How to Use An Employer of Record in
Spain

Spain's Estatuto de los Trabajadores mandates indefinite contracts as the default, requires employer social security contributions of approximately 29.9% of gross salary, and enforces sector-specific collective agreements (convenios colectivos) that can override your employment terms if you're not careful. An Employer of Record in Spain becomes the legal employer of your staff, handling all statutory filings, payroll tax withholding, and compliance with both national law and applicable collective agreements while you retain full operational control and avoid setting up a local entity. The EOR removes the risk of misclassifying contracts, missing the mandatory 10-day registration deadline with the Seguridad Social, and exposure to penalties that can reach €10,000 per infraction under the Ley de Infracciones y Sanciones del Orden Social.

What Is an Employer of Record in Spain?

An Employer of Record in Spain is a third-party organisation that becomes the legal employer of your staff under Spanish law, handling all statutory obligations, payroll processing, and compliance with the Estatuto de los Trabajadores and applicable convenios colectivos while you retain full operational control over day-to-day work, performance management, and business objectives. The EOR appears on the employment contract, pays the employee, withholds income tax (IRPF), remits social security contributions to the Tesorería General de la Seguridad Social, and assumes liability for employment law compliance in Spain.

Under Spain's employment law framework governed by the Estatuto de los Trabajadores, indefinite contracts (contratos indefinidos) are the legal default and carry stronger protection than fixed-term arrangements. The EOR ensures every contract includes mandatory clauses covering trial periods (up to six months for qualified roles, two months for others), working hours (maximum 40 per week under most collective agreements), and termination procedures that comply with both national law and any sector-specific convenio colectivo that applies to the employee's role. Fixed-term contracts (contratos temporales) are only permitted for specific circumstances defined in Article 15 of the Estatuto, and misuse triggers automatic conversion to indefinite status.

You retain full control over the employee's daily responsibilities, performance reviews, project assignments, promotion decisions, and business deliverables. The EOR owns the legal employment relationship, meaning it issues the contract, processes monthly payroll in euros, files modelo 111 (monthly IRPF withholding return) and modelo 190 (annual IRPF summary) with the Agencia Tributaria, remits employer and employee social security contributions, manages statutory leave accruals, and executes any termination procedures including severance calculations and mandatory notice periods under Spanish law.

How Does an Employer of Record Work in Spain?

When you hire through an Employer of Record in Spain, the process begins with defining the role and finalising employment terms, then moves through compliance checks, contract preparation, government registrations, payroll setup, and ongoing statutory filings. The EOR acts as the legal employer at every step, ensuring compliance with the Estatuto de los Trabajadores, applicable collective agreements, and all reporting obligations to the Seguridad Social and Agencia Tributaria. Here's how it works in practice.

Step 1: Define Role and Terms

You provide the job description, salary, work location, and any specific benefits or allowances. The EOR reviews these terms against the applicable convenio colectivo for the employee's sector and province to ensure the salary meets or exceeds any sector minimum wage, which often sits above the national Salario Mínimo Interprofesional (SMI) of €1,323 gross per month in 2026 for a full-time role. If a collective agreement applies, the EOR flags any mandatory benefits such as additional salary payments (pagas extraordinarias), meal vouchers (tickets restaurante), or transport allowances. This step typically takes one to three business days depending on the complexity of the role and whether special terms like stock options or international assignments need structuring under Spanish tax and social security rules.

Step 2: EOR Compliance Check

The EOR conducts a compliance review to confirm the proposed employment terms meet all statutory and contractual minimums in Spain. This includes verifying that the gross salary satisfies the 2026 SMI of €1,323 per month (€15,876 annually in 14 payments), that weekly working hours do not exceed 40 unless the applicable convenio colectivo permits otherwise, and that the role classification (grupo profesional) aligns with Spain's occupational categories to avoid misclassification risk. The EOR also confirms whether the role qualifies for a fixed-term contract under Article 15 of the Estatuto de los Trabajadores (permitted only for temporary work, seasonal roles, or specific project-based assignments) or requires an indefinite contract, which is the legal default. If the employee will work remotely or across multiple provinces, the EOR identifies which convenio colectivo applies and whether any regional social security or tax rules create additional obligations.

