How to hire employees in Spain
Hiring employees in Spain can be a complex process for foreign employers, especially when it comes to navigating the nuances of Spanish labor laws and regulations. Understanding the legal framework is crucial for any business looking to establish or expand its presence in the Spanish market. Whether you’re considering hiring foreign employees, integrating remote workers into your team, or setting up a local workforce, it’s essential to be well-informed about the contractual obligations, social security contributions, and the rights of employees under Spanish law. This article serves as a comprehensive guide to assist employers in mastering the intricacies of the Spanish hiring landscape. At Lawants, we offer expert guidance and support throughout the hiring process, ensuring that your business complies with all legal requirements while optimizing your HR investments in Spain.
Guide to hiring employees in Spain
When considering expanding your business into Spain or hiring within the country, it’s imperative to acknowledge that employment is highly regulated, with a strong emphasis on protecting employees’ rights. Before engaging in the process of hiring in Spain, foreign employers must familiarize themselves with the multitude of legislations that define the Spanish labor landscape. This includes understanding that jobs are meticulously categorized, with each category governed by specific regulations regarding salary ranges, working hours, and annual leave entitlements.
A cornerstone of Spanish employment law is the Workers’ Statute (Estatuto de los Trabajadores), which comprehensively outlines the rights and obligations of both employers and employees. This statute is pivotal in regulating individual and collective employment relations and serves as a reference for the convenio colectivo. The convenio colectivo, or collective bargaining agreement (CBA), is a crucial component of Spanish labor law. It specifies professional classifications, minimum wage standards, and other working conditions within various sectors.
Spain has also implemented significant labor reforms to address economic challenges and promote stable employment. Notable reforms include those in response to the 2008 economic crisis and more recent legislation in 2021 aimed at reducing temporary work.
Other legislative updates have focused on areas such as workplace safety, gender equality, data protection, remote working, delivery platform workers, social security reforms, training opportunities, and regulations on temporary contracts. Understanding these complex frameworks is essential for any employer aiming to hire in Spain successfully.
Mastering the intricacies of hiring in Spain can be a challenging task, particularly for international businesses. At Lawants, we specialize in simplifying this process for you. Our expert labor advisors and attorneys are well-versed in the nuances of Spanish employment law, ensuring your hiring practices are compliant, efficient, and tailored to your business needs.
Employment contracts in Spain
Employment contracts in Spain are the foundation of the employer-employee relationship and are subject to stringent regulations.
There are primarily two types of contracts: indefinite contracts (contratos indefinidos) and fixed-term contracts (contratos temporales).
An indefinite contract, as the name implies, does not have a set end date and could potentially extend until the employee’s retirement, barring any terminations that may arise. On the other hand, a fixed-term contract is characterized by specific start and end dates.
Traditionally, Spanish companies have been cautious in issuing indefinite contracts due to the complexities involved in terminating such agreements (read our article on employment termination in Spain) and the substantial compensation packages they entail. As a result, securing an indefinite contract is often regarded with as much importance as the salary package itself by Spanish employees.
When recruiting in Spain, presenting a formal contract is an essential step. While verbal agreements are valid for short-term engagements, any employment exceeding four weeks requires a written contract to be issued within two months of the employee’s start date.
Additionally, regardless of the contract’s duration, a basic summary (copia básica) must be registered with the Employment Office. Official templates for specific types of contracts, such as seasonal employment agreements, are also mandated by the Employment Office.
In general, the employment contract must encapsulate several critical elements:
- Identification of the involved parties
- Commencement date
- Duration of employment if temporary
- Designated workplace
- Professional category or group
- Detailed salary structure including benefits and other forms of compensation
- Total working hours
- Annual leave entitlement
- Notice period requirements
- Reference to the governing collective bargaining agreement (CBA)
These details ensure transparency and protect both parties by clearly defining the terms of employment.
