Employment laws in Spain: how to hire and stay compliant

Hiring employees abroad can have a positive impact on your business, from adding diversity to your team to increasing employee productivity. And with the right tools and tech, it's more attainable than ever. However, international hiring also poses significant risks to employers who want to tap into talent abroad but don't have knowledge of local employment laws. 

If you’re considering hiring in Spain, for instance, you’ll have to comply with the country’s complicated local tax and labor regulations. Any missteps on your part could pose significant financial and legal risks for your company.

Continue reading for an in-depth understanding of the employment laws in Spain, what you should know when considering hiring a candidate living there, and how to get started hiring in Spain. 

Understanding key labor laws in Spain

To compliantly hire employees in Spain, it's essential to understand which laws affect the employer-employee relationship.  There are multiple sources of law protecting Spanish employees, which adds to the complexity of navigating employment regulations in Spain.

The main labor regulations that exist in Spain are contained in the: 

• Spanish Constitution

• Spanish Workers' Statute

• Law 5/2000 on Labour Infractions and Sanctions

• Law 31/1995 on Work Risk Prevention

• Law 3/2007 on Equality between Men and Women

• Royal Decree 8/2015 on Social Security

• Collective Bargaining Agreements

Do employment laws in Spain vary by region?

Because Spain's labor laws are nationally recognized, there is little variation in regional labor laws. However, employers may notice some regional differences, including a regional variation in public holidays and the typical hours that employees work based on the region. 

What do you need to know before hiring a Spanish employee?

To compliantly hire employees living in any country, you have to operate your business in that country legally. To do so, you’ll have to either open your own legal entity in Spain, use a professional employer organization (PEO), or partner with an employer of record (EOR). 

Below, we explore each of these options in further detail.

Establish a legal entity in Spain.

This allows you to operate your business in the country and hire employees. Through your local entity, you can process employee payroll, offer global benefits, pay social security and taxes, and more.

While establishing a legal entity in Spain offers autonomy, it also leaves greater room for risk. If you hire employees in Spain independently, you will be responsible for learning about Spanish tax and labor laws and staying up-to-date with any changes to these laws. Therefore, you should only move forward with this option if you're confident of navigating local laws in Spain. Utilize a professional employer organization (PEO). The PEO you partner with enters into a co-employment relationship with your company and can manage many aspects of employment for you.

For example, while you retain control over your employee's job function, a PEO can manage HR tasks like onboarding, payroll, and more. However, with a PEO, you will be held financially and legally responsible for non-compliance with labor regulations.  Partner with an employer of record (EOR): Partnering with an EOR is the safest solution when hiring in Spain. When you use an EOR, you don't have to establish a legal entity in Spain, nor do you assume any hiring risks.

An EOR like Remote can manage the same employee HR tasks as a PEO, but significantly offers more benefits. Remote has local expertise in Spain, ensuring you always have access to accurate information. This means that you can minimize legal risks every step of the way while hiring, paying, and managing employees abroad.

If you're looking for the most affordable and risk-free hiring method to hire international employees, a global HR platform like Remote is just your ticket.

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How to use an Employer of Record in Spain

Learn how to use an EOR in Spain and find out how an employer of record platform like Remote can make it easy to hire globally with full compliance.

Statutory employment rights in Spain 

The statutory employment rights laid out in Spain's labor laws apply to all employees, whether you hire one employee or an entire team. When you partner with Remote, you are guided by a team of regional experts who can answer any questions relating to employing individuals in Spain and ensure your company remains compliant with employment rights. 

Although the below statutory benefits do not cover all employee entitlements in Spain, they offer a framework through which you can gain insight into the payments, benefits, and accommodations to which Spanish employees will be entitled. 

What is the minimum wage in Spain?

The minimum wage in Spain as of January 2024 is EUR 1,134 per month in 14 payments. This is equivalent to a yearly wage of EUR 15,876.

What are the standard working hours in Spain?

Spain's standard working hours are unique compared to much of the world and vary based on the region and company. 

What is the overtime rate in Spain?

In Spain, employees are entitled as a minimum to either compensatory time off or payment at the same rate of a regular working hour or a 75% increase rate if hours are on a holiday or rest day when working overtime. 

Spain has strict overtime laws and employees cannot take more than 80 hours of overtime per calendar year. 

How do probation periods work in Spain?

There is no statutory probation period employers are required to abide by in Spain. 

Rather, the employer can implement a probation period if they choose on a case-by-case basis, so long as it aligns with the limitations outlined in the employee's collective bargaining agreement. 

What discrimination protections does Spain provide for workers?

Employees in Spain are protected from workplace discrimination, and if an employee believes their employer has discriminated against them, they are entitled to pursue legal recourse. In Spain, employers cannot discriminate based on the following:

• Age

• Race

• Color

• Ethnicity

• Nationality 

• Sex

• Disability

• Religious beliefs

• Marital status

Can employees in Spain join unions?

In Spain, employees are entitled to unionize if they wish to do so, and employers cannot prevent employees from joining a union. As a result, nearly 20% of the workforce in Spain belongs to a union. There are two primary unions in the country: 

• The Confederación Sindical de Comisiones Obreras (CCOO)

• The Unión General de Trabajadoras y Trabajadores (UGT)

Collective Bargaining Agreements in Spain

In Spain, collective bargaining agreements (CBAs) play a key role in regulating labor relationships between employers and employees. These agreements are negotiated between trade unions and employers’ associations, establishing the terms and conditions of employment in a particular industry or sector.  

