Hiring Talent And Managing Payroll In Spain?

Hiring in Spain? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Spain?

Employment Norms in Spain

Spain is a country located in southwestern Europe and is the fourth largest economy in the Eurozone. The country has a unique employment culture, which is influenced by several factors, including labor laws, social welfare programs, and cultural attitudes.

General Information:

The currency of Spain is Euro, EUR.
Madrid is the capital of Spain.
Spanish is the official language of Spain Catalan, Basque, and Galician. Though it is not mandatory, if both parties are local then the contracts and agreements can be drafted in Spanish. Documents drafted in any other language than Spanish, need to be translated to be invoked in court legally.
As of 2021, the GDP of Spain was reported to be 1.43 trillion USD.

Spain has strict labor laws that govern working conditions, wages, and benefits. These laws also protect workers from discrimination and unfair treatment.

Table of Contents

Select Section

Agreements
Onboarding Process
Visa
Minimum Wage
Payroll Cycle
Annual Bonus
Health Benefits
Working Hours and Overtime
Leaves
Social Security
Taxes for Employers
Taxes for Employees
Probation
Termination
Severance Pay
Employees or Contractors
Final Words

Agreements Onboarding Process Visa Minimum Wage Payroll Cycle Annual Bonus Health Benefits Working Hours and Overtime Leaves Social Security Taxes for Employers Taxes for Employees Probation Termination Severance Pay Employees or Contractors Final Words

Agreements

Employment agreements in Spain are governed by the Worker's Statute and other relevant labor laws:

The language of agreements must be in Spanish or any other regional language accepted by law.
The employment contract must specify the employee's job duties, work schedule, compensation, and benefits.
Collective bargaining agreements between employers and labor unions are common in Spain and can provide additional protections for employees.
Non-compliance with labor laws and regulations can result in fines, penalties, or legal action.

Onboarding Process

The onboarding process typically involves the following steps:

The employer provides the employee with an employment contract that outlines the terms and conditions of employment.
The employee is required to submit certain documents, such as a valid ID card, social security number, and bank account information.
The employer must register the employee with social security and other relevant government agencies.
The employer must provide the employee with information about company policies, procedures, and benefits.
The employee should be introduced to their colleagues and given a tour of the workplace.

While there are no specific laws in Spain that govern the onboarding process, best practices include providing a comprehensive orientation program, assigning a mentor or supervisor to help the employee adjust to their new role, and providing ongoing training and support.

Visa

Spain has several types of work permits and visas available:

Work Visa for highly skilled workers
Blue Card for highly qualified non-EU workers
Temporary Residence and Work Permit for non-EU workers
Student Visa for individuals studying in Spain who wish to work part-time
Entrepreneur Visa for individuals who wish to start a business in Spain

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Minimum Wage

The current minimum wage in Spain as of 2023 is EUR 1,080.00 per month

Payroll Cycle

The payroll cycle in Spain is typically monthly and employees are paid once a month.

Annual Bonus

The employee gets 13th and 14th-month pay twice a year, in July and December. Collective agreements and employment contracts should have the details of the 13th as well as the 14th-month pay.

Health Benefits

Employees in Spain are required to provide certain health benefits to their employees, including:

Public health insurance coverage through the Spanish National Health System (SNS)
Access to private health insurance plans
Sick leave and paid time off for medical reasons
Workplace safety and accident insurance

Best practices for health benefits in Spain include offering additional benefits such as dental, vision, and mental health coverage.

Working Hours and Overtime

Work hours: In Spain, the maximum working hours per week are 40 hours.
Break: Employees are entitled to a minimum of 30 minutes of uninterrupted rest for every 6 hours of work.
Overtime: Employees may be required to work overtime in certain situations, such as during peak hours or emergencies. Overtime work is generally compensated at a higher rate than regular hours, with a maximum limit of 80 hours a year.

