Employer Action Code: Act
Despite widespread opposition from businesses and center-right politicians, and a judicial suspension ruling, the government has increased the monthly minimum wage (salario mínimo legal – SMMLV) by 23.7%, effective January 1, 2026. This increase is more than four times the rate of inflation. In addition to the impact on the lowest-paid employees, the new SMMLV also significantly raises the eligibility threshold for the “integral salary regime” (salario integral – ISR) with knock-on effects to employees paid under the ISR.
Key details
The SMMLV is typically adjusted annually in January based on changes in the cost of living, productivity, projected inflation and general economic conditions. Annual consumer price inflation was 5.1% for 2025 and is forecast at 5.8% for 2026, according to Oxford Economics. At the end of 2025, the government announced the 23.7% increase in the SMMLV, to 1,750,905 Colombian pesos (COP). That decree was suspended by the Council of State (the highest administrative court) in February 2026, pending justification or a new decree from the administration. The government duly issued a new decree for the same increase, ahead of new elections for parliament in March and a presidential election in May.
As a result, the lowest-paid workers – those earning below two times the SMMLV – are entitled to COP 2,000,000 per month in wages based on the SMMLV plus the mandatory transportation allowance, which was increased by 24.5% to COP 249,095. Under the ISR, employees with a monthly base salary at least 10 times the SMMLV and total salary and benefits at least 13 times the SMMLV can opt to receive the annual value of mandatory reward elements (i.e., overtime, service bonuses [prima de servicios] and severance [cesantías]) integrated into their base pay.
The SMMLV increase has had a direct impact on roles earning close to both the SMMLV and the ISR threshold. Companies have implemented various measures to mitigate the effects on costs, salary structures and overall compensation policies. Companies recently surveyed by WTW indicated the following responses to the new minimum integral salary:
- 38% converted employees from the ISR to non-integrated salary
- 37% are evaluating making this change in the short term, potentially during 2026
A few companies have adopted mechanisms such as advance bonuses, one-time bonuses or forgivable loans to mitigate cash flow impacts and support an orderly transition when moving employees out of the ISR. For positions with salaries very close to the SMMLV, 62% of organizations are adjusting salaries to match the new SMMLV, a change that has compelled companies to redesign their salary structures, as the increase in the SMMLV generated compression at the lowest levels. Redesigns include eliminating obsolete salary bands, expanding salary ranges to preserve internal differentiation and enable growth within the level, and implementing short- and medium-term measures to reinforce differentiation based on job impact and employee experience.
Employer implications
The median salary budget increase for 2026 across all employee categories among companies surveyed prior to the SMMLV increase announcement was 5.5%; WTW’s latest survey indicates that this has risen to 6.2% since the SMMLV increase was confirmed. Eighty-nine percent of companies surveyed are implementing salary increases within the first four months of the year, reflecting a market trend toward early-cycle adjustments to ensure timely alignment with inflation, budget planning and internal compensation structures. Companies should review the impact of the change on their pay policies to determine how to absorb the impact of the SMMLV adjustment.