Working hours and overtime
In Spain, the legal framework establishes that full-time employees are limited to an average of 40 hours of work per week, calculated on an annual basis. Daily working hours should not exceed nine hours unless otherwise agreed upon, and for minors under 18 years old, the maximum is eight hours per day.
Overtime is capped at 80 hours annually, excluding any overtime compensated with equivalent rest time.
The typical Spanish workday starts at 9:00 am and breaks around 2:00 pm for a siesta. Work then generally resumes from 4:00 or 5:00 pm and concludes around 8:00 pm. It is a requirement under the Spanish Workers Statute Royal Decree-Law 8/2019 for employees to record their daily working hours by clocking in and out, including when they take breaks or finish their workday, ensuring accurate tracking of working hours and overtime.
In Spain, the duration of the probation period for new employees is contingent upon their level of seniority and qualifications. For employees classified as “qualified” technical staff, the probationary period may extend up to six months. In contrast, “unqualified” employees typically have a shorter probation period, which is generally limited to two months. This initial phase allows both the employer and the employee to assess suitability for the role before confirming ongoing employment.
In Spain, the standard payroll frequency for employee salaries is monthly. Employers typically have the option to distribute salaries in 14 payments, which includes the regular monthly salary plus two additional payments.
To streamline the process and avoid any misunderstandings, it is advisable to agree on a gross annual salary with employees, regardless of the payment division. Alternatively, if both employer and employee agree to a 12-payment structure, it is necessary for the employee to sign a statement confirming this preference, and the employer should inform their payroll provider accordingly.
For more information, read our article: Payroll in Spain: Guide for Employers
In Spain, employees are legally entitled to a minimum of 23 business days of paid leave annually. This leave may be split into different periods, provided that at least one of these periods spans a continuous two-week duration. It is important for employers to note that collective agreements, the convenios colectivos, may stipulate additional leave entitlements specific to certain industries or job categories, potentially offering more generous terms than the statutory minimum.
In the event of illness, Spanish law does not specify a set number of ‘sick days’. Instead, employees who are unable to work due to sickness must obtain a medical certificate, known as a ‘baja’, which confirms their incapacity to perform their duties. Initially, the employer is responsible for covering the full salary of the employee during the first three days of leave. From the fourth day onwards, the social security system steps in to provide payment to the employee. The maximum duration for sick leave in Spain is established at 18 months, after which additional assessments and procedures may apply.
In Spain, employees are granted the right to parental leave, encompassing both maternity and paternity leave. Each parent is entitled to 16 weeks of paid leave, with compensation at 100% of their full pay, which is funded by the social security system. For maternity leave, a mandatory period of six weeks must be taken immediately following the birth. Eligibility for this state-funded leave requires that employees over 26 years old must have accumulated over 180 days of work within the last seven years across any employment.
Other paid leaves
Spanish labor law grants employees various entitlements to paid leave for personal circumstances. Employees have the right to 15 days of leave for marriage, which includes weekends. Additionally, they are entitled to 2 days of leave in the event of a family member’s death and 1 day for home relocation.
Here are all types of leave that may be available depending on the collective agreement and the employer’s consent:
- Up to two years of unpaid leave can be taken to care for a seriously ill household or family member.
- Two days of leave, extendable to four if travel is necessary, are provided for attending to a family member with a serious illness or injury.
- In cases where a child, adopted child, or foster care child has a disability, maternity leave can be extended by an additional two weeks.
- For the death of a family member, two days of paid leave are granted, which can be extended to four if travel is involved.
- Employees moving to a new home are allowed one day’s leave.
- Public or personal obligations, such as court appearances, may also warrant paid leave with proper written notice.
- Engaging in trade union activities or fulfilling duties as a workers’ representative may entitle employees to additional leave as established by law or collective agreement.
Additionally, employees have the right to adjust their working hours to attend professional training courses, exams, or classes necessary to obtain an academic or professional qualification. After completing one year of service with a company, and upon reaching 20 years of age, employees are also entitled to professional training that is related to the company’s activities.