Step 3: Employment Contract Preparation

The EOR prepares a written employment contract in Spanish, as required by Spanish labour law and reinforced by Article 8 of the Estatuto de los Trabajadores, which mandates written contracts specifying at minimum the employee's identity, job description, salary, working hours, trial period, and applicable collective agreement. Mandatory clauses include the trial period (período de prueba), which cannot exceed six months for qualified technicians or two months for other employees unless a collective agreement sets a different limit, the working day (jornada laboral) with weekly and daily hour distributions, the notice period for termination (preaviso), and reference to the applicable convenio colectivo if one governs the role. Fixed-term contracts must state the specific legal ground under Article 15, the contract duration, and the end date or triggering event, and they automatically convert to indefinite if these conditions are not met or if the employee is renewed beyond legal limits. The contract is issued in the EOR's name as the legal employer, signed by the employee, and a copy must be delivered to the employee and to the legal representatives of the workers (representantes legales de los trabajadores) if they exist in the workplace.

Step 4: Government Registrations

Before the employee's first day, the EOR registers them with the Tesorería General de la Seguridad Social and, if the employee is a new entrant to the Spanish social security system, applies for a número de afiliación (social security number). Spanish law requires employers to communicate the employment start date to the Seguridad Social no later than the day before commencement, using the online Sistema RED or the Contrat@ electronic platform, and failure to register on time triggers automatic fines starting at €3,126 per employee under the Ley de Infracciones y Sanciones del Orden Social. The EOR also notifies the Servicio Público de Empleo Estatal (SEPE) of the new contract within 10 business days using the modelo de comunicación de contratos, which is separate from the social security registration and tracks labour market data. If the employee is a non-EU national, the EOR verifies that they hold a valid work and residence permit (permiso de trabajo y residencia) and that the permit covers the specific job category, as employing someone without proper authorisation exposes the employer to fines of up to €100,000 and potential criminal liability.

Step 5: Payroll in Local Currency

The EOR processes monthly payroll in euros, calculating gross salary, employer social security contributions of approximately 29.9% (covering pension, healthcare, unemployment, and other schemes), and employee social security contributions of approximately 6.35%, then withholding income tax (IRPF) at progressive rates determined by the employee's personal circumstances and filing the monthly modelo 111 return with the Agencia Tributaria. Spain operates a 14-payment salary structure in many sectors, meaning employees receive their annual gross salary divided into 14 instalments rather than 12, with two extra payments (pagas extraordinarias) typically paid in June or July and December, though some employers prorate these into 12 monthly payments. The EOR issues a payslip (nómina) in Spanish showing all deductions, remits net salary to the employee's Spanish bank account by the last working day of the month (or earlier if required by the collective agreement), and pays employer contributions to the Seguridad Social and withheld IRPF to the Agencia Tributaria within the statutory deadlines, typically the last day of the following month for social security and the first 20 days of the following month for IRPF.

Step 6: Ongoing Compliance Management

The EOR manages all recurring statutory filings and compliance obligations for the duration of the employment, including monthly modelo 111 IRPF withholding returns and quarterly modelo 303 VAT returns if applicable, monthly social security contribution payments via Sistema RED, and the annual modelo 190 summary of IRPF withholdings submitted to the Agencia Tributaria by January 31 each year. The EOR tracks and administers all statutory leave entitlements, including 30 calendar days of paid annual leave under the Estatuto de los Trabajadores (reduced pro-rata for part-time employees), 16 weeks of maternity leave (baja por maternidad) and 16 weeks of paternity leave (baja por paternidad), and any additional leave days mandated by the applicable collective agreement or regional law. The EOR monitors changes to Spanish employment legislation, tax rates, social security contribution bands, and collective agreement renewals, updating contracts, payroll configurations, and internal processes to remain compliant without requiring action from you. If your employee takes sick leave (baja por incapacidad temporal), the EOR manages the interaction with the Seguridad Social, processes any subsidio payments that are advanced by the employer and later reimbursed, and ensures continuity of salary payments as required by law and the collective agreement.

