An Employer of Record (EOR) in Spain helps you hire talent without the complexities of registering a business and handling local labor laws in Spain. Spain, despite facing economic challenges over the past decade, has displayed remarkable growth. It is noteworthy for its top-tier infrastructure and its position as a leader within the European Union in terms of global exports. When contemplating Spain as a potential test market, an EOR can prove to be an invaluable partner.

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A Spain EOR like Gloroots helps recruit staff and expand into Spain without the need to establish a formal company. Collaborating with a PEO/EOR in Spain offers numerous advantages that go beyond expediting your company's growth

For example, setting up a subsidiary or branch office in Spain can be less than ideal for staff recruitment as it can set businesses back by several thousand dollars. This can strain your hiring budgets and affect the way you can hire and retain talent in competitive labor markets.

Secondly, labor laws in Spain have some unique aspects that are different from majority countries. For example, Spain's severance payment structure is quite specific. For example, for unfair dismissals, employees are typically entitled to 33 days of salary per year of service (for contracts post February 12, 2012) with a maximum of 24 monthly payments. Moreover, labor unions and labor representation are fairly influential. In many companies, workers are entitled to elect representatives (either union representatives or workers' committees. These representatives play a crucial role in labor relations within the company.

Employers hiring in Spain must be aware of these laws and stay compliant with these laws. This is where EORs can help. A Spain EOR can help generate legal contracts, oversee recruitment, and handle a variety of HR-related tasks and alleviates the burden on your internal team.

While new hires and headquarters teams focus on achieving business objectives, the Gloroots manages all human resource activities, benefits, payroll, and tax-related responsibilities.

EOR/ PEO services in Spain can be billed using two methods: a fixed yearly fee per employee or a calculated fee based on the company's annual payroll. The first option generally falls within a specific range, while the second option is a percentage of the total payroll.

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Gloroots provides an equally competitive platform in Spain at an attractive rate. Our pricing guarantees that your company and its employees receive the necessary HR support for optimal performance.

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Key Metrics For Foreign Employers

Spain ranks among the top 30 countries in INSEAD’s Global Talent Competitiveness Report. The country’s skilled talent pool and low labor costs present are lucrative for foreign employers hiring from the country.

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Spain.

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‍Source: The Global Talent Competitiveness Index 2023‍

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Spain.

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Spanish labor law is comprehensive and provides substantial protections for employees. These regulations govern both individual and collective relationships between employers and workers. They also extend to cover areas such as social security, health, safety, and unique employment arrangements.

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One significant component of Spanish employment law is the Workers' Statute, known as the Estatuto de los Trabajadores. This statute regulates various aspects of individual and collective employment interactions. It plays a crucial role in overseeing collective bargaining agreements that establish minimum wages for certain professions and their associated rights and privileges.

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Employment Contract

Spanish labor law requires employers to establish either a verbal or a written employment contract. A written contract becomes essential in the following circumstances:

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• Additional legal requirements are in place.
• The employment is for a fixed duration that exceeds one month.
• The contract results from a formal request by either party.
• Having a written contract is a prudent step to safeguard the interests of both the employer and the employee. It becomes particularly necessary when hiring individuals in specific roles, such as senior executives, interns, part-time workers, or individuals working abroad.

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Under legal obligation, a typical employment contract in Spain must include the following key details:

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• Name and address of the employer and employee.
• Type and location of the workplace.
• Work schedule and hours of work.
• Job category or professional classification.
• Commencement date of employment (and termination date, if applicable).
• Salary details, including gross, net, and base salary.
• Notice period.
• Provisions for holidays and sick leave.
• Information about any applicable collective bargaining agreements.

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Spanish labor law recognizes the following types of employment contracts:

Indefinite and temporary: Most employment contracts in Spain are indefinite or open-ended. However, temporary contracts can be used in specific situations, including production contingencies and temporary replacements. If an employee continues working beyond the contract's specified end date, they are considered full-time employees and entitled to standard severance benefits.

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Training: These contracts are designed for employees aged 16 to 21 seeking skill development and qualifications. The duration varies, but there are two types: work-linked and professional practice contracts. Specific regulations apply to these contracts concerning educational institutions and candidates.

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Part-time: Part-time contracts, whether indefinite or fixed-term, must be documented in writing and include details about the workplace and working hours. If employees agree to work overtime, a supplementary hours agreement is required, but this is only valid if the employee has already worked more than 10 hours. Complementary hours must not exceed 30% of the hourly rate in the contract and are capped at full-time hours. The employer must provide three days' notice if they require employees to work during complementary hours.

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Work from home: As many companies adopt hybrid work models, allowing employees to work remotely for a portion of their hours, Spanish law mandates companies to establish a work-from-home policy and enter into agreements with employees when remote work exceeds 30% of their working hours. Additionally, companies must cover expenses related to setting up remote workstations.

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Working Hour 

The regular workweek in Spain should not exceed 40 hours. A typical workday in Spain usually starts between 8.30-9.00 am and continues until approximately 2.00 pm, followed by a “siesta” break. Work hours then resume from 4.00-5.00 pm and typically conclude around 8.00 pm.

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According to the Spanish Worker's Statute Royal Decree-Law 8/2019, all employees are obligated to document their actual daily working hours by registering their time when taking breaks or at the end of the workday.

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Overtime

If an employee exceeds the 40-hour workweek limit, they must receive mandatory overtime compensation. 

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The maximum allowable overtime hours for a single employee within a year is 80 additional hours. The rules governing overtime hours and payments are closely regulated and adhere to collective agreements.

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Public Holidays

Spain acknowledges a total of 10 national holidays and an additional 4 regional or local public holidays. 