In Spain, employees enjoy a variety of holidays that span across national, regional, and local observances. It is crucial for employers to be aware of these as they differ by location and can affect work schedules. Nationally recognized holidays apply to all employees regardless of their region. Additionally, each of Spain’s autonomous communities and localities may celebrate their own set of holidays, entitling employees to additional days off. To ensure compliance with holiday entitlements, employers should consult a comprehensive and up-to-date holiday calendar for Spain, which details all the national, regional, and local holidays that may apply to their employees based on their specific work location.
Salary and Payroll
In Spain, the salary system is denominated in the Euro (EUR), the country’s official currency.
Minimum wages are determined by industry sectors through collective bargaining agreements. The national minimum wage is generally set at 965 EUR per month, which breaks down to 32.17 EUR per day for employees receiving 14 payments annually, culminating in a minimum annual income of 13,510 EUR for full-time workers.
For temporary and seasonal employees working less than 120 days at the same company, the daily minimum is set at 45.70 EUR. Domestic workers paid by the hour must receive at least 7.55 EUR per hour worked. While employees typically anticipate an annual salary increase ranging from 3% to 10%, the actual increment is influenced by various factors, including collective bargaining agreements and employer discretion.
Employers should offer gross annual salaries (sueldo en bruto) rather than net figures to avoid misunderstandings. Payroll in Spain is processed monthly, with payments issued between the 25th of the current month and the 5th of the subsequent month. Employers are required to provide a detailed payslip each pay period, which includes total remuneration, net salary, social security and tax deductions, along with personal and employer information. These records must be maintained for a minimum of four years.
In Spain, employees are entitled to receive a 13th and 14th month’s salary, which is a mandatory practice embedded in the employment culture. Typically, an employee’s annual salary is divided into 14 equal installments. These additional payments are issued by employers in two separate months—commonly in July and December—as outlined in the terms of the employment contract and reinforced by collective bargaining agreements. This practice ensures that employees receive these extra payments as part of their standard remuneration package.
In Spain, the pension system is primarily supported by the state pension scheme, which requires considerable contributions from both employer and employee. Employers are obligated to contribute 23.6% of an employee’s salary towards the pension fund, while employees contribute a smaller portion of 4.7% of their earnings. While occupational and private pension plans are available, they are not as commonly utilized due to the substantial provisions offered by the Spanish state pension. The state’s commitment to a generous pension scheme underscores the country’s dedication to ensuring financial security for its retirees.
In Spain, the statutory notice period is set at a maximum of 15 working days, which equates to approximately three weeks. It is important for employers to note that any notice period stipulated in an Employment Agreement that exceeds this duration is not legally enforceable. The law caps the notice period to ensure a balance between the employer’s need for workforce stability and the employee’s flexibility to transition. Therefore, regardless of what might be specified in the contract, the statutory limit prevails and cannot be extended legally.
Choose Lawants for seamless integration into the Spanish employment landscape and make hiring in Spain a smooth, compliant, and strategic part of your business growth.
Taxes and Social security contributions in Spain
In Spain, both employers and employees have specific tax obligations and are required to make social security contributions, which are essential for maintaining the country’s social welfare system.
Employers in Spain face a combined taxation rate of 31.95% on an employee’s salary. This comprehensive contribution includes several components:
- Social Security Fund: 23.6% of the salary, with contributions calculated on a minimum monthly base of €1,125.90 and capped at €4,495.00.
- Unemployment Fund: 5.5% to provide support in the event of job loss.
- Salary Guarantee Fund: 0.2% to ensure employees receive their salary in case of the employer’s insolvency.
- Professional Training: 0.6% to finance vocational training and development.
These contributions are subject to a salary threshold of €4,070 per month, and depending on the employer’s circumstances, Spanish VAT may also apply.