Step 7: Termination and Severance

Spanish law requires objective or disciplinary just cause for dismissal, governed by Articles 51 to 57 of the Estatuto de los Trabajadores, and unilateral termination without proper cause (despido improcedente) triggers severance compensation of 33 days of salary per year of service with a maximum of 24 monthly payments, along with the risk of reinstatement orders if the employee challenges the dismissal in court. The EOR calculates the statutory notice period, which is typically 15 days for dismissals on objective grounds (despido por causas objetivas) and zero for disciplinary dismissals (despido disciplinario) if serious misconduct is proven, though collective agreements often impose longer notice periods regardless of the termination ground. Severance (indemnización) for objective dismissals is 20 days per year of service capped at 12 monthly payments, while disciplinary dismissals for serious and proven misconduct (such as repeated absence, insubordination, or fraud) carry no statutory severance, and voluntary resignations require the employee to provide notice as stipulated in the contract or collective agreement, typically 15 days. The EOR prepares the carta de despido (termination letter) stating the legal grounds and factual reasons, delivers it to the employee with the required formalities, processes final payroll including accrued leave and any prorated paga extraordinaria, calculates and pays any severance due, and files the mandatory communication with the SEPE within 10 business days using the modelo de comunicación de fin de contrato.

Employment Laws and Compliance an Employer of Record Handles in Spain

When you hire through an Employer of Record in Spain, the EOR assumes full responsibility for employment law compliance across statutory contracts, payroll tax, social security, leave administration, termination procedures, and regulatory filings, so you don't need to build an in-country HR or legal function.

