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How to Hire Employees in Spain

Key Takeaways

  • Global companies wanting to hire employees in Spain need to carefully consider the legal, cultural and economic differences hiring there as opposed to in other countries.
  • Those companies looking to hire international workers in Spain need to consider which type of work visa might be best for the employee. 
  • Companies that need support for their Spain hiring might consider the benefits of engaging a Spain Professional Employer Organization (PEO) or Spain Employer of Record (EOR).

Expanding into Spain provides substantial strategic benefits, including access to a large, diverse market as it is the fifth-largest economy in the EU with a population of approximately 47 million. Its location offers a gateway to Europe, Africa, and Latin America, and the presence of a well-educated, skilled workforce adds value.

Spain’s improved business-friendly environment, government incentives for foreign investors, and high-quality infrastructure also make it an appealing business destination.

Read on to find out what to do if you are looking at hiring employees in Spain as part of your expansion into that location. 

What are the legal requirements for hiring employees in Spain?

The legal requirements for hiring employees in Spain are largely governed by the Workers’ Statute (Estatuto de los Trabajadores), collective bargaining agreements, and other laws and regulations. Here are some of the key legal requirements:

  1. Employment Contract: All employees must have a written employment contract, and it should be registered with the Spanish Public State Employment Service. The contract should include the start date, job position, salary, working hours, and other conditions of employment.
  2. Work Permits: For non-EU nationals, a valid Spain work permit is required. The employer usually needs to apply for this on behalf of the employee. Note, for employees living in Spain but working for an overseas employer there is a separate visa available, the Spain digital nomad or remote work visa
  3. Social Security Registration: Employers must register their employees with the Spanish Social Security system within the first six days of employment. This includes paying the employer’s portion of social security contributions.
  4. Tax Withholding: Employers are responsible for withholding income tax from their employees’ salaries and submitting it to the Spanish tax authorities.
  5. Compliance with Labour Laws: Employers must comply with all relevant labour laws, including those related to minimum wage, working hours, overtime, vacation, and public holidays.
  6. Health and Safety: Employers have an obligation to ensure the health and safety of their employees by providing a safe working environment, appropriate training, and protective equipment if necessary.
  7. Non-Discrimination: Employment practices must comply with non-discrimination laws. This includes hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, and any other term or condition of employment.
  8. Data Protection: Employers must comply with the General Data Protection Regulation (GDPR), which governs how personal data of employees is handled.
  9. Registration of the Company: Before hiring employees, the company must be registered with the Spanish tax office (Agencia Tributaria) and the Spanish Social Security system.

These are some of the main legal requirements. Depending on the industry and the specific circumstances, there may be additional requirements. It’s always a good idea to consult with a legal expert or human resources professional to ensure compliance. 

What are the key ways to hire employees in Spain?

There are several ways to hire employees in Spain depending on your business needs and resources. Here are some of the key methods:

  1. Direct Hiring — this is the traditional method where you hire employees directly. International companies can do this in Spain by setting up a local subsidary there. You would need to handle all the HR tasks such as recruitment, payroll, tax, social security contributions, and compliance with local labor laws.
  2. Professional Employer Organization (PEO) —A PEO is a firm that providess outsourced employee management tasks, such as employee benefits, payroll, workers’ compensation, recruiting, risk/safety management, and training and development. This can be an excellent choice for companies that don’t have a legal entity established in Spain or want to simplify their HR processes. Read more about PEO services in How does a PEO work?
  3. Employer of Record (EOR) — this is similar to a PEO but takes on formal employment liability. An EOR becomes the legal employer and takes care of all the administrative, legal, and HR responsibilities. This can be a good option for companies that want to quickly hire employees in Spain without setting up a local entity or dealing with local compliance issues. To find out more about the differences between PEO and EOR services check out our PEO vs EOR guide
  4. Recruitment Agencies — these are firms that specialize in finding candidates for businesses. They can handle the entire recruitment process or just certain aspects, such as initial screening or interviews. This can be a good option for companies that don’t have the resources to handle recruitment in-house. Find out more in our guide to the leading international recruitment agencies
  5. Freelancers and Contractors — for short-term or project-based work, hiring freelancers or contractors can be a good option. This can be done directly or through various online platforms. However, it’s important to ensure that this type of arrangement complies with local labor laws to avoid misclassification of employees.

