2011, which partially regulated Law 1233/2008¹ and Article 63 of Law 1429/2010². 

The articles in question were excluded from the legal system since they were involved in the grounds of nullity due to exceeding the regulatory power of the National Government. The objective of this article is to set out the provisions that were eliminated from the legal system, and the reasons that the Council of State had for it; so that in this way, companies can learn the changes that this ruling produced in the employment outsourcing regime.

The first rule declared null was Article 2 of Decree 2025/2011, a provision that, with the purpose of regulating Article 63 of Law 1429/2010, established a general prohibition for institutions and companies, both public and private, on “hiring permanent processes or activities with Associated Work Cooperatives or Pre-Cooperatives”. However, the prohibition established in Law 1429 refers only to the hiring of personnel through associated work cooperatives that perform employment intermediation activities or that use any other type of relationship that affects the rights of workers. For this reason, the Council of State considered that the general prohibition set forth in Article 2 of Decree 2025/2011 affected not only the actions of Associated Work Cooperatives or Pre-Cooperatives when they carried out employment intermediation activities, but also restricted all types of contracts  with Cooperatives or Pre-Cooperatives, including those carried out in accordance with the law. Due to the above, the Council of State eliminated the prohibition of article 2, considering that the text affected the lawful activities of Associated Work Cooperatives or Pre-Cooperatives, which had not been prohibited by Law 1429.

Likewise, articles 4, 5 and 9 of Decree 2025/2011 were eliminated from the legal system, which established a fine of up to five thousand (5,000) minimum legal monthly salaries in force (SMLMV) for both public institutions and/or private companies that have hired personnel through Associated Work Pre-Cooperatives or Cooperatives that have carried out employment intermediation activities. For the Council of State, this provision exceeded the regulatory function of the government, since it was not within its powers to extend the penalty regime established in article 63 of Law 1429/2010 to public institutions and/or private companies that had not been contemplated in the Law. Due to the nullity of said articles, the only penalty that may be imposed on Associated Work Pre-Cooperatives or Cooperatives for carrying out employment intermediation activities,³ is that indicated in article 17 of Decree 4588/2006, according to which the corresponding administrative authority may impose successive daily fines of up to 100 SMLMV.

Finally, the Council of State declared the nullity of article 10 of Decree 2025/2011, which established a reduction and remission of the possible penalty imposed by the Ministry of Labor for violating the contracting system through Associated Work Cooperatives or Pre-Cooperatives. For the Council of State, the government exceeded its regulatory function with this provision because: (i) a fine cannot be remitted to a subject if the fine is not contemplated in the Law; and (ii) article 63 of Law 1429/2010 did not authorize a reduction or remission of the economic penalties imposed on public institutions and/or private companies that hire Associated Work Cooperatives or Pre-Cooperatives to carry out employment intermediation activities.

In conclusion, it is important to bear in mind that it is possible to hire through Associated Work Pre-Cooperatives or Cooperatives, as long as it is not intended to carry out employment intermediation activities. Furthermore, carrying out employment intermediation activities through Associated Work Cooperatives or Pre-Cooperatives is still subject to administrative penalties, which may consist of successive daily fines of up to 100 SMLMV. Finally, to voluntarily formalize the employment relations of personnel hired through Associated Work Cooperatives or Pre-Cooperatives through indefinite employment agreements will not allow making a discount or remission of a possible penalty imposed by the Ministry of Labor.

The National Government repealed Decree 583/2016 by means of Decree 683/2018

On April 18, 2018, the National Government, through the Ministry of Labor, issued Decree 683/2018 whereby it repealed Decree 583/2016 which regulated article 74 of Law 1753/2015 and added Chapter 2 “Inspection, Surveillance and Control on Employment Outsourcing” contained in articles 2.2.3.2.1 to 2.2.3.2.10 of Decree 1072/2015.

According to the explanatory statement of Decree 683, due to the declaration of nullity of the definitions contained in paragraphs 4 and 6 of article 2.2.3.2.1 of Decree 1072/2015, by the Council of State by means of the ruling of July 6, 2017 (Filing No. 2016-2218), the application of the other provisions contained in articles 2.2.3.2.1 to 2.2.3.2.10 of Decree 1072/2015 was considerably hindered and legal certainty was affected.

The repeal of the aforementioned Decree 583/2016 entails, in practice, the elimination of the definition of the concept of “illegal employment outsourcing”, which provided that employment outsourcing is illegal when two elements take place in a public and/or private institution and/or company: (1) When personnel is hired for the development of permanent activities through a provider mentioned in this decree; and (2) When personnel is hired in a manner that affects the constitutional and legal benefits and rights set out in the current employment regulations.

Resolution 2021 of May 9, 2018

Notwithstanding the foregoing, on May 9, 2018, the Ministry of Labor issued Resolution 2021 whereby guidelines were established regarding the Inspection, Surveillance and Control exercised on the contents of Article 63 of Law 1429/2010 (the “Resolution”). The aforementioned rule prohibits the hiring for the development of permanent activities with Associated Work Cooperatives or under any other modality that affects the constitutional and legal benefits and rights of workers.

By means of this Resolution, the Ministry of Labor defined employment intermediation and established that the Territorial Authorities in charge of Inspection, Surveillance and Control will impose the corresponding penalties when hiring Associated Labor Cooperatives and Pre-Cooperatives or under different modalities that violate the constitutional and legal benefits and rights of workers, through the development of irregular employment intermediation activities.

Thus, the Ministry established that Territorial Authorities must identify the contracting scheme with third parties and, in the case of independent contractors, will analyze, among other things, the following:

1. If the contractor’s workers carry out the same or substantially the same tasks performed by the contracting party’s workers and what type of tasks are they regarding the contractor’s own activities.
2. If the current contractor’s workers have been employed as workers of the contracting party or of any other contractor that the latter has hired. 
3. If the contractor has autonomy for the use of the means of production in the performance of the processes or sub-processes contracted. 
4. If the contractor exercises regulatory and disciplinary authority vis-à-vis its workers, or, on the contrary, if it is exercised by the contracting party.
5. If the contractor and the contracting party engage in conducts that violate the employment principles and regulations in force in the conclusion or execution of the type of contract that brings them together. 

Finally, the Resolution establishes the cases in which an illegal employment intermediation takes place when contracting Temporary Agencies, Cooperative and Pre-Cooperative Associated Work Companies, Contractors, Trade Union Contracts and when employment placement services are provided.

Brigard Urrutia offers a special audit to its clients to learn about the risks derived from their outsourcing scheme

In instances of the public policy applied by the National Government to monitor and sanction private companies that carry out illegal employment intermediation activities, Brigard Urrutia offers an audit to its clients in order to determine the level of compliance of both the Client, as of its suppliers, with the rules regulating employment outsourcing.

The audit exercise is focused on evaluating two aspects:

1. The outsourcing scheme used by the client; and
2. Compliance with the Colombian employment law by the third party supplier.

Thus, the audit will involve a review of the services and goods subject to outsourcing within the corporate structure of the client; and also the verification of compliance by third-party suppliers with the obligations established in the Colombian employment law.  

1. Whereby rules were issued in relation to Associated Work Cooperatives and Pre-Cooperatives, the conditions for contracting with third parties, and prohibitions were contemplated for the event in which said entities act as employment intermediation companies or send workers on assignment
2. This article regulates the hiring of personnel through Associated Work Cooperatives.
3. Prohibition established in article 17 of Decree 4588/2006.