SpainA guide to employment laws, regulations, and Employer of Record (EOR) services in Spain.
Want to hire in Spain? An EOR can help
Are you looking to get up and running in Spain? An Employer of Record (EOR) service allows you to recruit, onboard, and manage employees without the need to set up your own legal entity.
An EOR acts as the official employer for your staff, managing local recruitment, payroll administration, benefits provision, and tax compliance – all in line with Spanish labor regulations.
Utilizing an EOR to simplify and automate the management of global employees allows you to sidestep the intricacies of international employment law and focus on growing your business.
How to hire in Spain
Step 1: Choose between creating an entity and using an EOR
When it comes to hiring people in Spain, you have two options: 1) Setting up a local entity or 2) Using an EOR.
Although it can be time-consuming, expensive, and complicated to set up and run, establishing a local entity gives you more control over your HR function in the long run. However, bear in mind that you’ll need to register your business with the government, appoint directors, and comply with complex tax regulations and this process can take weeks or even months to complete.
With an EOR, you don’t need to understand all the subtleties of Spanish employment laws. You can onboard new talent in minutes and automate core HR functions. You also avoid risk since you aren’t responsible for ensuring compliance with all local employment laws and regulations.
In general, when your headcount exceeds a certain threshold and you want to establish a significant presence in the region, a local entity can be a good idea. However, if you want an easier way to hire in Spain, an EOR is a better solution.
Step 2: Finding the right EOR
Selecting the right EOR for your business requires careful consideration of several key factors. Choosing the wrong provider can lead to compliance issues, unnecessary costs, and a poor experience for your new hires. Here’s what to consider:
- Legal compliance. Ensure the EOR has a deep understanding of Spain’s labor laws, employee protections, tax regulations, and localized benefits. Investigate their track record and inquire about their experience with industry-specific scenarios.
- Customer service. Evaluate whether the EOR offers continuous support. For example, Multiplier provides 24/7 personalized support (no automated systems) and assigns dedicated managers to each account.
- Transparent pricing. Be cautious of EOR services with low initial costs but hidden fees or complicated pricing structures. Make sure to clarify all associated costs upfront before making your decision.
- Total cost of ownership. The cheapest option isn’t always the best as less expensive solutions can end up costing more if they prove ineffective. Ensure that the EOR you choose offers a quality service that fits within your budget without sacrificing essential features.
Step 3: Employing and onboarding in Spain
Send over a contract
Once you’ve found the candidate, it’s time to send them an employment contract. An EOR like Multiplier can generate contracts that are fully compliant with Spain law in less than five minutes.
You will be able to customize the terms of employment, including job responsibilities, working hours, remuneration, and termination conditions. Then, once the contract is ready, Multiplier will collect all signatures.
Enhance compensation with competitive benefits
Do you want to add a competitive benefits package to sweeten the deal? It’s tedious and time-consuming to sift through local vendors yourself. A great EOR can make finding and choosing from several locally administered packages easy. Multiplier even organizes the IT assets employees need to get up and running.
Get all your documentation in order
Next, you’ll need to collect the new hire’s tax and banking information. If you’re using an EOR like Multiplier, that information will automatically be collected to set up payroll. Multiplier will handle all required documentation directly, ensuring a smooth process without paperwork hassles.
Onboarding employees in Spain may seem daunting, but an EOR makes it pain-free.
Step 4: Run payroll for employees based in Spain
Handling payroll for employees based in Spain involves meticulous attention to local tax regulations and mandatory contributions. Spain’s income tax rates vary based on income levels, with progressive rates ranging from 19% to 47%.
Employers must contribute a fixed percentage of an employee’s salary to the Spanish social security system. These contributions support retirement benefits, unemployment insurance, and other social services. This also includes healthcare coverage. Employers contribute to this fund to ensure employees have access to necessary medical care and services.
Navigating these regulations can be intricate and time-consuming, particularly for multinational companies managing a workforce in Spain.
Using an EOR like Multiplier streamlines this process by managing precise and timely salary payments while also handling all local taxes, contributions, and withholdings. With Multiplier’s global payroll solution, you can efficiently outsource payroll for all your international employees and we will handle it within a single platform.
