Spain

Employment Act And Labor Laws In Spain

The Spanish labor law is extensive and offers significant employee protection. These laws oversee the individual and collaborative relationships between the employer and employees. Furthermore, the scope of these laws extends to social security, health, safety and special employment relationships.

The Workers’ Statute, also known as Estatuto de los Trabajadores governs many facets of individual and collective employment interactions, is a significant component of Spanish employment law. Additionally, it is in charge of the collective bargaining agreements that govern certain professions’ minimum earnings and their associations and privileges. 

In reaction to the 2008 financial crisis, Spain also implemented critical labor changes in 2012 and 2021, which would address the country’s high number of temporary employees. Other recent legislation has addressed social security, training, gender equality, temporary contracts, remote working, delivery platform workers, and workplace safety.

If you are looking to open a business in Spain, go through this guide to hire compliantly and understand the rights of the employees.

Who Is Covered by the Employment Act?

The Spanish Employment Act protects employees who are:

  • Above 18 years of age
  • Minors under 16 and 18 years of age
  • Members of the works council and their legal representatives
  • Disabled
  • Affiliated with a trade union
  • Facing discrimination based on race, ideology, gender, sexual orientation, or religion
  • Facing suspension of employment contracts due to maternity, adoption, or other custody-related reasons
  • Pregnant women who have either requested or are already on leave
  • Victims of gender violence and exercising their legal right to rearrange or reduce their work time, change their work location or suspend their employment contract
  • returned to work after suspension of employment contract

The employees are classified by their type of contract, professional category, occupation, experience, seniority and salary.

Employment Contract

Spanish labor law mandates employers to have a verbal or a written employment contract. A written contract is crucial in the following cases:

  • There has to be an additional decree
  • The employment is finite but spans more than a month
  • The contract involves a formal request by either party

A written contract is a wiser step to protect the interest of both the employer and the employee. They become necessary if you hire a senior executive, an intern, a part-timer, or someone working abroad.

You are legally obligated to include the following specifics in a typical employment contract:

  • Name and address of the employer and employee
  • Type and place of work
  • Work schedule and work hours
  • Professional category
  • Date of commencement of employment (and termination, if necessary)
  • Salary (Gross, Net and Base)
  • Notice period
  • Holiday and sick leaves
  • Collective bargaining agreements

The types of employment contracts recognized by Spanish labor law are as below:

Indefinite and temporary

Employment contracts in Spain are usually of indefinite time or open-ended. However, you may present a temporary contract in the following situations:

  • Production contingencies: Can only be as long as six months to a year.
  • Temporary replacement: You must specify the staff being replaced and the genuine reason.

If the employee keeps working beyond the date specified in the contract, they become full-time employees. Hence, they are entitled to a standard severance package.

Training

These are given to employees between the ages of 16 and 21 looking to develop skills and earn qualifications. The duration of such contracts is between 6 months to 2 years.

There are two types of training contracts:

  • Work-linked: This is a blend of studies and paid training, lasting for a minimum of three months and a maximum of three years.
  • For professional practice: This must be formally signed and accepted within three years of the end of study (five years for professionals with a disability). Such contracts last between six months and a year.

You must be aware that both the contracts above have specific regulations regarding the university or training institute and the candidate.

Part-time

These contracts must be finalized in writing and include the location of work and the working hours. The length of the contract may be indefinite or fixed.

The employees must work overtime if they sign a complimentary hours agreement. These agreements are valid only when the employee has already worked more than 10 hours. The number of complimentary hours must be 30% of the hourly rate in the contract, with a maximum of full-time hours. The employer must provide a notice three days in advance if they want an employee to work during the complimentary hours.

Work from home

Many companies are adopting a hybrid working model and allowing their employees to work a few days in the office and the rest from a remote location.

The Spanish law directs companies to draft a work-from-home policy and sign an agreement with their employees if they allow remote work for more than 30% of the working hours. Furthermore, the companies must cover the expenses related to setting up a remote workstation.

Key Provisions of the Act

Many aspects of the Spanish Employment Act outline processes and mandate benefits to employees. You must know the following provisions while building a workforce:

Minimum Wage

The minimum wage for a full-time employee in Spain is 1,125.83 EUR (gross amount) per month. You must pay your staff 14 times yearly with additional payments in July and December.

Work Hours

Full-time employees have to work a maximum of 40 hours a week. There must be a gap of 12 hours between two working days. The employer must give a 15-minute break after the employee has worked continuously for 6 hours.

Overtime

An employee must not work over 80 hours of overtime in a year. You may compensate for the overtime monetarily or give paid time off.

Paid and unpaid leaves

Full-time employees are mandated 22 working days a year as paid leaves. The number of days may vary based on the employee’s location, as there are several local and regional holidays in Spain. If a public holiday falls on Sundays, it transfers to the following Monday.

The paid leaves can be taken all at once or distributed randomly. However, the employee must take at least one two-week long holiday.

