Employer of Record Spain
Employing in Spain
The vibrant country of Spain remains a highly popular choice amongst our client base. But before hiring and setting up business, it’s important to know that Spain is highly regulated with the main priority of protecting an employee’s interests.
Jobs are categorised according to differing regulations and collective agreements (known as “convenio colectivo”) and labour inspections are not uncommon. Generally speaking, Spain is not a particularly litigious country —except when it comes down to employment matters and employee protection. The courts often favour the employee, so following strict procedures is essential if you want to employ individuals in Spain.
Let’s take a look at some of the key things you need to consider to stay on the right side of the Spanish law.
Statutory provisions
Salary payments
In Spain, month 13 and month 14 payments are often cited. These can either be paid as two additional payments in July and December or the employer can choose to make the payments in 12 prorated parts. Here at TopSource Worldwide, payments are made in 12 prorated parts.
Working hours
It’s customary for employees in Spain to work a 40-hour working week.
Sickness
In the event of short-term sickness in Spain, employees are entitled to continuation of salary payments as follows:
Long-term illness (classed as more than one month) will often be subject to the provisions of the applicable collective agreement, which will often determine that the employee must receive their full salary. In the event these provisions dictate that the social security will meet a portion of the salary, the employer would be expected to meet any shortfall.
Holidays
Annual holidays can be agreed individually or collectively, and their annual length may not be less than 30 days, including Saturdays and Sundays.
Public holidays in Spain comprise of a mixture of religious, national and regional or provincial observances. The following national holidays are celebrated:
In addition to these national holidays, there are also various provincial holidays which employees enjoy depending on where they reside.
It’s also important to note that in Spain, it’s not possible to make deductions from an employee’s salary (only in the event of unauthorised absence). This means employees can’t take unpaid leave or to “purchase” additional holidays (although the employee can, of course, be granted additional holiday).
Other statutory provisions
Employees are entitled to 15 days off for marriage and 16 uninterrupted weeks off for maternity, adoption or foster care (plus an additional two weeks for each child after the second for a multiple birth, adoption or foster care).
The father can take off part of this time if both parents work. Therefore, on the birth of a child, adoption or the start of foster care, the father is entitled to suspend his contract for thirteen uninterrupted days of paternity leave, which may be extended by an additional two days for each child after the second for the birth, adoption or foster care of several children.
Overtime
Employees should not work overtime in Spain unless there is a specific reason for it, such as covering short-term sickness or emergency non-business-as-usual activities. In any event, this overtime should not exceed 80 hours per year.
Employees should seek written permission from the workside employer (client) prior to undertaking any overtime. If the employee must carry out overtime, they should receive time off in lieu (TOIL). If it is not practical for the employee to receive TOIL, then they can be paid for the overtime if it has been agreed in writing.
Employers costs
As a guide, the following employer costs apply when employing individuals in Spain, subject to a monthly threshold of Euros 4,070.10 (2020):
Social security system/healthcare
In Spain, employees are insured under the Sistema Nacional de la Seguridad Social (National Social Security System) and they and their beneficiaries are entitled to healthcare.
The healthcare system in Spain is relatively good, with many public and private hospitals belonging to the social security system. The Spanish social security healthcare network is organised into primary care centres (called “health centres”), specialised care centres and hospitals. Treatment is free under the public social security system. If specialist treatment is required, the doctor will send the patient to a specialist with an official report.
All employees working in Spain should register with the social security system. Both employer and employee contributions are made monthly by the employer. This covers healthcare, unemployment insurance, industrial injuries, pension, invalidity and death. The minimum monthly base for social security contributions is EUR 1,050.00 and the maximum is EUR 4,070.10 (2021).
Termination
Employment in Spain is highly regulated with employee’s enjoying enhanced legal protection. This can make terminating contracts in Spain notoriously difficult. As a guide, you can budget for the termination of an employee in Spain as a severance fee, which would be due in the event of wrongful termination. This equates to 33 days of salary per employment year (one month of salary for every year worked with the company) which is in addition to any contractual notice period.
The calculation base for the fee is based on the total gross income over the last 12 months, meaning it includes any additional income such as bonus and commissions. If a company wishes to terminate, they should also expect to pay at least one additional month in lieu of notice, over and above the severance fee.
It’s worth noting that if an employee believes they have been terminated unfairly, they may lodge a case against their termination in a Spanish labour court. This process is convoluted and costly. However, if the company engages an Employer of Record, the responsibility for assessing the legal basis and issuing appropriate legal documentation for a potential termination rests with the EOR. It’s imperative that the workside employer (client) consults the EOR prior to any individual discussions taking place around possible termination of contracts.
Mileage allowance
Mileage can be reimbursed at 0,19 cents per km tax-free — anything more than this would be taxable. If mileage is claimed, it’s important that adequate records are maintained as the employer would have to provide satisfactory evidence of proof of business mileage if the employee became subject to an inspection in the future.
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