How to Use An Employer of Record in
Andorra

Andorra requires employers to contribute 15.5% to social security (CASS) on top of salaries, plus navigate the Qualified Code of Labor Relations that sets strict termination procedures and mandatory collective bargaining coverage. An Employer of Record in Andorra becomes your legal employer, ensuring full compliance with local employment law while you retain operational control over your team. This eliminates the risk of inadvertently violating Andorra's residency-based employment quotas or missing mandatory CASS registrations that must happen before your employee's first day.

What Is an Employer of Record in Andorra?

An Employer of Record in Andorra is a third-party organisation that becomes the legal employer of your staff under Andorra law, handling all statutory obligations, payroll, and compliance while you retain full operational control. The EOR takes on liability for employment law compliance, social security contributions, and termination procedures on your behalf.

Under Andorra's Qualified Code of Labor Relations (Codi Qualificat de les Relacions Laborals), the EOR must manage mandatory contract clauses including probation periods, collective agreement coverage, and statutory leave entitlements. They handle CASS social security registrations, income tax withholding through the Andorran Tax Administration, and compliance with sector-specific minimum wages that often exceed the national minimum.

You retain complete control over daily management, performance reviews, and role responsibilities. The EOR owns payroll processing, employment contracts, statutory filings, and termination procedures. This split protects you from employment law violations while ensuring your employee receives full protection under Andorra's labour framework.

How Does an Employer of Record Work in Andorra?

Hiring through an Employer of Record in Andorra involves navigating the country's residency quotas, social security system, and collective bargaining framework. The process takes you from job offer to compliant employment without requiring local legal expertise or entity setup. You'll work through seven key steps that ensure full compliance with Andorra's employment laws while maintaining operational control over your new hire.

Step 1: Define Employment Terms

You specify the role, salary, and employment conditions for your Andorra hire. The EOR verifies whether your position falls under a collective agreement, as most sectors in Andorra have binding collective bargaining coverage that sets minimum salaries above the national minimum wage of €1,083.33 per month. They confirm the job classification aligns with Andorra's occupational categories and check if any sector-specific requirements apply. This upfront review prevents compliance issues during contract preparation.

Step 2: Compliance Review

The Employer of Record conducts a comprehensive compliance check against Andorra's employment framework. They review applicable collective agreements for your industry, verify the current national minimum wage of €1,083.33 set by the Government of Andorra, and confirm working time limits of 40 hours per week with maximum 8 hours daily. They assess employee classification rules to ensure correct categorization and identify any sector-specific requirements like professional licensing or certification needs.

Step 3: Employment Contract

Employment contracts in Andorra must be drafted in Catalan as the official language, though a parallel version in another language can be provided for clarity. Under the Qualified Code of Labor Relations, contracts must include job title and description, gross monthly salary, working hours and schedule, notice periods for termination, probation period terms, and applicable collective agreement references. Indefinite-term contracts are the legal default in Andorra, with fixed-term contracts only permitted for temporary project work, seasonal employment, or replacing employees on leave. The maximum probation period is six months for most positions, reduced to three months for contracts under one year.

Step 4: Government Registrations

The Employer of Record registers your employee with CASS (Caixa Andorrana de Seguretat Social) within five days of hire, which is mandatory before the employee can begin work. They also register with the Andorran Tax Administration for income tax withholding purposes and notify the Ministry of Labor if required for certain sectors. Missing these registration deadlines can result in fines and prevent your employee from legally working in Andorra.

Step 5: Payroll Setup

Andorra follows a monthly payroll cycle, with salaries paid in euros. The EOR handles income tax withholding based on progressive rates from 0% to 10% depending on income level, remitting payments to the Andorran Tax Administration. They calculate and withhold the employee's 6.5% social security contribution to CASS while managing the employer's 15.5% contribution separately.

Step 6: Ongoing Compliance

The EOR manages monthly CASS contribution filings, quarterly income tax returns to the Andorran Tax Administration, annual leave balance reporting, and collective agreement compliance monitoring. They handle mandatory 13th and 14th month salary payments where applicable and ensure adherence to working time regulations. Regular compliance updates keep pace with changes to Andorra's employment laws and collective bargaining outcomes.

Step 7: Termination Process

Andorra allows both justified termination (for cause or economic reasons) and unjustified dismissal under the Qualified Code of Labor Relations, though severance obligations differ significantly. Notice periods range from 15 days for employees with under one year of service to three months for those with over ten years, with collective agreements often providing longer notice. Severance pay applies only for unjustified dismissal, calculated at 20 days' salary per year of service with no legal cap, though collective agreements may provide more generous terms. The employer must provide written notice stating termination reasons and follow any disciplinary procedures outlined in applicable collective agreements, with economic dismissals requiring consultation with employee representatives where they exist.

Employment Laws and Compliance an Employer of Record Handles in Andorra

When you hire through an Employer of Record in Andorra, they assume complete responsibility for compliance across every aspect of Andorra's employment framework, eliminating your need to master local labor law or build in-country HR capabilities.