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According to the Collective Bargaining Agreement (CBA), it is mandatory to grant employees 22 working days or 30 calendar days of paid leave each year. Importantly, employees are not permitted to convert this time off into extra monetary compensation, which encourages them to utilize all their allocated paid vacation days.

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Minimum Wage

In Spain, minimum wages are established based on industry sectors through collective bargaining agreements. However, as a general guideline, the minimum wage in Spain amounts to 1,080 EUR per month, distributed across 14 payments annually.

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Temporary employees and seasonal workers who are employed by the same company for fewer than 120 days must receive a minimum daily wage of no less than 51.15 EUR.

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Maternity Leave and Paternity Leave

A pregnant employee in Spain is eligible for 16 weeks of unpaid maternity leave, which can extend to 18 weeks in cases of a complicated delivery or multiple births.

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The 16-week maternity leave is divided into two periods:

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1. Mandatory leave for the first 6 weeks following childbirth.

2. The remaining leave, which covers an additional 10 weeks of full absence or 20 weeks of half-day absences. This portion of the leave can be taken at any time within one year after childbirth, provided that 15 days' notice is given.

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Maternity pay is administered and disbursed by the Social Security System Health Insurance Fund. Social security benefits for employees on maternity leave are calculated as a monthly benefit equivalent to 100% of the mother's base rate, which is based on the previous month's earnings.

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Every pregnant woman is entitled to healthcare services before, during, and after childbirth. To access these services, individuals must visit the healthcare center with their Sistema Nacional de Salud (National Health Service) user's card.

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Fathers in Spain are eligible for 16 days of paid paternity leave, which can be extended to 18 weeks in the case of multiple births. In same-sex couples, both parents have the right to paid leave. To qualify for paid benefits, it is essential that each parent has the appropriate legal connection to the child. 

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The Spanish Government covers 100% of the paternity pay, provided that the father has made the required social security contributions. This entails a minimum of 180 working days within the past 7 years or a total of 360 days throughout his entire professional career. Employers are still responsible for certain taxes related to the salary payments.

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Annual leave

Full-time employees in Spain are legally entitled to 22 working days of paid leave per year. The precise number of days may vary depending on the employee's location due to various local and regional holidays across Spain. In cases where a public holiday falls on a Sunday, it is typically moved to the following Monday.

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Employees have the flexibility to take their paid leave either continuously or sporadically throughout the year. However, Spanish law mandates that employees must take at least one continuous two-week holiday.

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It is important to note that Spanish laws prohibit employers from offering monetary compensation in lieu of reducing employees' paid leave entitlements.

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Sick Leave

In situations where an employee in Spain experiences illness or a personal accident, they are eligible for temporary disability benefits, entitling them to at least 60% of their regular salary.

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For common diseases or non-work-related injuries, Spanish employees have the following entitlements:

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• 1 to 3 days (3 days): 0% (There is no obligation to pay unless the employer agrees or it's stipulated in the Collective Bargaining Agreement.)
• 4 to 15 days (12 days): 60% (The employer pays 60% of the employee's contribution base.)
• 16 to 20 days (5 days): 60% paid by Social Security (Social Security pays 60% of the employee's contribution base, even if the employer makes the payment on behalf of Social Security.)
• 21 days and beyond: 75% paid by Social Security (Social Security pays 75% of the employee's contribution base, even if the employer makes the payment on behalf of Social Security.)

These provisions apply unless a specific Collective Bargaining Agreement specifies an alternative or a different company policy is in place.

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Income Tax

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Social Security contribution

Employer Payroll Contributions:

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Employee Payroll Contributions:

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Termination Process

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The way termination is handled depends on the specific Employment Agreement and Collective Agreement in effect, as well as the type of contract and the cause for ending the employment.

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Notice Period

In Spain, typical notice periods are established at 15 days, and if notice is not provided, employers can compensate with a payment in lieu of notice.

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Severance Pay

Severance pay is applicable when an employer terminates an employment agreement without providing notice. In such cases, the severance pay equals the amount the employee would have earned if they had been given notice.

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Employers have the option to terminate an employment contract in two ways: by giving a notice period or by immediately terminating the contract and providing compensation in lieu of notice. It's also possible to use a combination of both methods, where a notice period is served initially, followed by compensation for the remaining notice period.

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The compensation in lieu of notice is calculated based on the employee's annual salary at the time of termination, including statutory and contractual benefits. Additionally, when an employer terminates a contract, they must adhere to the following legal requirements:

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1. The employer must provide written notice to the employee, specifying the reasons for dismissal.

2. The employer must offer compensation equal to 20 days' salary per year of service, payable upon delivering the written notice, up to a maximum of 12 months' salary.

3. The employee must be given a notice period of thirty days for contract termination, starting from the moment of official notification to the employee.

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If the dismissal is deemed unfair, the employer must provide compensation equal to 45 days' pay per year of service (if employed before 12th February 2012, and 33 days after this date), with a maximum limit of 42 months' salary.

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Probation Periods

Probation or trial periods are typically established through collective agreements. Nonetheless, it's a common practice in Spain to have a probation period of two months, which can be extended to six months for graduate technicians or employees with seniority.

Hiring employees in Spain may seem intricate due to the multitude of regulations and requirements that need to be navigated. Understanding employment laws, ensuring accurate compensation to employees, adhering to fairness and data protection rules, and more can add layers of complexity to the hiring process.

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However, there's some positive news – Gloroots is here to simplify it all for you. Our comprehensive solutions provide a convenient and streamlined way to manage every aspect of hiring in Spain. Our team of experts is well-versed in international hiring practices and can help you navigate payment and labor regulations seamlessly. We handle everything from crafting employment agreements to ensuring timely payments and administering benefits, allowing you to focus on selecting the best candidates.

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With Gloroots by your side, you can trust that global hiring in Spain will be made straightforward and hassle-free.

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