Product Updates — 7 min
If you’ve found the perfect candidate for the job, you would rather not let their location stop you from hiring them – even if they’re based abroad, in Spain. While many companies have unlocked the benefits of hiring a globally distributed team, the actual process of international hiring can be daunting.
To hire employees in Spain, you’ll have to open a legal entity in the country and understand Spanish laws and regulations. You'll also have to deal with the HR and admin work of managing your employees abroad and remain compliant with employment laws. The whole process can take a significant amount of time and resources.
You can make your life easier by choosing a reputed employer of record (EOR) in Spain to take over the hassle of hiring and paying workers in Spain for you. An EOR will ensure compliance with all employment laws, and even handle HR for your Spanish employees, including onboarding, payroll, benefits packages, tax, compliance, and more.
Curious to find out how to use an employer of record in Spain? This comprehensive guide will provide you with helpful information about everything that you need to know about hiring in Spain.
Once you’ve decided to use an employer of record in Spain to hire candidates, follow these steps to make sure you’re selecting the right partner organization to fulfill your business needs.
Step 1: Evaluate the pros and cons of each potential EOR
Think about what features you’re looking for in a partner EOR in terms of costs and services. In addition to helping you employ a worker from Spain, what other services can they provide? Can they help with payroll and compliance? Can they take care of HR and admin work of international hiring?
Having to outsource payroll and compliance to external organizations can end up adding to costs. Make a list of potential EORs that suit your business needs, analyze the pros and cons of each, and shortlist the companies that can offer you the best service and value for money.
Step 2: Ensure that your shortlisted EORs own a legal entity in Spain
Don’t whittle your shortlist down to one employer of record, to later discover that they don’t own a legal entity in Spain. Some EORs will claim to be able to help you expand into every country in the world.
In reality, you may find that these companies are typically partner-dependent employers of records, who essentially act as the intermediary between your business and third-party organizations. As a result, the EOR will not have control over costs, as prices may vary depending on external providers. It also puts your company’s confidential information at risk.
Step 3: Check the reviews, testimonials, and press coverage of your potential providers
Do some research online to discover what other clients are saying about the EOR. You could visit the company website, check third-party review websites, read online reviews and testimonials, and review press coverage. You could even get in touch with the company’s previous clients to gain insights into their operations and level of customer service.
Step 4: Check that your EOR provides competitive compensation packages which comply with Spanish Labor laws
Your EOR in Spain will handle HR matters such as compensation, so you’ll want to make sure that they’re able to keep your employees happy — both in terms of service and compensation. To attract top talent, make sure you can work alongside the EOR to offer competitive compensation and benefits packages that are in line with local labor laws.
Step 5: Make sure that your EOR partner can protect your intellectual property and safeguard your data
Hiring international employees can, of course, pose certain risks to your company data and intellectual property, unless you work with a trustworthy EOR provider. For instance, your employer of record in Spain should not pass your information to any third-party organizations without your knowledge or consent.
A partner-dependent EOR may pass on confidential information (for instance, employment contracts) to third parties, which creates risks around data privacy. On the other hand, owned-entity employers of record in Spain carry out your tasks in-house, so you won’t need to worry about potential data leaks. This is why it’s important to ask your potential EOR about what security measures they use to protect your intellectual property and data.
By using an employer of record, you can hire talent from Spain or anywhere in the world, without the burden of legal risks. As the name indicates, the EOR is your employee’s named employer in legal records, except that the employee will be working for your company in reality.
In doing this, your EOR in Spain takes on all the legal responsibilities regarding your international employees, acting on your behalf to create the employment contract and manage your employees. Your EOR can manage:
By making use of the EOR’s legal entity in Spain, you won’t have to set one up yourself, saving you months of legal research and vast sums of money. Your EOR may also offer advisory services to help you expand into new markets, integrate your employees, and create a global compensation plan.
