FAQ: Teleworking, Working from Home and Remote Work

Currently, the hiring of workers who carry out their functions through information and communication technologies (“ICT”) has become popular. For this reason, the Colombian Ministry of Labor has regulated the different types of distance work agreements so that both employers and workers know their rights and comply with their obligations. Here we tell you what these types are and answer the most frequently asked questions about them: 

1. What does each of these types of distance labor agreements consist of?

  • Work-from-Home: This is an occasional, temporary and exceptional authorization that employers grant workers to perform their duties from home due to extraordinary circumstances that are expected to be overcome in time. It does not imply a modification or affectation of workers’ rights and guarantees or to the labor conditions agreed upon at the beginning of the labor relationship. This authorization may be granted for a maximum of six (6) months, unless the circumstances that gave rise to the authorization to work from home persist, in which case it will remain in force until such circumstances disappear.
  • Teleworking: Workers perform their functions using information and communication technologies (“ICT”) as support, so their physical presence at a specific workplace is not required. This type of agreements authorize three (3) types of teleworkers:
    • Autonomous: when workers use their own home or somewhere other than the place of business, previously agreed upon with their employers, and sporadically go to the company’s place of business.
    • Mobile: When workers relie on the use of mobile technological devices, but do not have a fixed workplace and occasionally go to the company.
    • Supplementary: Depending on the need for the service, workers work either from their house or from the company’s place of business.

  • Remote work: It is a form of performance of labor contracts in which ICTs or other similar means are used. That is, employers and workers do not interact physically since all stages of the contract are performed virtually. However, exceptional situations may be agreed upon in which the physical presence of workers in the workplace is required.

2. So how are they different?

The main difference is that work from home is the authorization granted by employers to workers to carry out their functions from home due to an extraordinary situation. Thus, it is a temporary authorization, so that once this extraordinary situation is overcome, workers must return to their place of work. On the other hand, remote work is completely virtual and there is never physical contact between employers and workers except in special circumstances. Finally, teleworking involves the provision of the service through technological means, but with the possibility that workers occasionally go to the workplace according to the company’s needs.

3. Must they be in writing?

Yes. For the authorization to work from home, a written notice by employers of the authorization given to workers is sufficient. That is, modification of the initial agreement or entering into a new one, is not required. However, this written notice must include certain information such as the situation that allows this authorization to be granted, the term of duration, the functions that workers must perform, among others. In the case of teleworking and remote work, it is necessary that employment contracts clearly indicate the chosen type of modality along with all conditions, obligations and rights that the parties will have. Thus, in the event that the initially agreed upon modality of work is to be changed, the original employment contracts must be modified. 

4. Is the right to disconnect recognized in all three types of agreements?

Yes, employers have the obligation to recognize workers’ right to disconnect from work in order to guarantee respect of their free time and breaks, so that workers can fully enjoy these spaces and reconcile personal and family life with work.

5. What is the digital connectivity aid?

It is a change in the destination of the legally mandated “transportation aid” for those workers who are temporarily enabled to work from home, in order to facilitate access to the connectivity services they require to continue performing their work from their residences. Thus, workers who earn up to two (2) legal monthly minimum wages (SMLMV, by its Spanish acronym) and who are entitled to the payment of “transportation aid”, will receive this payment as a digital connectivity aid during the time they provide their services under the authorization to work from home (article 10, Law 2088 of 2021).

6. Is it mandatory to recognize the digital connectivity aid in all three modalities of distance work?

No, as mentioned above, this aid should only be recognized for workers who: (i) earn up to two (2) SMLMV, (ii) are entitled to “transportation aid”, and (iii) are carrying out their functions under the temporary and transitory modality of work from home.

However, in the case of teleworking, it is possible to establish, by mutual agreement, a compensatory aid for the costs of public services such as Internet, landline and mobile telephony and energy. That is, workers and employers may agree on the recognition of this compensatory aid and its amount, as it is not mandatory. Similarly, in the case of remote workers, the parties are also free to agree on the payment of compensatory assistance, as it too is not mandatory. However, in the event that the aid is agreed upon, the amount may not be less than the value that has been established for the “transportation aid”.

7. Is it necessary for employers to provide workers with work items and tools?

Although employers may provide equipment and work tools suitable for the performance of the contracted functions, it is also possible to agree to workers’ use of their own equipment and tools. Additionally, the parties may agree on a compensatory fee for the use of these tools owned by workers, but it is NOT mandatory.