Each of these methods has its advantages and disadvantages, and the best choice depends on your specific needs, resources, and business strategy. 

How much does it cost to hire employees in Spain?

The cost of hiring employees in Spain is influenced by various factors such as the industry, the level of the position, the region, and specific benefits or bonuses. However, one of the most significant costs to employers is the social security contributions. The requirements can be broken down as follows:

  1. Wages — the minimum wage in Spain as of 2023 is €1,1080 per month for full-time work, though many positions command a higher wage depending on the industry, the level of the role, and the skills and experience of the employee.
  2. Social Security Contributions — Employers are generally responsible for paying approximately 30% of an employee’s gross salary towards social security. This covers benefits such as healthcare, unemployment, and pensions. The employee contributes an additional roughly 6.35% from their salary.
  3. Severance Pay — If you terminate an indefinite contract, you typically have to pay a severance of 20 days’ salary per year of service for objective dismissals and 33 days’ salary per year of service for unfair dismissals.
  4. Holiday Pay and Extra Salary Payment —  employees in Spain are entitled to a minimum of 30 calendar days of paid vacation per year. In addition, it’s customary to provide two extra payments per year, one at Christmas and one during the summer.
  5. Training Costs and Recruitment Costs — these will vary depending on your organization and the role.

Keep in mind that these are only rough estimates and the actual costs can vary. Laws and regulations can change, so it’s always a good idea to seek legal advice or consult with a professional familiar with Spanish employment law to understand the most current regulations and obligations.

What are the steps businesses need to take to hire employees in Spain?

Hiring employees in Spain requires careful planning and adherence to local labor laws and regulations. Here’s a simplified list outlining the steps a business needs to take:

  1. Business Registration — the first step is to establish your business in Spain. This will typically involve registering with the local tax office (Agencia Tributaria) and the Spanish Social Security system.
  2. Job Advertisement — once your business is established, you can begin the recruitment process. This will generally involve advertising the job and screening applicants.
  3. Interview Process — after screening, select the most suitable candidates for interviews. It’s important to ensure that your interview process complies with local anti-discrimination laws.
  4. Job Offer — once you’ve selected a candidate, make a formal job offer. This should include details about the role, compensation, start date, and other relevant information.
  5. Work Permit — if you’re hiring a non-EU national, you’ll need to apply for a work permit on their behalf. This can be a complex process, so it’s a good idea to start this as early as possible.
  6. Employment Contract — once the job offer has been accepted, you’ll need to prepare a written employment contract. This should be registered with the Spanish Public State Employment Service. The contract should include details about the job, compensation, working hours, vacation time, and other terms of employment.
  7. Social Security Registration — register the employee with the Spanish Social Security system within the first six days of employment.
  8. Onboarding — Once all the paperwork is completed, the final step is to onboard the new employee. This involves introducing them to the team, explaining their duties and responsibilities, and providing any necessary training.

These are the basic steps for hiring an employee in Spain. Depending on the specific circumstances, there may be additional steps or requirements. It’s always a good idea to consult with a legal expert or HR professional to ensure you’re complying with all local laws and regulations. 

What are the employment contract requirements for Spanish employees?

Employment contracts in Spain are governed by a set of legal requirements to ensure fairness and clarity in the terms of employment.

hire employees in spain employment contract considerations

Here are the key requirements for employment contracts for Spanish employees:

  1. Written Format: While verbal contracts are legally valid, it is highly recommended to have a written contract. This helps in avoiding misunderstandings and provides a clear record of the terms agreed upon.