They offer protections to employees and dictate the working agreements employers and employees make, covering a wide range of issues such as wages, working hours, leave entitlements, and grievance procedures. All companies in Spain have legally binding CBAs that apply to them and all employees, regardless of their union membership status. 

Can companies drug test employees in Spain?

Employer drug testing laws in Spain are complicated, and there are many rules around whether an employer can request a drug test from an employee. As a result, employers may risk being accused of discrimination if they request a drug test. 

Employers should avoid requesting an employee living in Spain to take a drug screening unless specifically necessary. 

What is the relevant workers' compensation legislation in Spain?

Workers' compensation in Spain isn't mandatory on a national level, but may be a requirement of a relevant collective bargaining agreement. Therefore, whether the employee belongs to a union that mandates worker's compensation or the industrial collective bargaining agreement dictates it is necessary, an employer may be required to opt into worker's compensation insurance. 

Managing employee offboarding in Spain

Spain's employment laws affect how you enter and exit employment contracts with individuals in the country. Factors like at-will employment, notice periods, and severance pay differ nationally, and adhering to Spain's offboarding laws is essential to terminate any active employment contracts compliantly. 

Consider the following regulations regarding managing employee offboarding in Spain.

Does at-will employment exist in Spain?

At-will employment does not exist in Spain. Employees can only be dismissed without a cause during the probationary period. Even then, dismissing an employee for discriminatory reasons such as pregnancy or sick leave would not be valid. 

How do companies terminate employees in Spain?

Employers in Spain are required to provide employees with a minimum notice of 15 days before their termination. The exception is except in the case of terminations during the probationary period or for disciplinary reasons.

Employers can pay the employee for 15 days instead of giving them notice, terminating them immediately.

Are terminated employees in Spain entitled to severance pay?

Terminated employees are generally entitled to severance pay commensurate with their length of service. Severance pay accrues at 20 days' pay for each year they worked with your company for a maximum severance package of a full year's salary.

Employers are not required to provide notice or severance pay, only if the employee is terminated during probation or for disciplinary reasons.

When hiring employees in Spain, you must not accidentally classify an employee as an independent contractor, or you could face significant risks. Because each country's laws differ regarding what differentiates an independent contractor from an employee, it can be challenging to ensure compliance. 

Partnering with an employer of record like Remote is the best way to avoid employee misclassification. Remote’s team of employment experts can help you classify your workers correctly and ensure compliance with local labor laws. 

What regulations separate employees and contractors in Spain?

Employee misclassification carries significant financial and legal risks for both the employer and employee, and the working relationship you enter should be examined closely (and continuously) to ensure compliance. 

The primary distinctions that differentiate an employee from an independent contractor in Spain include the following: 

• An independent contractor is self-employed and has control over their performance and work schedule, whereas an employee is subject to the rules and requirements of their employer. 

• An independent contractor has ownership over their work, whereas an employee creates work on behalf of their employer. 

• An independent contractor is only compensated for services provided on an ad hoc basis, whereas an employee receives a regular salary.

What are the relevant rules on contract workers in Spain?

Working with independent contractors is often attractive to employers, as this group of workers is not protected under the same laws as employees. However, working with contractors comes with more significant risks of noncompliance, especially in Spain, where a protected class of independent contractors exists. 

Under Spanish law, there exists another sub-category of workers called “dependent self-employed.” This refers to an independent contractor who earns 75% or more of his income from one company or client. These self-employed individuals are entitled to additional benefits from their primary client, including paid leave time, severance pay, and more.

Can employers hire employees on fixed-term contracts in Spain?

Both indefinite and fixed-term labor contracts exist in Spain. However, there are stringent regulations on the length and types of fixed-term contracts employers can enter, so you will need to be careful about compliance when entering these types of contracts. 

What are the misclassification laws and penalties in Spain?

Misclassifying an employee as an independent contractor or vice versa can have significant consequences on the business. For this reason, compliance in this area is critical when hiring remote foreign employees. 

Below is a list of some of the penalties that employers face if they're found to have misclassified employees:

• Administrative sanctions between 100 and 150 percent of unpaid back taxes.

• Administrative fine between 100 and 150 percent of unpaid social security contributions.

• Employees will always be able to request the amount of their retirement contributions to social security, as well as having one year to claim all ordinary employment rights, such as severance payments, overdue salary amounts, and benefits.

• The company could receive a criminal offense charge. 

The fast, simple, compliant way to hire in Spain

Hiring employees in Spain can be a risky and time-consuming endeavor for companies to take on their own, but thanks to global employment services like Remote, you can compliantly onboard Spanish employees in a few clicks.

Remote can help you navigate all aspects of hiring in Spain, including: 

• Navigating Spain's employment laws to ensure compliance.

• Assessing consistent adherence to the minimum statutory employment benefits.

• Guaranteeing employee offboarding is compliant, including providing 15 days' notice and severance pay.

• Ensuring independent contractors or dependent self-employed individuals aren't accidentally classified as employees.

• Managing foreign employee taxes, benefits, and payroll.

Download Remote's Where to Hire report to find the best places to hire talent around the world based on cost, talent, and more. To get a sense of how much it would cost to hire a full-time employee in Spain, check out our free Employee Cost Calculator.

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