Spanish laws prohibit employers from providing monetary compensation for lowering employees’ paid leaves.

Sick leaves

In Spain, employees can claim an allowance for temporary absence if they fall ill and have to stop working. It will enable them to cover the loss of their daily income and receive healthcare.

The Spanish labor laws allow you to apply for leaves and claim allowance for temporary absences during sickness. The allowance is granted three days from the start of any common illness or the time of the non-work-related accident. Although the reimbursement is for a maximum of 365 days, it can be extended for 180 days more if there is a possibility of recovery.

Parental rights

Spanish laws entitle biological, adoptive and foster parents to 16 weeks of maternity and paternity leave. The parents must take 6 weeks off work after the birth of the child and the remaining 10 weeks can be distributed as required in the following 12 months. Employees are given an additional week of leave for each child, multiple births, or if the child has a disability. In the case of premature birth or necessary hospitalization for more than 7 days, the parents can add another 13 weeks to their leave. 

The parents are entitled to 100% of their pay during the leave. To qualify for this benefit, the employee must contribute to the Spanish social security for a minimum of 180 days in the last 7 years or 360 days of their total working life. However, if a mother has not met this requirement, Spanish law approves a non-contributory compensation of 530 EUR per month under certain conditions.

Self-employed parents are also eligible for maternity and paternity benefits if registered in the Spanish social security system.

Social security and tax

In Spain, employees must register with the Spanish Social Security system (Tesorería General de la Seguridad Social or TGSS) and pay taxes. In return, they receive benefits and insurance protection for sickness, harm, accidents at work, unemployment, retirement, and parental leaves.

The rate of contribution is as given below:

Full-time employee

6.35%

Temporary employee

6.4%

Employer

30.4%

Occupational accidents

1.5%

The labor law mandates employers to withhold employee contributions every month from their salary. The contribution is in addition to the other deductions, such as personal income tax. Therefore, the employee receives a net compensation after subtracting the deductions from their gross salary.

Self-employed staff are considered under a special scheme, known as the régimen especial trabajadores autónomos. They must pay all their contributions themselves as per the minimum monthly amount.

Protection from workplace discrimination

The Spanish law mandates companies with 50 or more employees to develop and implement an equity plan by 2021. The businesses must include a pay audit in the plan and give public access. Employers with 50 or more employees must demonstrate that compensation variations between employees of different genders are not the result of discrimination if one person in a particular professional group or job earns at least 25% more or less than an employee of the other gender.

In addition, discrimination based on sex, marital status, ethnicity, color, nationality, ethnic origin, disability, religion or belief, and age is wrongful by Spanish labor laws. Direct and indirect discrimination, harassment and victimization, are illegal. An employee in Spain who believes they have been harassed at work or subject to workplace prejudice may file a claim with the Labor court.

Additionally, employers must generally take the necessary steps to adapt the workplace to allow those with disabilities. Furthermore, they must provide disabled employees access to advancement and training opportunities. Businesses with more than 50 employees must reserve a quota of 2% of their workforce for people with disabilities.

Joining a union

The Spanish constitution allows workers to set up and participate in unions. There are two different forms of employee representation: works councils and individual delegates. Work councils are present at offices with more than 50 employees. On the other hand, the individual delegates represent employees in companies with less than 50 employees.

The Spanish labor laws also mandate the right to strike. Trade unions, elected officials (works councils, individual delegates), or the employees can organize strikes against an employer. However, the strikes called by the trade unions must affect an entire industry.

Unfortunately, the employee must take reduced pay due to strikes and absences. However, if they are a delegate, they will be given paid time credit for their duties as a workers’ representative.

Health and safety at work

In Spain, businesses are required to establish a workplace risk prevention policy. The employers can implement the policy independently or partner with an external risk prevention agency.

Employees in Spain are entitled to contribute to occupational health and safety matters. They must have access to specialized training regarding dangers relevant to their position. 

Representatives for health and safety (delegados de prevención) are chosen by the workforce in all businesses with more than 50 employees. They collaborate with employers in health and safety committees and have significant consultation privileges in larger businesses.

Additionally, new regulations have been implemented in Spain to help ensure the well-being of remote workers (teletrabajo). For instance, modern labor rules mandate that employees have the right to private life and to withdraw from work-related activities after hours. Employees are also entitled to digital disconnection after work and during vacation.  

Retirement

The minimum age to retire and receive a pension in Spain is 65 years. To qualify for the minimum pension, the employee must have worked and contributed to the Spanish social security for a minimum of 15 years. 

Employees who want to retire early will not qualify for a full pension claim as voluntary retirement is not allowed in Spain. The employee may retire a maximum of two years early after making at least 35 years of social security contribution.

However, an employee can retire early, a maximum of four years in advance, due to termination due to economic reasons, death of an employer, or collective dismissal. They also must’ve made a social security contribution of at least 33 years.

Employees can claim a full pension from the age of 60 if they have a disability or work in hazardous conditions. They also must have made sufficient security contributions.