  2. Contract Content: The contract should include the identity of the parties, the start date, job title and description, work location, duration of the contract (if it’s temporary), salary details including any bonuses or commissions, work hours, paid leave (including for serious illness), and holiday entitlement under Spanish labor laws.

  3. Types of Contracts: There are various types of contracts, including permanent, temporary, training, part-time, and fixed term contracts. Each has specific rules and conditions.

  4. Probation Period: If applicable, the probation period must be specified. The maximum probation period is usually six months for technical roles and two months for other roles, except under collective agreements.

  5. Social Security Registration: Employers must register employees with the Spanish Social Security system before they start working.

  6. Collective Bargaining Agreements: Many sectors in Spain have a collective bargaining agreement that set out specific terms and conditions of employment. These must be adhered to where applicable.

  7. Notice Periods and Dismissal: The contract should specify the notice periods for termination by either party. Rules around dismissals are strictly regulated in Spain, and unfair dismissals can lead to significant compensation payments.

  8. Language: Contracts are typically in Spanish, but a translation can be provided. However, in case of discrepancies, the Spanish version prevails.

  9. Work Permits for Non-EU Citizens: If employing a non-EU citizen, ensure that they have a valid work permit.

  10. Compliance with Employment Laws: The contract must comply with Spanish employment laws, including those relating to minimum wage, working hours, and annual leave.

For authoritative information, it is advisable to consult resources such as the Spanish Ministry of Labour’s website or seek advice from a Spain PEO or Spain EOR to ensure full compliance with local employment laws.

What is the average employee’s annual salary in Spain?

Here is a table of the average annual salaries across sectors in Spain in 2022, according to the Instituto Nacional de Estadística (INE):

Sector
Average Annual Salary (EUR)
Information and communication41,735
Financial and insurance activities38,855
Professional, scientific and technical activities37,145
Electricity, gas, steam and air conditioning supply35,842
Public administration and defense; compulsory social security35,506
Manufacturing31,188
Transportation and storage31,065
Wholesale and retail trade; repair of motor vehicles and motorcycles29,441
Construction27,588
Accommodation and food service activities21,433
Other service activities20,437
Education20,383
Human health and social work activities19,717
Administrative and support service activities19,133
Arts, entertainment and recreation18,425
Water supply; sewerage, waste management and remediation activities17,935

Hiring employees in Spain — our take

International companies looking to hire employees in Spain need to think carefully about the legal rules and tax laws that apply to hiring there. For support in hiring employees in Spain, it is worth considering how a Spain EOR or Spain PEO might better support your expansion in full compliance with local laws. 

FAQs

In Spain, probationary periods are common for new employees. The length of the probationary period depends on the type of contract and the size of the company. For qualified technicians, the maximum probationary period is 6 months, while for other workers in companies with more than 25 employees, the maximum is 2 months. In companies with 25 employees or fewer, the maximum probationary period for other workers is 3 months. During the probationary period, either the employer or the employee can terminate the employment without providing notice or severance pay.

Employers in Spain can terminate an employment contract, but they must follow the legal requirements and provide valid reasons for the termination. There are three main types of dismissal: objective, disciplinary, and collective. Objective dismissal may be due to economic, technical, organizational, or production-related reasons. Disciplinary dismissal is based on the employee's misconduct. Collective dismissal occurs when a company lays off a certain number of employees due to economic or other valid reasons. In each case, the employer must respect the notice periods stipulated in the worker's contract or the relevant collective agreement and may be required to provide severance payments depending on the circumstances.

Yes, when hiring non-EU nationals in Spain, the employer needs to secure a work permit for the employee. The process can be complex and typically involves obtaining authorization from the Spanish labor authorities, demonstrating that no suitable candidates are available in Spain or the EU, and showing that the employee has the necessary qualifications and skills for the position. 

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