Employees in Spain are taxed at a federal level with progressive rates ranging from 19% to 45%, based on their income bracket. In addition to income tax, employees must also contribute a total of 6.4% of their salary towards social security:
- Social Security Fund: 4.7%, which provides benefits such as pensions, healthcare, and maternity leave.
- Unemployment Fund: 1.55%, offering protection against unemployment.
- Professional Training: 0.1%, allocated for ongoing professional education.
The personal income tax rates for employees in Spain are tiered as follows:
- Up to €12,450: 19%
- €12,451 to €20,200: 24%
- €20,201 to €35,200: 30%
- €35,201 to €60,000: 37%
- €60,000 to €300,000: 45%
- Over €300,000: 47%
Social Security Contribution
For social security purposes, all workers contribute a standard rate of 4.7% directly to the Spanish social security office.
Understanding these tax implications is vital for both employers and employees as they navigate the financial aspects of employment in Spain. It ensures compliance with legal obligations and contributes to the overall economic health of the nation.
Employment termination: firing employees in Spain
In Spain, terminating an employee’s contract is a process that requires adherence to strict regulations to ensure fairness and legality. Employers must be cautious and follow the correct procedures, especially when it comes to notice periods and severance payments.
When an employer decides to terminate an employment contract, they are typically required to provide the employee with a notice period. The length of this notice period can vary depending on the terms of the contract or collective bargaining agreements. If the employer opts to terminate the contract immediately without providing notice, they are obligated to compensate the employee with a month’s salary.
Severance pay in Spain is another critical aspect of employment termination. The amount of severance depends on factors such as the type of contract, reason for dismissal, and duration of employment. In cases where termination is due to economic reasons or performance issues not attributed to disciplinary action, employees are generally entitled to receive 20 days’ salary for each year of service. However, if the dismissal is deemed unfair, the compensation may range from 20 to 33 days of daily wages per year worked, including bonuses and commissions.
Employers must also be aware of the concept of ‘despido nulo,’ or void dismissal, which occurs when a termination is found to be discriminatory or in violation of fundamental rights. In such cases, the employee must be reinstated, and any wages lost during the period of dismissal compensated.
The finiquito is another crucial element in the termination process, covering any pending payments such as unused vacation time. Employers should ensure that this settlement document is signed by the employee upon termination.
In summary, employers in Spain must approach terminations with careful consideration of legal requirements, including notice periods, severance pay, and potential repercussions of an unlawful dismissal. Failure to comply can lead to significant legal challenges and financial liabilities.
Employee Benefits in Spain
In Spain, employers are required by law to provide a range of benefits to their employees, contributing to a comprehensive social security system that encompasses healthcare, pensions, and unemployment insurance. These mandatory benefits ensure that employees are supported in terms of health services, retirement planning, and financial stability in case of job loss.
In addition to the statutory benefits, employers may provide optional perks such as bonuses, stock options, meal allowances, or flexible remuneration packages that can include various forms of non-cash benefits. A work-from-home allowance has also become increasingly common, especially in the wake of the remote work trend accelerated by the pandemic.
By offering a combination of mandatory and optional benefits, employers in Spain can create an attractive work environment that not only complies with legal requirements but also fosters employee satisfaction and loyalty.
Hiring Process in Spain
When considering hiring employees in Spain, foreign entrepreneurs have two primary avenues to explore. The first option is to establish a local entity, aligning with the country’s laws and regulations. This traditional approach involves setting up a branch in Spain or a subsidiary (read how in our dedicated article), which can offer certain tax benefits but requires substantial investment in time and resources. It is an ideal solution for those planning not just to hire but also to operate extensively within the country.
Alternatively, for businesses aiming to hire Spanish workers without establishing a physical presence, utilizing an Employer of Record (EoR) is an efficient and compliant method. An EoR service takes on the administrative and legal responsibilities of employment, including payroll, tax management, employee benefits, and onboarding processes. This option allows companies to focus on their core operations while ensuring compliance with local employment laws and regulations, without the need to maintain a full-time HR department.