Employment laws and regulations in Spain
The main labor law in Spain is the Workers’ Statute, which regulates the employment relationship and sets out the rights and obligations of both employees and employers in Spain.
The law is broad, dealing with issues including, for example, anti-discrimination, employment rights, paid time off, and the need for written employment contracts.
By understanding these laws and protections, you can ensure compliance with Spanish employment regulations when hiring and managing staff.
Employ top talent in Spain through an EOR
Onboard, pay, and manage all your international employees
Employee benefits and compensation
In Spain, the current minimum wage stands at €1,134 per month. Spanish labor laws also prescribe several standard employee benefits.
- Annual leave: Employees are entitled to a minimum of 30 days of paid annual leave, which can increase based on years of service or company policy.
- Sick leave: Employees are eligible for paid sick leave, with the rate of compensation determined by the Social Security system.
- Parental leave: Spain provides paid parental leave, which includes 16 weeks of maternity leave for new mothers and 16 weeks of paternity leave for new fathers. Both parents can take additional unpaid parental leave to care for their child.
Employers often offer additional benefits beyond these statutory requirements to attract and retain top talent. Explore Multiplier’s global benefits administration to deliver locally compliant and competitive benefits to your international employees.
Termination and offboarding procedures
When terminating employment in Spain, employers must adhere to regulations concerning notice periods and severance pay. The typical notice period is generally 15 days, though it may vary depending on the specifics outlined in the employment contract.
Under Spanish law, severance pay is required. This usually amounts to 33 days’ salary for each year of service, calculated based on the employee’s most recent 12 months of salary. This applies unless otherwise specified in the employee’s contract or under specific statutory provisions.
Employers must follow specific procedures during organizational restructuring or economic difficulties, such as conducting a formal consultation process with employee representatives. If clearly stipulated in the employment contract, you may provide compensation in lieu of notice.
These procedures can be complex and time-consuming, especially for international employers unfamiliar with Spanish labor laws. An EOR, like Multiplier, can greatly streamline this process.
By managing offboarding procedures, an EOR ensures that all termination activities comply with local regulations and facilitate a smooth transition for both the employer and the departing employee.
Visa and work permit assistance
Hiring foreign workers in Spain requires obtaining the appropriate visas and work permits. The type of visa needed varies based on factors such as the nature of the job, the duration of employment, and the employee’s nationality. Here are the main categories:
- Type D Long-Term Visa: For individuals who wish to work in Spain for more than 90 days. This visa is suitable for long-term employment and specialized roles.
- EU Blue Card: Meant for highly skilled non-EU workers in professions requiring advanced qualifications. It allows for residence and work in Spain while facilitating mobility within the EU.
- Single Permit: Combines both work and residence authorization for non-EU nationals employed by Spanish companies across various sectors, typically requiring a job offer from a Spanish employer.
- Seasonal Work Visa: For foreign workers in seasonal jobs, valid for up to 6 months, catering to employment during peak periods in sectors like agriculture and tourism.
- Intra-Company Transfer Visa: For employees transferring within a multinational company to a Spanish branch, allowing for work and residence in Spain.
- Student Visa with Work Rights: Allows international students to work part-time while studying in Spain.
- Highly Qualified Employment Visa. For professionals in specialized fields with specific qualifications and a job offer from a Spanish employer, supporting long-term employment and residency.
There are also other categories of visas, such as those meant for entrepreneurs, au pairs, and scholars and researchers.
Given the complexities of visa applications and renewals, expert assistance is highly advisable. Multiplier offers comprehensive support for work permits and visas as part of its Employer of Record (EOR) services.
For further insights into how we handle global immigration issues, you can visit our Global Immigration page.
Get started with Multiplier’s EOR services
Multiplier’s Employer of Record (EOR) services offer a comprehensive solution for workforce expansion in Spain. You can hire without needing to set up a global entity and then outsource all HR tasks while delivering a great employee experience.
Multiplier EOR ensures a smooth hiring, onboarding, and employee management process, complete with locally compliant contracts, managed payroll and tax withholding services, and a range of customizable benefits tailored to local standards.
Book a demo to learn more.
