Explore our EOR & PEO services in SPAIN

As your EOR in Spain, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.

Your candidate is hired by a PEO in Spain provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.

Madrid

Country Overview

Spain is a country located on the Iberian Peninsula in southwestern Europe. It is bordered by the Mediterranean Sea to the east, France and Andorra to the north, and Portugal to the west. Spain is the fourth largest country in Europe, and has a population of approximately 47 million people. Its capital and largest city is Madrid, while Barcelona is another significant economic center.

Spain also is a popular destination for businesses looking to expand their operations in Europe. It offers a highly skilled workforce, a strong economy, and a strategic location that makes it easy to access other European markets.

General Information

Population: ~47.300.000

Capital City: Madrid (population: ~3.200.000)

GDP: ~$2.2 trillions

GDP per capita: ~$46.500

Currency: Euro (EUR)

Unemployment: ~12.4%

Employer Taxes: ~23%

Employee Taxes: 19% – 47%

SPAIN EOR SPECIFICS

Employment Contracts in Spain

Employment contracts are legally binding agreements between an employer and an employee that outline the terms and conditions of their working relationship. These contracts are regulated by the Spanish Labor Law (the “Statute of Workers”) and must include certain information, such as the job title, the duration of the contract (if it is temporary or permanent), and the salary and working hours.

Employment contracts in Spain are typically divided into two main types: indefinite and fixed-term. Indefinite contracts have no end date and are the most common type of contract used by employers. These contracts can be terminated by either the employer or the employee with proper notice, depending on the specific circumstances. On the other hand, fixed-term contracts have a specific end date and can only be terminated when that date arrives or by mutual agreement between the employer and employee.

Spain also has specific laws that protect employees who are hired on a temporary basis. For example, if an employee has been working on a temporary basis for more than six months, they are entitled to the same benefits and protections as permanent employees. This is known as the “six-month rule.”

Probation Period in Spain

The length of the probation period is determined by the employer and can vary depending on the position and the company’s policies.

The maximum length of a probation period for indefinite-term contracts is 12 months according to the Spanish Workers’ Statute. However, for some specific types of employment, such as managers, executives, or senior technicians, the maximum probation period can be extended up to 24 months.

During the probation period, the employer has the right to terminate the contract without notice, and without any compensation for the employee. However, the employee may also terminate the contract with prior notice, with the same conditions of previous notice for regular workers, and without cause.

It is worth noting that during the probation period, the employee is entitled to all the rights and benefits established by the law and the Collective Bargaining Agreement, if applicable. This includes the right to fair working conditions, health and safety protections, and rights related to discrimination, harassment and bullying.

Working Hours in Spain

In Spain, the typical workweek is Monday to Friday, with a total of 40 working hours per week. The daily work schedule typically begins around 9:00 or 9:30 am and ends around 1:30 or 2:00 pm, with a break for lunch in the middle. However, this can vary depending on the company and the specific job requirements.

According to the Spanish Workers’ Statute, the legal maximum limit for weekly working hours is 40 hours per week, exclusive of breaks. Additionally, Spanish law requires that employees receive at least 11 hours of rest between workdays.

It’s worth noting that working hours can be increased by the agreement of the company, the worker and the workers’ representatives.

Vacation Days in Spain

In Spain, employees are entitled to a minimum of 30 vacation days per year. This is established by the Spanish Workers’ Statute, and applies to both full-time and part-time employees.

Employees are entitled to an additional day of vacation for each year of service, up to a maximum of 12 additional days. This means that an employee who has worked for a company for five years or more would be entitled to a total of 35 vacation days per year.

Vacation days must be taken during the calendar year in which they are earned, and any unused vacation days cannot be carried over to the next year or exchanged for pay. Employers are responsible for scheduling vacation days and must give notice to the employees with a minimum of two weeks of anticipation.

30 days of minimum vacation days can be increased by collective agreement. For example, some collective agreements establish a minimum of 35 days of vacation per year.

Sick Leave in Spain

Employees get paid sick leave if they are unable to work due to illness or injury. The amount of paid sick leave to which an employee is entitled is determined by the Spanish Workers’ Statute and the National Collective Agreement.

According to the Spanish Workers’ Statute, employees are entitled to up to 30 calendar days of paid sick leave per year. This can be extended to up to 90 calendar days per year in certain circumstances, such as if the employee has a chronic illness or disability.