8. Must any process be carried out before the workers’ compensation administrators?

Yes. For any of the modalities it is necessary to notify the workers’ compensation administrators (ARL, by its Spanish acronym) of the chosen modality, the place where workers will carry out their functions, working hours and the type of risk. Likewise, in case there is any modification in this information, the ARL must also be informed.

9. Must workers be ordered to submit to occupational medical examinations?

Yes. Employers must order occupational medical exams when workers start working in the company, when they leave the company, after a medical leave and also periodically during the employment relationship, to identify workers’ health conditions. These evaluations may be conducted via telemedicine.

10. Is it necessary to have any special regulations in the workplace policy regarding these modalities?

No, the implementation of these modalities does not require an addition or modification to the workplace policies.

11. Must the Ministry of Labor be notified?

Only in the case of teleworking, since employers must inform the Ministry of Labor of the number of teleworkers that the company has, for which a digital form that the Ministry has established must be filled out.

For more information you can consult our entries on teleworking, work from home and remote work or you can contact us.

Implementation of Equity Impairment and Insolvency Risk Indicators

Recently, the Colombian Superintendence of Corporations referred to the obligation of implementing equity impairment and insolvency risk indicators in the analysis of companies’ financial information. In this regard, it recalled that, in accordance with the provisions of Law 2069 of 2020 and Decree 1378 of 2021, the directors of commercial companies have the obligation to monitor the financial statements, financial information and projections of the company. Likewise, they have the obligation to determine if the indicators established in the aforementioned Decree 1378 on equity impairment and insolvency risks are applicable to the company, in accordance with its business model and the commercial sector in which it develops its corporate purpose. If these indicators are applicable, they are of mandatory implementation and doing so demonstrates proper management by the corporate directors. Therefore, in the event that they are not implemented when there is an obligation to do so, it will be considered a breach of the directors’ duties, who may be liable for damages caused to the company, to partners or to third parties by said breach.

In addition, the superintendence established that, once these indicators are implemented and analyzed, the following conclusions can be reached: (i) that there is no equity impairment or insolvency risk, (ii) that there is both equity impairment and insolvency risk, (iii) that there is equity impairment but no insolvency risk, or (iv) that there is no equity impairment but there is risk of insolvency. Additionally, it specified that the implementation of these indicators is not a simple formality, since the results of the analysis must be shared with the company’s highest corporate body (shareholders’ assembly or meeting of partners). The foregoing, in order to allow it to clearly know the company’s situation and risks and to take the decisions it deems appropriate based on the information provided by the company’s directors.

If you have any questions regarding this matter, please contact us.

FAQ: Non-Compliance with the “Ongoing Business Hypothesis” as a Cause for Dissolution

Law 2069 of 2020 expressly repealed the ground for dissolution for losses, according to which, companies had to be dissolved when losses decreased their assets below 50% of their share capital. In its place, this law establishes that companies will enter into dissolution for non-compliance with the principle of ongoing business hypothesis. Below, we answer the most frequently asked questions.

1.What is the ongoing business hypothesis?

It is understood as the intention and capacity that a company has to continue with its operations in the foreseeable future. Thus, an important consideration to take into account in the analysis of compliance with this hypothesis is if the company has the necessary resources to fulfill its obligations when they are enforceable[1]. In accordance with the above, in the event that the company’s financial, operational or legal information does not allow this continuity in business to be inferred, it will be understood that this cause for dissolution has been fulfilled, since the company has no real alternatives other than termination of its operations and liquidation[2].

2. When should compliance with this hypothesis be verified?

Decree 854 of 2021 establishes that verification of compliance with the ongoing business hypothesis must be done at the time of preparation of the general-purpose financial statements at the end of each financial year. However, during the accounting year, the company’s directors must monitor the company’s financial information to determine if there is any loss of equity or risks of insolvency.

3. What information should be considered when verifying this compliance?

Decree 854 establishes that, for the verification of compliance with the ongoing business hypothesis by the company’s directors, all information and projections about the company’s future must be considered. This information must cover, at least, the twelve (12) months following the end of the reporting period. Thus, it is presumed that in cases where a company has a history of profitable operations and easy access to financial resources, it complies with the ongoing business hypothesis and a detailed analysis is not required.

Additionally, Decree 1378 of 2021 establishes that, for the verification of compliance with this hypothesis, directors must take into account all the indicators that are applicable to the company’s business model and the sector in which the corporate purpose is pursued and, if applicable, the following:

  • In the event that the company’s total assets are less than $0, a loss of equity is to be understood.
  • Likewise, there is a loss of equity when negative profits are obtained in the results of two consecutive corporate years.
  • There will be a risk of insolvency when during two consecutive corporate years a result of less than 1.0 is obtained from dividing current assets by current liabilities for each year.