Remote’s global employment service is exactly what you need to make sure you hire, onboard, and pay workers in Spain quickly and compliantly. From onboarding and taxes to compliance and payroll — Remote makes your global expansion journey a simple process.
If you’re uncertain whether an employer of record is right for you, read our guide for more information on when to choose an EOR.
The pricing for your employer of record in Spain will vary depending on the level of service that you’re looking for, the location your employees are based in, and the number of workers you want to hire.
You will typically find that traditional providers charge costly enterprise rates. On the other hand, newer players may showcase surprisingly low rates — though this may indicate low levels of data security protection or compliance. Be sure that your EOR in Spain offers GDPR protection, as this legislation applies to this region.
Generally, EOR costs in Spain can be as low as $599 to upwards of $2,000 per employee, depending on the country of employment. Remote’s pricing is completely transparent, with a low flat rate pricing model for Spain as well as the strictest quality and compliance standards.
Spanish employment law is not contained within a single law. There are numerous statutory regulations codified in the Spanish Civil Code and the Spanish Workers’ Statute. While this can seem complicated to navigate, employing workers who are based in Spain becomes simple thanks to an employer of record.
Spanish employees are paid on a monthly basis in the Euro (€) currency. Employers are required to own a legal entity in Spain, which is where the assistance of an employer of record service comes in. Payroll, tax, benefits, and compliance must all be handled through their own in-country resources.
As with most countries, Spain makes a distinction between self-employed individuals or contractors and full-time employees, which can create some classification risks for employers. An employer of record in Spain will ensure that your company does not face penalties or fines for employee misclassification.
Learn more about hiring employees or contractors in Spain.
Under Spanish labor legislation, it is possible for some employment contracts to be made verbally, although temporary employment contracts, contracts involving special labor relations, and part-time contracts must all be in writing.
When an employment contract’s duration lasts for longer than four weeks, the employer must provide the employee with a written contract with details of the following:
identification of the parties involved in the employment relationship
start date and an estimate of the employment duration for temporary contracts
place where work will be carried out
professional group or category
base salary as well as other compensation or benefits, if any
total working hours
total number of holidays
applicable collective agreement.
If the employment contract states a definite term, yet the worker continues to work beyond this term, the relationship automatically becomes indefinite. This entitles the worker to severance pay from the employer.
If the applicable collective bargaining agreement does not include mention of a trial period, then the contracted period cannot exceed six months. Contracts for entrepreneurs differ, with a trial period of up to one year.
As with most European countries, Spanish labor laws are comprehensive and provide strong protections for employees.
The Workers' Statute, or the Estatuto de los Trabajadores, is the main legislation that governs employment in Spain. However, employers must also comply with collective agreements, employment contracts, as well as other legislation including:
The Spanish Constitution (December 17, 1978)
Law 31/1995 on Work Risk Prevention
Law 5/2000 on Labor Infractions and Sanctions
Law 3/2007 on Equality between Men and Women
According to the Spanish Statute of Workers, employees cannot work for more than 40 hours per week on average, and not more than 9 hours per day. However, collective bargaining agreements and employment contracts could affect this limit.
Moreover, nearly all employees in Spain must have a weekly period of rest of a minimum of a day and a half. For example, Sunday plus Monday morning or Saturday afternoon. To ensure compliance, employers are required to keep a record of working time for their employees for at least four years.
In Spain, employees are entitled to 14 salary payments. This could either come in 12 payments, with the extra two months of wage prorated throughout the year, or it could be made in 14 payments, with the additional sums paid in July and December.
Labor laws dictate that the employer can decide how these additional payments are made, though your employer of record may give them the freedom of choice.
Employers must make social security contributions for their employees, which make up 31.55% of their salary. This is broken down into:
Common contingencies – 23.6%
Unemployment for permanent employees – 5.5% (6.7% for temporary employees)
Occupational accident and professional disease contribution – 1.65%
Professional training – 0.6%
Wage guarantee – 0.2%
It is worth noting that these contributions are capped at a monthly rate of EUR 4139.40.