• Employment Contracts: The EOR prepares written contracts in Spanish complying with Article 8 of the Estatuto de los Trabajadores, which mandates disclosure of job category, salary, working hours, trial period, and applicable collective agreement. Indefinite contracts are the legal default, and fixed-term contracts are only valid under Article 15 for temporary, seasonal, or project-based work; misuse converts the contract to indefinite status automatically. Failure to provide a written contract within the required timeframe can result in fines of up to €6,251 per employee under the Ley de Infracciones y Sanciones del Orden Social.
• Payroll and Income Tax Withholding: The EOR calculates and withholds IRPF (Impuesto sobre la Renta de las Personas Físicas) at progressive rates ranging from 19% to 47% based on the employee's income and personal circumstances, files monthly modelo 111 returns with the Agencia Tributaria by the 20th of the following month, and submits the annual modelo 190 summary by January 31. Late or incorrect filings trigger penalties starting at €300 per return plus interest, and the employer is liable for any underpayment of IRPF even if the error was in the employee's favour.
• Social Security and Pension Contributions: The EOR registers employees with the Tesorería General de la Seguridad Social before their start date and remits monthly contributions covering pension (retirement and disability), healthcare, unemployment, Fondo de Garantía Salarial (wage guarantee fund), professional training, and other schemes. Employer contributions are approximately 29.9% of gross salary and employee contributions are approximately 6.35%, though rates vary slightly by contract type and occupational category. Failure to register an employee or pay contributions on time results in automatic surcharges of 20% if corrected within the first month, rising to 35% thereafter, plus potential criminal liability for prolonged non-payment exceeding €50,000.
• Statutory Leave and Public Holidays: The EOR administers 30 calendar days of paid annual leave per year under Article 38 of the Estatuto de los Trabajadores, 14 public holidays (including national, regional, and local days), 16 weeks of maternity leave and 16 weeks of paternity leave at 100% salary funded by the Seguridad Social, and sick leave paid at 60% of the regulatory base from day four to day 20 and 75% from day 21 onward. Employers who deny statutory leave or fail to pay during protected absences face fines of up to €6,251 per infraction and potential claims for damages.
• Termination and Severance: The EOR manages dismissals under Articles 49 to 57 of the Estatuto de los Trabajadores, ensuring proper legal grounds (objective economic reasons, disciplinary cause, or mutual agreement), calculating severance at 20 days per year for objective dismissals or 33 days per year for unfair dismissals, and issuing the carta de despido with required formalities. Unfair dismissal (despido improcedente) declared by a labour court entitles the employee to either reinstatement or severance compensation, and procedural errors such as incorrect notice or missing justification automatically render the dismissal unfair regardless of underlying cause.
• Working Time and Overtime: The EOR ensures compliance with the 40-hour maximum working week under Article 34 of the Estatuto de los Trabajadores, daily rest periods of at least 12 hours between shifts, a minimum 30-minute break for workdays exceeding six hours, and accurate time tracking using a sistema de registro de jornada (mandatory since 2019) that records start and end times for every employee every day. Overtime (horas extraordinarias) is capped at 80 hours per year unless the collective agreement sets a different limit, must be compensated at a premium rate or with equivalent rest, and failure to track working time can result in fines of up to €6,251 per infraction.
• Health and Safety: The EOR complies with the Ley de Prevención de Riesgos Laborales, which requires employers to conduct risk assessments, provide mandatory health and safety training, offer periodic medical examinations to employees, and contract a servicio de prevención ajeno (external prevention service) unless the company has sufficient internal resources. Employers must notify workplace accidents to the authority within 24 hours if they result in absence, and serious or fatal accidents must be reported immediately. Non-compliance with health and safety obligations can result in fines ranging from €40,000 to €819,780 for very serious infractions and potential criminal liability for gross negligence.
• Data Protection and Employee Privacy: The EOR processes employee personal data in compliance with the GDPR and Spain's Ley Orgánica de Protección de Datos Personales y Garantía de los Derechos Digitales, maintaining lawful bases for processing (typically contract performance and legal obligation), providing privacy notices, implementing security measures, and respecting employee rights to access, rectification, and deletion. Spain's law also grants employees the right to digital disconnection (derecho a la desconexión digital), limiting employer contact outside working hours, and employers must establish internal policies governing this right and remote work arrangements. GDPR violations can result in fines up to €20 million or 4% of global annual revenue, whichever is higher.
• Collective Agreements: The EOR identifies and applies the relevant convenio colectivo based on the employee's sector, occupation, and geographic location, as collective agreements often set higher wage floors, additional leave days, sector-specific benefits, and different termination notice periods that override the statutory minimums in the Estatuto de los Trabajadores. Spain has over 4,000 active collective agreements covering sectors from construction to hospitality to technology, and applying the wrong agreement or ignoring its terms exposes the employer to back-pay claims, penalties, and potential strikes or labour conflicts. The EOR monitors renewals and updates to the applicable convenio, ensuring payroll and contracts remain compliant as terms change.
• Employment of Foreign Nationals: The EOR verifies that non-EU employees hold valid work and residence permits before employment begins, ensures the permit covers the specific job category and employer, and monitors renewal deadlines to avoid lapses in authorisation. Employing a foreign national without proper permits triggers fines ranging from €10,001 to €100,000 per employee under the Ley Orgánica sobre Derechos y Libertades de los Extranjeros en España, and repeat violations can result in criminal prosecution of company directors. The EOR also manages any reporting obligations to the Oficina de Extranjería when hiring or terminating non-EU staff.

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

Using an Employer of Record in Spain involves two cost components: the EOR's service fee and the statutory employer costs mandated by Spanish law. Statutory costs include social security contributions, which are fixed by the Tesorería General de la Seguridad Social and cannot be reduced or avoided. Playroll's Employer of Record service fee starts from $399 per employee per month, billed separately from payroll and statutory costs. This gives you a predictable monthly cost structure with no hidden setup fees or long-term commitments.

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

Playroll's service fee covers all contract drafting in Spanish, monthly payroll processing, IRPF and social security filings, government registrations with the Seguridad Social and Agencia Tributaria, statutory leave administration, ongoing compliance monitoring, and support for terminations including severance calculations and carta de despido preparation. There are no additional charges for onboarding, compliance reviews, or employee offboarding.

Employer of Record vs Setting Up an Entity in Spain

Choosing between an Employer of Record and establishing your own legal entity in Spain depends on your hiring plans, budget, timeline, and risk tolerance. Foreign companies typically incorporate a Sociedad Limitada (S.L.) or Sociedad Anónima (S.A.) when entering Spain, which requires notarised articles of association, registration with the Registro Mercantil, obtaining a Spanish tax ID (NIF), and opening a local bank account to deposit minimum share capital of €3,000 for an S.L. or €60,000 for an S.A. The entire incorporation process takes approximately eight to twelve weeks and costs between €3,500 and €7,000 including legal, notary, and registration fees.

