Guide to hiring employees in Spain

Employment in Spain is highly regulated, with the main purpose to protect an employee's rights.

The regulations are complex: Collective bargaining agreements are responsible for indicating how workers are grouped in each professional category. These agreements regulate, for example, the legal salary range for each job, the hours of a working day, the days of vacation per year. The following rules, however, are generally valid for employment in Spain:

  • A 40-hour week.
  • Depending on the applicable collective bargaining agreement, between 12 or 14 annual payments may apply (yes, you read that right!), this may vary between agreements and have a higher number of payments. To avoid problems, make sure you agree on an annual gross salary, so it doesn't matter how it's divided. If you and your employee prefer 12 payments, simply have the employee sign a statement to that effect and let your payroll provider know, provided the applicable collective bargaining agreement allows it.
  • Paid vacation of 30 calendar days for each full year worked, which may be enhanced by the applicable collective bargaining agreement. In addition, there are a total of 14 paid holidays (national, provincial and local) per year.
  • There is no sick leave per se. If an employee becomes ill, they should seek to see their social security doctor (family doctor) who signs a sick leave confirming that he/she is unable to work. It should be noted that the employee will not receive their full salary during this period of sick leave, unless otherwise agreed or specified in the collective bargaining agreement.
  • If you dismiss an employee, depending on the type of dismissal you must pay severance, with the amount varying depending on the type of dismissal. Note that if you dismiss someone with disciplinary dismissal, then it is not necessary, if there is no complaint by the worker, to pay severance. In both cases, however, you must pay something called finiquito, which mainly covers the vacation that the employee has not yet taken. Make sure the employee signs this finiquito. See our full article.
  • Employees are entitled to 15 days (weekends included) for marriage or domestic partnership, 2 days for death of a family member (extendable to 4 days for travel), 5 days for serious illness, hospitalization or surgery of family members up to second degree or cohabitants, 1 day for moving house and 16 weeks of leave for birth, both for the father and the mother (to be extended to 20 weeks in 2024), as well as breastfeeding leave. All these leaves are extendable by collective bargaining agreement. See our article on paid 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. Find out how much you need to pay to social security.
  • 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. And the courts usually decide in favor of the employee. If you think there may be a problem firing an employee, we highly recommend speaking to a labour lawyer before you do the firing, to make sure the firing is done properly and avoid a ruling of "despido nulo".

There are 3 main ways to hire an employee in Spain:

  • EOR: If you want to hire an employee without an entity in Spain, visit our Employer of Record services, where we employ your worker on your behalf.
  • Non-Resident VAT Registration: If you are not planning a permanent establishment, you can start a foreign company that can hire employees freely while not presenting any bookeeping.
  • SL Company Formation: You can register for a normal SL in Spain, which allows any number of employees and permanent establishment.

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