But how does the hiring of employees work in Spain? The process involves several key steps to ensure compliance with local laws and the successful integration of new employees into your business. Here’s a brief overview:
- Job Postings: Advertise the vacancy on popular job websites like Indeed, Bolsa de Trabajo, and Monster, or utilize social media platforms such as LinkedIn.
- Application Review: Screen applications to shortlist candidates that best match the job requirements.
- Interviews: Conduct comprehensive interviews, which may include both HR and technical rounds, to assess the candidates’ qualifications and fit for the company culture.
- Background Checks: Perform necessary background checks to verify candidate information and suitability for employment.
- Formal Contract Offer: Present a formal employment contract detailing job position, compensation, benefits, and other relevant terms of employment.
- Onboarding: Once the candidate accepts the offer, initiate the onboarding process which should clearly communicate company policies, role expectations, and provide necessary training. Introductions to the team and follow-up meetings are also essential for a smooth transition.
It is important to note that in-person interviews are common practice in Spain, with online interviews gaining popularity. The onboarding process should be comprehensive, ensuring all legal information is included in the written contract and allowing new hires the opportunity to engage with company culture and policies.
Employment of Foreign Employees in Spain
Hiring foreign employees in Spain is a viable option for companies looking to tap into a global talent pool. However, employers must be aware of the legal requirements and processes involved. A critical step is obtaining a work permit for the foreign employee, which is subject to approval by Spanish immigration authorities. The process typically involves demonstrating that the job position could not be filled by a local candidate and that the foreign employee possesses the necessary qualifications and experience. Additionally, the employer must ensure that the foreign worker has the legal right to live in Spain, which may require a separate residence visa. It’s essential to factor in these considerations and plan accordingly, as the foreign employee cannot commence work until their work permit has been officially approved by the Spanish government.
What is the cost of hiring an employee in Spain?
The cost of hiring an employee in Spain extends beyond the gross salary and involves various additional financial commitments. Employers must account for mandatory social security contributions, which are approximately 29.90% of the employee’s gross base salary. These contributions fund benefits such as healthcare, unemployment, and pensions. Additionally, costs related to compliance with labor regulations, mandatory insurance, taxes, and potential hidden fees must be considered for accurate payroll management. It’s essential for employers to understand these expenses to budget effectively for new hires and maintain financial health within their Spanish operations. For a detailed breakdown of the costs associated with employing staff in Spain, employers can refer to Lawants’ comprehensive article on the real cost of an employee for a Spanish company.
Advice to foreign employers hiring in Spain
- Be mindful that salary expectations in Spain may be lower compared to northern Europe and the USA. Consult with experts like Lawants to ensure your offer aligns with the Spanish market standards.
- Always state salary offers in terms of gross annual salary (sueldo en bruto) to avoid misunderstandings and unexpected costs associated with taxes and social security contributions.
- Employment disputes in Spain tend to favor the employee, particularly in cases of dismissal. To avoid legal complications, it’s advisable to consult with a labor lawyer before terminating an employee’s contract.
- If establishing a local entity in Spain is not part of your business strategy, yet you wish to hire Spanish workers, consider using an Employer of Record (EoR) service to handle employment responsibilities and compliance.
Start hiring employees in Spain with Lawants
Embarking on the journey of hiring employees in Spain is a significant step for any international business. Lawants is your dedicated partner in this venture, offering comprehensive assistance in setting up a company or subsidiary, and providing expert guidance on contracts, payroll, and taxation. Our seasoned professionals are well-versed in local government regulations, labor law, workplace safety, permits, and other related matters, ensuring your compliance and protecting your business from unnecessary risks.
We understand that hiring in a European country requires expert help, patience, time, and effort. The complex laws and regulations within Spain add to these challenges. By partnering with Lawants, you can streamline the hiring process: we help you save valuable time and energy so that you can focus on what truly matters—growing your business globally. Let Lawants be the key to unlocking your company’s full potential in the Spanish market.
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