For companies hiring fewer than 15 employees in Spain, 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 Spain when the time is right, without switching providers or rebuilding your HR processes.

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

The total timeline to hire an employee in Spain through an Employer of Record typically ranges from 10 to 15 business days, assuming the candidate is ready to start and all required documents are provided promptly.

• Stage 1: Contract preparation and signing (2 to 4 business days): The EOR drafts a compliant employment contract in Spanish under the Estatuto de los Trabajadores, incorporating mandatory clauses, applicable convenio colectivo terms, and any custom benefits or equity arrangements. Timing depends on the complexity of the role, whether legal review is needed for stock options or international assignment clauses, and how quickly the employee returns the signed contract.
• Stage 2: Government registrations (1 to 3 business days): The EOR registers the employee with the Tesorería General de la Seguridad Social and communicates the start date via Sistema RED, which must be completed no later than the day before the employee begins work under Spanish law. Missing this deadline triggers automatic fines starting at €3,126 per employee under the Ley de Infracciones y Sanciones del Orden Social, so the EOR prioritises this step to ensure the employee can legally start on the agreed date.
• Stage 3: Payroll configuration and first cycle (3 to 5 business days): The EOR configures payroll settings including gross salary, prorated pagas extraordinarias if applicable, IRPF withholding based on the employee's personal circumstances, and social security contribution rates, then tests the payroll calculation and confirms bank account details. Spain operates monthly pay cycles with salary typically paid on the last working day of the month, so the employee's first payslip will be issued at the end of their first full month of work.
• Stage 4: Spain-specific requirements (runs in parallel, adds 0 to 2 business days): If the employee is a non-EU national, the EOR verifies their work and residence permit and confirms the permit covers the specific job category before finalising the hire, which can add up to two business days if documentation needs clarification. For EU nationals or Spanish residents, this step completes immediately as they have automatic work authorisation.

Timelines can extend if the employee does not have a Spanish bank account (required for salary payments), if the applicable convenio colectivo imposes sector-specific registration requirements, or if the role involves complex compensation structures such as multi-country equity grants or expatriate tax planning that require additional legal review. Delays in providing required documents such as proof of identity, social security number (número de afiliación), or academic qualifications can also push back the start date by several business days.

By comparison, incorporating a Sociedad Limitada in Spain and then hiring your first employee takes approximately 10 to 14 weeks, including 8 to 12 weeks for entity registration and another 2 weeks for setting up local payroll and HR infrastructure.

How Playroll's Employer of Record Process Works in Spain

Playroll's Employer of Record service in Spain is built for speed, compliance, and transparency, giving you full control over your team while we handle the legal and administrative complexity of Spanish employment law.

1. You define the hire

You tell us the role, salary, benefits, and start date. We review the terms against the applicable convenio colectivo and flag any adjustments needed to meet sector minimums or statutory requirements under the Estatuto de los Trabajadores.

2. We prepare a compliant contract

Playroll drafts the employment contract in Spanish, including all mandatory clauses such as trial period, working hours, applicable collective agreement reference, and termination notice periods required by Article 8 of the Estatuto de los Trabajadores. The contract is issued in Playroll's name as the legal employer, signed by the employee, and delivered with a copy to you for your records.

3. Employee onboarded and payroll goes live

We register the employee with the Tesorería General de la Seguridad Social and Agencia Tributaria before their start date, meeting the mandatory one-day-before-commencement deadline, and configure payroll to process monthly salary, IRPF withholding, and social security contributions. The entire onboarding process from signed contract to first day of work takes 10 to 15 business days.

4. Ongoing compliance, and growth when you need it

Playroll manages all statutory filings, leave administration, payroll processing, and compliance monitoring for the life of the employment, tracking changes to tax rates, social security bands, and collective agreements so your contracts stay compliant. If your hiring in Spain grows to where a local entity makes financial sense, Playroll's global entity setup service can incorporate your Sociedad Limitada and transition employees onto your own payroll without switching platforms or rebuilding processes.