Employee Benefits in Spain: A Guide For Employers

What Are Employee Benefits in Spain?

In Spain, employee benefits are divided into mandatory and supplemental categories. Mandatory benefits are stipulated by the Spanish Workers’ Statute (Estatuto de los Trabajadores). In contrast, supplemental benefits are often offered to enhance compensation packages and remain competitive in the job market.

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Types of Workers Eligible for Benefits in Spain

Not all Spanish employees are entitled to the same benefits. For example, Spanish full-time employees work an average of 40 hours per week. These types of Spanish employees are entitled to all statutory benefits including maternity/paternity leave, annual leave, and paid sick leave under Spanish law. 

On the other hand, part-time employees are defined as Spanish employees who work up to 20 hours per week. These employees receive proportional benefits, based on the hours worked, in line with Spanish law.

Contractors and freelancers (autónomo)  in Spain work independently of any employing entity. In Spain, these workers can sign up to a special scheme for freelancers called RETA. This regime requires that freelancers contribute a specified amount to the social security system (Tesorería General de la Seguridad Social – TGSS). In exchange, they can enjoy benefits provided by the system such as medical treatment, sick pay, and retirement. 

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Mandatory Employee Benefits in Spain

Mandatory employee benefits in Spain are statutory requirements outlined by labor laws, ensuring employees receive basic rights such as paid time off, leave for family-related events, and social security.

Maternity and Paternity Leave

Spanish labor law ensures that new mothers receive 16 weeks of paid maternity leave after the birth or adoption of their child. There is an additional guarantee of two extra weeks of paid leave per child in cases where the mother gives birth to multiple babies or babies born with disabilities. 

Paternity leave (or “partner leave” as it is officially called by the Spanish government) has recently also been extended to 16 weeks of paid leave, to accommodate fathers of newborn or adopted children. Both types of leave are funded by the country’s Social Security. 

Annual Leave

Employees in Spain are entitled to 30 calendar days or 22 working days of paid annual leave each year, as outlined in the Workers’ Statute (Estatuto de los Trabajadores). However, the Collective Bargaining Agreements (CBAs) may secure additional days for workers in certain industries. 

Sick Leave

Employees unable to work due to illness are eligible for paid sick leave. This is typically covered by the Social Security system, with up to 18 months of paid sick leave depending on the severity of the illness. The first three days of sick leave are unpaid. The employee can receive 60% of pay between the fourth and 20th day and is eligible to receive 75% of pay from the 20th day onward. 

Statutory Holidays 

In addition to paid annual leave, Spanish employees are entitled to up to 14 paid days off in observance of national holidays (that are region-specific). All Spanish employees must be allowed to celebrate the nine nationwide holidays such as New Year’s Day (Año Nuevo), Good Friday (Viernes Santo), and Labor Day (Día del Trabajo). Other holidays granted to employees are dependent on provincial and regional customs. 

Social Security (INSS) 

In Spain, the social security fund is made up of several funds that address various aspects of employees’ lives such as illness, unemployment, disability, and retirement. 

1. Healthcare: Employers are required to provide their employees with medical insurance under Spanish labor law. To be eligible, employers must enroll their staff with the General Social Security Fund (TGSS). The total social security deduction is 28.3%. Employers contribute 23.6% and employees contribute 4.7% towards the fund. 
2. Unemployment: The Social Security fund provides financial support for individuals who are not currently working but are willing and able to work. 
3. Pension: Individuals who turn 66 (the retirement age) or are eligible for early retirement can claim a pension from the INSS.  
4. Disability (temporary and permanent): Individuals who have suffered temporary or long-term disabilities qualify to receive financial support from the INSS. 

Employers contribute 30.48% and employees contribute 6.47% (a total of 36.95%) towards INSS contributions. 

Workers’ Compensation 

Workers’ compensation is also referred to as Collective Agreement Accident Insurance (Seguro de Accidentes de Convenios Colectivos) because the provisions are usually dependent on the outcome of CBA negotiations for specific industries. 

This insurance provides healthcare and financial support to individuals who have suffered from job-related accidents and illnesses that prevent them from working. 

13th and 14th Month Pay 

While this pay is usually an additional perk in other countries, employers are required to provide their workers with two annual bonuses (13th and 14-month pay). Each bonus is equal to one month of an employee’s salary and is also subject to income tax.

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Supplemental Employee Benefits in Spain

While mandatory benefits ensure basic rights, supplemental employee benefits can significantly enhance a compensation package and help attract top talent. Common non-mandatory benefits in Spain include:

Private Health Insurance 

Employers often provide additional health benefits, such as private medical insurance, to cover employees and their families, complementing the public healthcare system. Health insurance can cost Spanish employees an additional 100 to 200 euros per month so offering private health insurance will be greatly valued by employees. Private healthcare gives employees access to better quality healthcare (when compared to Spain’s public healthcare system).  

An additional benefit that addresses employees’ physical health can make your compensation package more competitive. This can involve offering your employees additional medical coverage that includes expenses such as dental, vision, and disability that are not covered by mandatory health insurance. 

Additional Paid Time Off 

Spanish federal labor law ensures paid leave in certain circumstances such as maternity and paternity leave. However, additional paid time off is a powerful benefit to add to your benefits package as additional days off help employees manage unforeseen circumstances or celebrations in their personal lives. This is sure to boost company morale and improve employee work-life balance. 

Supplemental Retirement Benefits 

Many employers in Spain offer private pension plans to supplement the mandatory public pension system.

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Tax Implications of Employee Benefits in Spain

Certain employee benefits, such as pagas extraordinarias (extra pay), and meal vouchers, can have tax advantages for both employers and employees in Spain. Employers may receive tax deductions for offering specific benefits like private health insurance or childcare and meal vouchers, reducing the overall cost of providing supplemental benefits. 

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Legal Considerations for Employee Benefits in Spain

Compliance with Spanish labor laws is crucial when offering employee benefits. Employers must adhere to regulations outlined in the Estatuto de los Trabajadores (The Worker’s Statutes) and ensure they meet legal obligations. Spanish labor law requires that employers provide base-level benefits to their employees. If employers fail to do so, this can lead to penalties, including fines and legal disputes. 

Mandatory benefits are merely the bare minimum as outlined by Spanish Federal law. Employers can and should consider offering additional perks to their employees. 

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Additional Benefits in Spain to Attract Talent

To remain competitive in the Spanish market, companies often provide additional perks, including:

• Lunch Vouchers: Meal vouchers are a popular benefit and can be tax-efficient.
• Flexible Working Hours: Many employers provide flexible schedules to promote work-life balance.
• Company Vehicles: For qualified employees, this is a common incentive in Spain.
• Health and wellness programs: Whether it’s a gym membership, yoga classes, or an in-office gym, these programs make it easier for employees to stay healthy. 
• Public transportation passes: This can ease the commute for employees who need to head into the office.

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How Benefits Impact Employee Costs in Spain

Employee benefits significantly contribute to the total cost of hiring in Spain. On average, statutory and supplemental benefits can account for around 30-40% of an employee's total compensation. 

For a detailed breakdown of how benefits affect your employer costs, use Playroll’s Free Global Employee Cost Calculator for country comparisons.

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Provide Competitive Employee Benefits in Spain with Playroll

Managing employee benefits can be overwhelming, but Playroll simplifies the process. With a presence in over 180 countries, our platform ensures seamless onboarding, payroll, and benefits administration. Playroll ensures compliance with local labor laws while providing a competitive edge through attractive, localized benefits.

Book a chat with our team to learn how we can scale your global team with ease.

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