• Employment Contracts: The EOR drafts contracts in Catalan per legal requirements under the Qualified Code of Labor Relations, including all mandatory clauses like probation terms and collective agreement references. Non-compliant contracts can void employment protections and trigger labor disputes.
• Income Tax Withholding: The EOR calculates and remits progressive income tax from 0% to 10% to the Andorran Tax Administration monthly. Incorrect withholding exposes both employer and employee to penalties and requires complex reconciliation procedures.
• Social Security Contributions: The EOR manages CASS contributions totaling 22% of salary (15.5% employer, 6.5% employee) with monthly filing deadlines. Late contributions incur interest penalties and can compromise employee benefit eligibility.
• Statutory Leave Management: The EOR administers 23 days annual leave, 14 public holidays, and unlimited sick leave with medical certification per Andorran standards. They handle maternity/paternity leave calculations and coordinate with CASS benefit payments.
• Termination and Severance: The EOR manages notice periods from 15 days to 3 months and calculates severance at 20 days per year for unjustified dismissals under the Qualified Code of Labor Relations. Improper termination procedures can lead to reinstatement orders and additional compensation.
• Working Time Regulations: The EOR ensures compliance with 40-hour weekly limits, 8-hour daily maximums, and mandatory rest periods regulated by the Ministry of Labor. Violations can trigger labor inspections and penalty assessments.
• Health and Safety: The EOR maintains workplace safety compliance under Andorran occupational health regulations, including mandatory risk assessments and safety training documentation. Non-compliance can result in work stoppages and criminal liability.
• Data Protection Compliance: The EOR handles employee data under Andorra's Personal Data Protection Act, ensuring proper consent, storage, and processing procedures. Data breaches carry significant fines and notification obligations.
• Collective Agreement Coverage: The EOR ensures compliance with sector-specific collective agreements that typically provide higher wages and better conditions than statutory minimums. Violations can trigger union grievances and administrative sanctions.
• Residency Work Quotas: The EOR manages Andorra's employment quotas that limit non-resident workers to specific percentages of company workforce, ensuring proper authorization and reporting to immigration authorities. Quota violations can result in work permit revocation and business penalties.

How Much Does It Cost to Use an Employer of Record in Andorra?

Employer of Record costs in Andorra include your service fee plus statutory employer on-costs mandated by Andorran law. The service fee covers compliance management, payroll administration, and contract handling, while statutory on-costs are fixed legal requirements that apply regardless of your EOR provider. Playroll's service fee starts from $399 per employee per month, billed separately from all statutory obligations.

Let's look at an example that includes a base salary and the EOR service fee.

The Employer of Record service fee includes payroll processing, statutory filing and remittance to CASS and tax authorities, employment contract management, ongoing compliance monitoring, and HR support. This fee replaces the need for local legal counsel, accounting services, or in-country HR functions in Andorra.

Employer of Record vs Setting Up an Entity in Andorra

The EOR versus entity decision depends on your hiring timeline and commitment level in Andorra. Most foreign companies establish a Societat Anònima (SA) or Societat de Responsabilitat Limitada (SL) when building a permanent presence. Entity registration involves notarization, capital requirements, and regulatory approvals that typically take 6-8 weeks, making it unsuitable for immediate hiring needs in Andorra's competitive talent market.

For companies hiring fewer than 10 employees in Andorra, an Employer of Record is almost always the faster and more cost-effective route.

Playroll also supports your long-term growth through its Global Entity Setup product, which handles entity incorporation and local payroll in 120+ countries, so you can transition from EOR to your own compliant entity in Andorra when the time is right, without switching providers or rebuilding your HR processes.

How Long Does It Take to Hire Someone in Andorra Through an Employer of Record?

Hiring through an Employer of Record in Andorra typically takes 5 to 10 business days from signed offer to employee start date.

• Stage 1: Contract preparation and signing (1-2 business days): The EOR prepares an employment contract in Catalan compliance with the Qualified Code of Labor Relations and applicable collective agreements. Timing depends on contract complexity and how quickly your candidate reviews and signs the agreement.
• Stage 2: Government registrations (2-3 business days): The EOR registers your employee with CASS and the Andorran Tax Administration, with CASS registration required within 5 days of hire by law. Missing this deadline prevents your employee from legally starting work and can trigger penalties.
• Stage 3: Payroll configuration and first cycle (1-2 business days): Payroll setup involves configuring CASS contributions, income tax withholding brackets, and any collective agreement-specific benefits for monthly payment cycles. Your employee receives their first payslip covering their initial month's work and any prorated amounts.
• Stage 4: Residency quota verification (1-3 business days): The EOR verifies compliance with Andorra's non-resident worker quotas that limit foreign employees to specific percentages of total workforce. This requirement is unique to Andorra and can run parallel with other registration stages if documentation is ready.

Timelines can extend for visa processing if your employee needs work authorization, though many EU citizens have streamlined access to Andorran employment. Public holidays in Andorra, particularly around August and December, can also add processing time to government registrations.

Compare this to setting up your own entity in Andorra, which takes 6-8 weeks minimum before you can hire your first employee.

How Playroll's Employer of Record Process Works in Andorra

Here's exactly what happens when you hire through Playroll in Andorra:

1. You Define Your Hire

You provide the role details, salary, and employment terms for your Andorra position. Playroll reviews these against applicable collective agreements and confirms compliance with local employment standards.

2. Contract Preparation

Playroll drafts a compliant employment contract in Catalan under the Qualified Code of Labor Relations, including mandatory clauses like CASS social security enrollment and applicable collective agreement coverage. The contract covers all statutory requirements while protecting your operational control over the role.

3. Employee Onboarding

Your new hire is onboarded within 5-10 business days, with Playroll handling CASS registration, tax authority notification, and residency quota compliance. Payroll goes live immediately with proper withholding and contribution calculations for Andorran requirements.

4. Ongoing Compliance Management

Playroll manages all statutory filings, collective agreement compliance, and employment law updates in Andorra while you focus on managing your team's performance and growth. As your presence in Andorra expands, Playroll can also handle global entity setup to establish your own compliant local entity when that becomes the right strategic move.