The Spanish Workers’ Statutes stipulate that both permanent and temporary employees are entitled to the same benefits, while self-employed workers or contractors are not entitled to any protections or benefits under Spanish law.
All workers are entitled to a minimum wage of EUR 1,125.80 Those who do receive the minimum wage should also expect meal vouchers and medical insurance, as well as the use of company vehicles in some circumstances. However, it is worth noting that by offering competitive salaries, your company will appeal to workers with higher qualifications and experience less employee turnover. In Spain, workers receive a minimum of 22 days of annual leave, excluding weekends and national holidays. They can take their annual leave throughout the year, though each break must last at least two weeks.
Additional statutory leave includes:
Maternity leave – minimum 16 weeks
Paternity leave – 2 days following the birth as well as 2 weeks
Sick leave – with benefits payable from the employer for up to 14 days
While these are the statutory benefits in Spain, employers should offer additional perks to remain competitive in the global job market.
Remote creates and manages competitive global benefits packages to attract top talent to your business. They also offer packages for contractors that make working for your company appealing, while ensuring that you remain totally compliant.
In Spain, an employment contract may be terminated based on the following criteria;
mutual consent from both parties
grounds established in the contract
contract term expires or the project ends
employee’s death or permanent illness
employer’s death, retirement, or permanent illness
force majeure making it impossible to continue
objective collective dismissal
disciplinary dismissal of the employee
Objective dismissals are rarely used by employers, as Spanish labor courts are restrictive and are, therefore, unlikely to accept them.
Disciplinary dismissals could refer to repeated lateness or absence at work, insubordination, or verbal or physical offense to their employer or co-worker. Although if a court were to rule that an employee faced an unfair disciplinary dismissal, they would be due a severance pay of 33 days’ salary per year at the company, capped at 24 months.
Employees are entitled to severance pay where there are collective or individual dismissals — unless the grounds were disciplinary. Standard severance is equivalent to 20 days of pay per month for each year that the employee worked for the company, with a cap of 12 months. In some circumstances, the bargaining agreement might require a larger pay. The severance is subject to both tax and social security contributions.
Labor authorities are strict on employee misclassification in Spain, hence the penalties for a company that has been found to be misclassifying its employees are severe.
To distinguish between a contractor and an employee, you will need to consider the following;
Is the worker free to choose their own working hours?
Does the worker perform their services in the office?
Does the worker provide their own equipment?
Do they provide invoices and take care of their own tax payments? Or are they on the monthly payroll?
Is their term of employment definite or indefinite?
If the business is found to have misclassified workers, they may face hefty fees or penalties, and may have to:
Pay fines ranging from EUR 3,000 to EUR 10,000.
Pay the withheld taxes for each worker
Pay outstanding social security contributions
Pay the corresponding severance if the contract has been terminated
Pay back benefits, overtime, holidays, paid time off, etc. accused by the worker
An employer of record in Spain will use the legal know-how of their local labor law experts to correctly classify workers and significantly reduce the dangerous consequences of employee misclassification.
To find out more about employee misclassification, read this expert guide.
International hiring doesn’t have to be a hassle. With a reliable employer of record in Spain, you can expand your talent search beyond borders and find the best person for the job. An employer of record can take the burden of legal work, compliance, and even HR duties out of your hands.
Remote’s global employment services make it quick and easy for you to hire employees in Spain. From onboarding, right through to payroll, benefits packages, tax, local compliance, stock options, and even more HR management, we can be the partner organization that can help you expand your global operations into Spain and beyond.
Remote has its own legal entity established in Spain, so you can start onboarding your recruits right away. Partner with Remote and you get:
The ability to view and manage all your employees globally from a single platform
HR services that can help with hiring, onboarding, employment contracts, benefits, and other management tasks.
Payroll services that can help you handle payments to employees and contractors, quickly and compliantly
A legal team to ensure that you’re in compliance with employment and tax laws
High levels of security for your data and intellectual property.
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