During the first three days of a sickness, the employer shall not pay the salary, after that, the salary shall be paid by the Social Security. As from the fourth day the employer shall pay the salary, however, the Social Security will reimburse the employer for the salary paid for the sick leave.

Wages and Salary Payment in Spain

Wages and salaries are generally paid on a monthly basis, with payments typically made on the last working day of the month. However, this can vary depending on the company’s policies and the terms of the employment contract.

The Spanish Workers’ Statute establishes the minimum wage in Spain, which is reviewed every year by the government. As of 2022, the minimum wage in Spain is €1,166 per month for full-time workers. This means that all employees in Spain, regardless of the nature of their work, are entitled to at least this amount per month.

The minimum wage can be increased by collective agreement. A collective agreement is an agreement reached between the company, worker representatives and the workers, that can modify the legal framework established by the worker’s statute.

In addition to the minimum wage, employees in Spain are also entitled to other forms of compensation, such as bonuses and commissions, that can vary depending on the company and the specific job. These forms of compensation must be established in the employment contract and must be clearly outlined and agreed upon before starting the job.

Salary payments should be made in legal currency and in a timely manner, with specific days agreed in advance. Employers must also provide their employees with a salary receipt, which must include details such as the employee’s name, the amount of the salary, and the period for which the salary is being paid.

Public Holidays in Spain

Some dates are public holidays in Spain, and these may be national, regional or local.

Public holidays for 2022:

1 January, New Year’s Day.
6 January, Epiphany.
14 April, Holy Thursday (in all of Spain, except Catalonia).
15 April, Good Friday.
15 August, Assumption.
12 October, National Holiday in Spain.
1 November All Saints Day.
6 December, Spanish Constitution Day.
8 December, Immaculate Conception.

Employer Taxes in Spain

Social Security (29.9% as of 2022) contributions are mandatory for all employers in Spain and are used to fund the country’s social security system, which provides benefits such as pensions, healthcare, and unemployment insurance. The Social Security contributions are calculated as a percentage of an employee’s salary, and the employer is responsible for paying both the employer’s and employee’s share. The percentage is different for each kind of industry and employee, for more information you can check with the Spanish Social Security Institutions.

Employee Taxes in Spain

The income tax rate in Spain is progressive, meaning that it increases with the employee’s income. Tax rates vary between 11% and 47% and are calculated based on the employee’s salary, the number of dependents, and the tax deductions established by the law. Employees are also required to file an annual income tax return, usually due by June 30th, in which they must report their income and any deductions or credits to which they are entitled. The tax return should be made through a digital platform, which can be done by the employee themselves, or by an authorized representative or accountant.

Notice Period in Spain

Notice periods are the required time that an employer or an employee must give before terminating an employment contract. Notice periods are regulated by the Spanish Workers’ Statute and vary depending on the length of service of the employee and the type of contract.

For indefinite-term contracts, the notice period for an employee with less than one year of service is 15 calendar days, for an employee with one to three years of service, 30 calendar days, for an employee with more than 3 years of service it’s 45 calendar days.

For fixed-term contracts, the notice period is the same as the duration of the contract, but cannot be less than 15 days.

Termination / Severance in Spain

The employment contract can be terminated by either the employer or the employee, following certain procedures and requirements established by the Spanish Workers’ Statute.

For indefinite-term contracts, an employer can terminate the contract for various reasons, such as for economic reasons, for the employee’s misconduct, for the employee’s inability to perform their job or for reaching the retirement age. In these cases, the employer must provide a written explanation of the reasons for termination.

An employee can also terminate the contract with notice, following the notice period requirements established by the Spanish Workers’ Statute.

For fixed-term contracts, the contract ends on the established ending date, unless it is extended by mutual agreement.

In cases of dismissal for just cause, the contract can be terminated immediately without notice period and without indemnification.

Additionally, in cases of dismissal for economic reasons, the employer has the obligation to inform the worker representatives and the Ministry of Labour and Social Economy.

When the contract ends, the employee is entitled to receive their final salary and, if applicable, a severance payment, known as “Indemnification”. This payment is equivalent to 33 days of salary per year worked, with a maximum of 24 months’ salary.

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