Leaves

Sick Leaves

Employees can take a sick leave of 365 days, in case they have paid social security for 180 days in the past 5 years.
- 0-3 days - unpaid
- 4-15 days - employee receives 60% salary which is paid by their employer
- 16 - 20 days - employee receives 60% of salary paid through social security
- 21 to 30 days - employee receives 75% of salary paid by social security
- 30 to 365 days - employee receives 100%, 25% paid by the employer, 75% by social security

Parental leaves

16 weeks of unpaid maternity leave for pregnant employees, which may be extended to 18 weeks in certain situations.
Maternity leave consists of two periods - compulsory leave for the first 6 weeks after birth, followed by the remaining leave for the additional 10 weeks of full absence or 20 weeks of half-day absences, which may be taken any time up to one year later with 15 days' notice. The employee receives 100% salary during maternity leave, paid by social security.
Fathers are entitled to 16 days of paid paternity leave. The employee receives 100% of their pay during leave, which is paid by the Spanish government.
Same-sex couples are also eligible for paternity and maternity leaves.

Annual leaves

Employees in Spain are entitled to a minimum of 30 days of annual leave per year by the employer.

Public Holidays (for the Calendar year 2024)

Some dates may vary based on official notifications and traditional calendars.

Epiphany - 6th January
Good Friday - 29th March
Labor Day - 1st May
Assumption Day - 15th August
National Day of Spain - 12th October
All Saints' Day - 1st November
Constitution Day - 6th December
Immaculate Conception - 8th December
Christmas Day - 25th December

Public Holidays (for the Calendar year 2025)

Some dates may vary based on official notifications and traditional calendars.

Epiphany - 6th January
Good Friday - 18th April
Labor Day - 1st May
Assumption Day - 15th August
National Day of Spain - 12th October
All Saints' Day - 1st November
Constitution Day - 6th December
Immaculate Conception - 8th December
Christmas Day - 25th December

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Taxes for Employers

In Spain, employers are required to pay a variety of taxes, including:

Social Security contributions: 31.55%
- Unemployment tax: 5.50% (permanent employees), 6.70% temporary employees)
- Salary Guarantee Fund: 0.20%
- Professional disease and occupational accident contribution: 1.65%
- Common Contingencies: 23.60%
- Professional training: 0.60%

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Taxes for Employees

Employees are subject to a variety of taxes in Spain, including:

Social Security contributions: 6.35%
- Unemployment tax: 1.55%
- Professional training: 0.1%
Income tax: Employees are required to pay income tax on their earnings. The amount of tax owed is based on a progressive tax rate system that ranges from 19% to 47%.
- 0.00 EUR-12,450.00 EUR: 19%
- 12,451.00 EUR-20,200 EUR: 24%
- 20,201.00-35,200 EUR: 30%
- 35,201.00 EUR-60,000 EUR: 37%
- 60,000.00 EUR-300,000.00 EUR: 45%
- 300,000.00 EUR and over 47%

Probation

The probation period for a new employee is typically two months in Spain. It can be extended up to 6 months for seniority employees and graduate technicians.

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Termination

An employer may terminate an employee's contract in Spain for a variety of reasons, including:

Mutual agreement between the employer and employee to terminate the contract.
Expiration of a fixed-term contract.
Termination for disciplinary reasons, such as misconduct or poor performance.
Termination due to economic or organizational reasons, such as restructuring or downsizing.
Termination due to medical reasons or disability.

Severance Pay

Employees who are terminated due to economic or organizational reasons may be entitled to receive severance pay. The employer must provide compensation of 20 days' salary, per year of service, payable upon delivery of the written notice, up to a maximum of 12 months’ salary in Spain.

Employees or Contractors

Misclassifying employees as contractors, or vice versa, can result in significant legal and financial penalties for employers in Spain.

If an employer incorrectly classifies an employee as a contractor, the employee may not be entitled to certain employment benefits and protections that contractors do not receive.
Similarly, if an employer incorrectly classifies a contractor as an employee, the employer may be required to pay social security contributions and other benefits that are normally provided to employees.

Final Words

Spain has a well-established set of employment norms and regulations that aim to protect workers' rights and ensure fair treatment. The country offers a range of employment opportunities, and foreign workers may apply for various types of visas or work permits to work legally in Spain. Employers must comply with all relevant laws and regulations related to employment, taxation, and social security.