However, it is important to bear in mind that these indicators are intended to facilitate the monitoring of the company’s situation but the fact that there is a loss of equity and / or risk of insolvency does not necessarily imply that the company must be dissolved and liquidated. In these cases, the company’s directors must inform the highest company body of the possible breach of the ongoing business hypothesis, for it to determine if it is possible to continue with the company’s business or whether, on the contrary, it should be dissolved.

4. What should directors do if they find that the hypothesis is not met?

In cases in which directors reasonably consider that the company does not comply with the ongoing business hypothesis and that it is therefore in grounds for dissolution, or when the analysis of the financial statements and projections of the company indicates losses of equity and risks of insolvency, as explained in the previous section, they:  (i) must not initiate new operations other than those of the ordinary course of the company’s business and, (ii) must immediately convene the general assembly of shareholders or partners’ meeting to inform them of this situation and to let them adopt the decision to dissolve and liquidate the company or continue operating the business. This is because the ongoing business hypothesis allows the company´s associates to carry out an analysis of the company’s situation according to their own criteria and taking into account the company’s particularities, since it is not a strict and objective cause that necessarily results in dissolution. If the directors do not comply with these obligations, they will be jointly and severally liable for the damages caused to the associates or to third parties (Article 4, law 2069 of 2020).

5. Is this cause of dissolution in force?

In order to support companies and reduce the effects generated by COVID-19, this cause of dissolution was temporarily suspended. However, this period of temporary suspension expired on April 16, 2022 so that, from this date, it again came into force.

In case you have doubts regarding this or any other issue affecting your company, please contact us.

[1] Annex 5 of Decree 2420 of 2015.

[2] Opinion 220-047475 of 2021, Colombian Superintendence of Corporations.

Share Capital Reduction with Reimbursement of Contributions

On April 27th, the Superintendence of Corporations issued Opinion No. 220-106568 on the share capital reduction of a Colombian company with reimbursement of contributions, in which it relates its previously issued opinions on this matter. Bear in mind that the share capital of a company is made up of the contributions that the partners or shareholders have made, which then become part of the assets of the entity, which can use these good to pursue its corporate purpose.[1] In accordance with article 122 of the Colombian Commercial Code, this decrease in share capital requires the company’s by-laws to be reformed, therefore, in addition to requiring the approval of the partners or shareholders to proceed with this measure, it must comply with what the by-laws and the law establish for the approval and formalization of by-laws reforms[2]. Additionally, the reimbursement of contributions refers to the repayment to associates of the amount of the contribution they previously made to the company. This amount will be calculated depending on the share capital reduction that is effectively enacted and in proportion to each associate’s participation, if something different has not been established in the by-laws[3].

In addition to the above, the Superintendence of Corporations has established in its Basic Legal Memorandum that, in accordance with article 145 of the Colombian Commercial Code, it authorizes, in a general manner, the share capital reduction of all companies that are subject to its inspection, surveillance or control and that are included in one of the following circumstances: (i) the company does not have external liabilities, (ii) the company does have external liabilities, but once the capital reduction is made, the company assets are at least double the external liabilities, or (iii) the creditors expressly accept in writing the share capital reduction, regardless of the company’s assets amount. However, in the event that the above is not met, the company must submit in writing a special request for the superintendence to authorize the intended share capital reduction with reimbursement of contributions. Additionally, in the event that the external liabilities of the company stems from social benefits, the competent labor authority must give its approval.

The reimbursement of contributions to interested partners or shareholders can be made through the delivery of money or goods. However, the way in which this reimbursement will be made and the appraisal of the assets that will be delivered to the associates, must be discussed and approved by the highest social body (shareholders’ assembly or meeting of partners), since there is no legal provision that indicates the procedure to be followed.

Finally, it is important to bear in mind that the company’s legal representative and statutory auditor (if appointed), are liable for any damages caused to the associates that do not participate in the reimbursement, or to the company itself, with the execution of this operation. Likewise, they must ensure that the pursuit of the company’s purpose is not adversely affected by the realization of this reimbursement operation.

For more information, contact us.

[1] Official Letter 220-53255 of 2001, Colombian Superintendence of Corporations.

[2] Article 147, Colombian Commercial Code.

[3] Article 144, Colombian Commercial Code.