Employer of Record in Spain

Hiring in Spain for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Spain in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Spain.
• Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Spain’s labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Businesses can only operate smoothly in Spain if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Spain below, to avoid any compliance issues.

Employment Contract Requirements

All employment contracts in Spain must be written and contain certain mandatory clauses, including:

• Identification of the employer and employee
• Employment commencement date
• Duration of employment
• Location of business
• Base salary, compensation, and benefits, if any
• Professional group or category
• Total working hours
• Holiday entitlement
• Termination clause

Onboarding Process

We can help you get a new employee started in Spain quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Spain

The standard working week in Spain is 40 hours, spread over five days.

Overtime in Spain

In Spain, employees are legally entitled to overtime compensation if their work hours exceed the standard 40 hours per week. The maximum amount of overtime an employee can work annually is 80 additional hours. Overtime regulations are strictly enforced in accordance with collective bargaining agreements.

Probation Period in Spain

Probationary periods are common but not required by law in Spain. Where there are no special provisions in an applicable collective bargaining agreement or employment contract, probationary periods have a maximum period of six months.

Fiscal Year in Spain

1 January - 31 December is the 12-month accounting period that businesses in Spain use for financial and tax reporting purposes.

Payroll Cycle in Spain

The payroll cycle in Spain is usually monthly, with employees being paid on the final working day of each month.

Minimum Wage in Spain

The minimum wage for employees in Spain is typically 7.09 EUR per hour, amounting to around 1,134 EUR per month for a typical 40 hour work week.

Bonus Payments in Spain

13th and 14th-month salary payments are mandatory in Spain. It is a customary practice to divide the annual salary into 14 installments, accommodating the additional salary payments that employers disburse in July and December. This arrangement is specified in both the employee's employment contract and collective agreements.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 31.9% on top of the employee salary in Spain.

Employee Payroll Tax Contributions

In Spain , the typical estimation for employee payroll contributions cost is around 6.45%.

Individual Income Tax Contributions

Individual income tax in Spain is a progressive tax system. Individual income tax ranges from 19% to 47%.

Pension in Spain

The funding for Spanish government pensions comes from contributions made by employees and employers. To be eligible for a government pension in Spain, individuals must currently be at least 65 years old and have a minimum of 15 years of contributions to Spain's National Social Security System. Within the 15 years preceding retirement, a minimum of two years of contributions must have occurred.

Mandatory Leave Entitlement in Spain

The annual leave entitlement in Spain is 22-30 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Spain

Spain's national holidays are listed below; however, regional variations may require the observance of additional and alternative holidays.

Paid Time Off in Spain

In Spain, employees are entitled to a minimum of 30 calendar days of paid leave each year. The terms of an employment contract or collective bargaining agreement may provide for an extension beyond this baseline.

Maternity Leave In Spain

Maternity leave in Spain spans 16 weeks for each parent, with an additional week for each child in the case of multiple births. The leave can start up to four weeks before the expected due date and must be taken continuously. The first 6 weeks after birth is compulsory. Additional details related to Spain's maternity leave benefit include:

• During maternity leave, employees are entitled to receive benefits from the Social Security Administration, amounting to 100% of their average daily wage, capped at a government-defined maximum.
• The payment is covered by the Social Security Agency.
• Employees are protected against dismissal during pregnancy and for nine months after giving birth.
• Employers cannot terminate contracts without a valid, non-pregnancy-related reason during this period.
• Upon returning to work post-maternity leave, employees are entitled to two one-hour breaks per day for breastfeeding or visiting their child in a nearby daycare facility.
• These paid breaks can be taken until the child reaches nine months of age.
• If requested, employers must reduce the employee's working hours by 1/8 or 1/4, with a proportional salary reduction, for up to one year after maternity leave.

Paternity Leave In Spain

The other parent (other than the biological mother) is entitled to up to 16 weeks of leave from social security.

Sick Leave In Spain

Employees in Spain qualify for sick pay if they have made contributions to the social security system for a minimum of 180 days within the five years preceding the onset of illness. Pay comprises 60% of the calculation basis for days 4-20. From day 21, 75% of the calculation basis will be paid. Employer bears the cost for the first 15 days and thereafter, social security takes over.

Parental Leave In Spain

Partner leave for birth or adoption also includes 16 weeks of paid leave at full pay, funded by the countrys Social Security System. Parental leave of 8 weeks is available for the care of a minor child, taken in a continuous or dicontinuous period, until the child turns 8.

Bereavement Leave

Employees are eligible for 2 paid days off in the event of a death in the immediate family.

Marriage Leave

Employees are eligible for up to 15 days of leave in the case of a marriage.

Family care leave

Employees are eligible for up to 2 years of unpaid leave when assisting a severely ill household member or family member.

Termination Process in Spain

In Spain, employers cannot terminate employment at will once the probation period has concluded, and termination must be justified by valid reasons. Other than voluntary termination by employee, mutual agreement or contract expiration, acceptable grounds for termination initiated unilaterally by employer include:

• Probation period
• Objective grounds
• Disciplinary dismissal
• Performance due to unsuitability for the job

Notice Period in Spain

Spanish law generally mandates a 15-day notice period for employment termination. Employers can substitute this notice requirement with financial compensation in lieu of notice.

Severance in Spain

Employers are required to pay severance following objective dismissal. The compensation thereof is a non-taxable payout equivalent to 20 days of salary for each year of service, capped at 12 months' salary.