Payroll and hiring employees in Spain

Spanish employer number

Employment is highly regulated in Spain, and labour inspections do occur. It can be very expensive for you to fire an employee in Spain if you haven't followed the rules. We recommend that you read our article about hiring employees.

Some reasons to use Strong Abogados for your payroll service in Spain:

  • Online access: All payslips, employment contracts, social security communications, and tax forms filed for your company will appear in your online client area.
  • Service in English: Hiring and firing in Spain can be difficult to understand for a foreigner. Our support team speaks English and our forms and guides are in English. We're used to explaining the ins and outs of the Spanish system.
  • Simplicity: The Spanish payslip is one of the most complicated payslips in the EU. With many years of experience, we have developed the know-how to transform a complicated system to a simple-to-manage process. There is no other provider with an online system developed specifically for international clients like yourself.

Hire our payroll service today. If you already have a payroll provider, we will take care of the transition at no additional cost. Contact us for a quote.

Articles:
Tips on hiring employees in Spain
Types of work contracts, with samples
Guide to a Spanish payslip, with sample payslip
For foreign employees: the Ministry of Employment's guide to working in Spain

FAQs:
What corporate setup do I need to hire employees in Spain?
As an employer in Spain, how much will I pay to social security?
What are the holidays in Spain?
We are a Swiss company and we are going to open a call center in Barcelona to serve our European (non-Spanish) clients. Can we apply our Swiss labour laws to our non-Spanish employees?
My company is assigning to UK nationals to Spain to work there for 18 months. Will they liable for taxes in Spain?
I work for a UK company. I plan to move to Spain and continue to do consulting for the company. Can I be self-employed (autónomo) in Spain, and send the company invoices for my work?
In Spain, can employees can be transferred using Form E101?
I am a foreigner working in Spain. My company is paying into the Spanish social security system. Can this be transferred into my native country's system?

Links:
Government offices: The Ministry of Employment (SEPE)
Infojobs [Spanish] If you want to hire Spanish workers, this is the site most used in Spain.

 

Tips on hiring employees in Spain

Employment in Spain is highly regulated, with the main purpose to protect an employee's rights. The regulations are complex: jobs are grouped into categories, and each category has a different set of regulations, called the convenio colectivo. These convenios regulate, for example, the legal salary range for each job, hours in a work day, vacation days per year. The following norms, though, generally hold true for employment in Spain:

  • A 40-hour week.
  • Either 14 payments or 16 1/2 payments annually. (Yes, you read it right!) If you choose 14 payments, you pay the monthly salary plus two extra payments due by July 10 and December 15. To avoid problems, make sure you agree on a gross annual salary, so it doesn't matter how it's divided. If you and your employee prefer 12 payments, just have the employee sign a statement to that effect, and let your payroll provider know.
  • Vacation of 23 business days for each full year worked. See FAQ regarding holidays.
  • There are no sick days per se. If an employee gets sick, they should find a doctor to sign a baja confirming that they are unable to work. With a baja, social security then takes over to pay the salary of the employee after a period of time.
  • If you lay off someone, you pay 45 days of indemnization for each year that the employee worked for you. Note that if you fire someone with sufficient cause, then there is no indemnization payment necessary. In either case, though, you must pay something called a finiquito, which mainly covers any vacation that the employee has not yet taken. Make sure you get this finiquito signed by the employee.
  • The employee has a right to 15 days (including weekends) for a marriage, 2 days for the birth of a child or the death of a family member, 1 day for home relocation, 4 months for maternity leave, and 20 days for paternity leave.

So, our advice to employers in Spain:

  • Be aware that salaries are lower in Spain than in northern Europe and the USA. You can contact us before making your offer to see if you are in the range for Spain.
  • When making a salary offer to someone in Spain, make sure you quote a gross annual salary (sueldo en bruto) rather than a net salary, so you're not in for a rude surprise.
  • Companies have traditionally avoided giving indefinite contracts because of the difficulties in laying off such employees, and the high compensation package involved. Consequently, the Spanish mentality is such that receiving an indefinite contract is almost as important as what salary they will actually receive.
  • You can't be too careful about employee issues. Spain is not a litigious country EXCEPT when it comes to an employee who has been fired.

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What corporate setup do I need to hire employees in Spain?

There are various alternatives:

  • You can create a Spanish company. Once the company is registered for social security, you can set up the payroll for the employees.
  • If you have a well-established business outside Spain, but you don't plan on having a physical office in Spain, then you should consider our service to register your foreign business with the social security office.
  • If your business is just starting, a less expensive alternative to forming a company is for the prospective employee to get set up as self-employed (autónomo).

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As an employer in Spain, how much will I pay to social security?

  Percentage of gross paycheck
Reason for contribution Employer Employee Total
Standard 23,6% 4,7% 28,3%
Unemployment* 6,0% 1,6% 7,6%
Other** 2,0% 0,1% 2,1%
Total 31,6% 6,4% 38,0%

*These percentages may be slightly different depending on your work contract.
**Salary guarantee in case of bankruptcy; professional studies; additional amount based on the employee's professional classification.

Note that these percentages only apply up to a maximum gross salary of roughly 36,000€. In other words, 14,000€ is about the maximum you will pay in social security per employee per year.

What the employee pays is included in the gross paycheck; what the employer pays is not. So the employer can calculate the total cost of an employee as the gross paycheck + 31,6% (assuming a simple payslip where the base amount for social security is equal to the gross paycheck).

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What are the holidays in Spain?

There are national, state, and local holidays. For a list, go to Spain's Social Security site, and click on "Lo más visitado", then "Calendario laboral".

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We are a Swiss company and we are going to open a call center in Barcelona to serve our European (non-Spanish) clients. Can we apply our Swiss labour laws to our non-Spanish employees?

If you have a functioning office in Spain, even though your clients are non-Spanish, you must register in Spain as a resident entity (such as a branch or SL). Also, your Spanish company must obtain an employer social security number in order to hire your employees. Keep in mind that Spanish labour laws apply, even if your employees are non-Spanish.

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I work for a UK company. I plan to move to Spain and continue to do consulting for the company. Can I be self-employed (autónomo) in Spain, and send the company invoices for my work?

The problem with this is that you must include withholding on your invoice. The final amount on the invoice is reduced, and the company pays the amount withheld to the Spanish tax office as withholding for the personal taxes you will pay to the Spanish tax office. But a UK company has no means of paying this amount without being registered in Spain. If your company agrees to the time and expense of getting registered in Spain, then you can ask a representative of the company to contact us, and we can handle this.

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In Spain, can employees can be transferred using Form E101?

Yes, employees may be transferred filing Form E101. Once the employee is here, we can handle all the employment and tax issues in Spain.

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I am a foreigner working in Spain. My company is paying into the Spanish social security system. Can this be transferred into my native country's system?

Yes. The amount that you have accumulated in the Spanish system can be transferred to any other EU country and any country that has a treaty with Spain. Go to Spain's Social Security site, and see "Internacional -> Convenios bilaterales" for a list of countries.

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