Partial retirement is allowed in Spain if the employee fulfills the age and contributions requirements. The working hours of partially retired employees are 20-25% less than a full-time employee.

Termination

According to the Spanish labor laws, the employer or the employee must give a minimum of 15 days written notice before terminating the employment contract. The notice period might be longer, as mentioned in the agreement. This rule is invalid in cases of temporary employment and probation periods. 

You can legally dismiss an employee for the following three reasons:

Objective (extinción del contrato por causas objetivas)

When the employee does not perform as expected and fails to adapt to the technical demands of the job, which were not identified during the probation period. The employee must be given 20 days’ salary for every year of service (a maximum of 12 months’ pay). During the notice period, the employee is mandated 6 hours of paid leave to find new opportunities.

Dismissal as a case of employee redundancy is also legal in Spain. Such instances are common during economic crises and the organization decides to offload employees. You must pay the professional 20 days’ salary for every year of employment (maximum of 12 months’ pay) to break the employment contract due to objective redundancy. However, if the dismissal is unfair and without reason, the compensation increases to 45 days.

Disciplinary (despido disciplinario)

When the employee does not exhibit professional behavior, viz. repeated absences, arrives late or harasses colleagues. Other instances of disciplinary removals include consumption of illegal substances and contract violations. You must inform the employee of the reason for their dismissal in writing and mention the termination date.

Collective (despido colectivo)

Due to the organization’s financial, management, or operational reasons, the employer decides to terminate the employee. When you dismiss an employee on collective grounds, you must consult statutory representatives over 30 calendar days (15 days for firms with less than 50 employees).

Penalties

The Spanish labor law incurs hefty penalties to businesses who do not comply with the regulations. The following points highlight the relevant penalty according to the violation:

Working without an employment contract

The Article 233 of the Penal Code and the Royal Legislative Decree 5/2000 states employment without a legal contract counts as an infringement.

As a result, the companies are imposed a fine of 3,126 to 10,000 euros and lose all government aid. Furthermore, they must pay the pending social security contribution for the entire work duration.

Infringements related to labor relations and employment, social security, temporary employment agencies, migration and foreign workers

Type of infraction

Minimum penalty (in euros)

Medium penalty (in euros)

Maximum penalty (in euros)

Minor

70 – 150

151 – 370

371 – 750

Serious

751 – 1,500

1,501 – 3,750

3,751 – 7,500

Very serious

7,501 – 30,000

30,001 – 120,005

120,006 – 225,018

Obstructing labor inspection regarding the employees’ registration status and non-compliance with the obligations: 

As per Article 22.2 of LISOS (Ley sobre Infracciones y Sanciones en el Orden Social)

Minimum penalty (in euros)

Medium penalty (in euros)

Maximum penalty (in euros)

3,750 – 7,500

7,501 – 9,600

9,601 – 12,000

As per Article 23.1.a of LISOS (Ley sobre Infracciones y Sanciones en el Orden Social)

Minimum penalty (in euros)

Medium penalty (in euros)

Maximum penalty (in euros)

12,001 – 30,000

30,001 – 120,005

126,006 – 225,018

Preventing occupational hazards

Type of infraction

Minimum penalty (in euros)

Medium penalty (in euros)

Maximum penalty (in euros)

Minor

45 – 485

2,451 – 9,830

49,181 – 196,745

Serious

486 – 975

9,831 – 24,585

196,746 – 491,865

Very serious

976 – 2,450

24,586 – 49,180

491,866 – 983,736

Compliance Strategies for Employers

Adherence to the state and federal labor laws is essential to running a business smoothly. To ensure total compliance with these laws and avoid hefty fines, follow the given strategies:

Identify the relevant laws affecting your business

The best way to ensure compliance with the laws is by learning which ones apply to your business and aligning with them. If you find it hard to keep tabs on all the rules and regulations, consider partnering with a PEO like Multiplier.

Publish and distribute employee handbooks

An employee handbook goes a long way in ensuring smoother onboarding and educating the workforce about the company’s ethics and policies. Furthermore, you can share your compliance measures and help your workforce understand their rights. Update the handbook regularly to ensure it is up-to-date and accurate. 

Perform audits

A yearly audit helps identify internal operations loopholes, resolve employee grievances, manage your finances better, etc. Check if you align with all the relevant laws and if your processes comply with the Spanish labor law. As a consequence, you will avoid paying hefty fines and running into unexpected obstacles.

How Can Multiplier Help Businesses Stay Compliant?

While hiring global employees, there are innumerable employment laws and regulations you must respect. Even a slight deviation from these rules can land you in deep trouble, impacting your image and finances. Therefore, you must conduct in-depth research of country-wise employment laws and hire responsibly.

Partnering with a PEO like Multiplier is a smarter alternative to hiring professionals across the globe and maintaining full compliance with the relevant laws. With our digital platform, you can draft legal employment contracts within minutes, allot mandatory benefits, manage payroll in desired currency and much more. With our PEO solutions, you can grow beyond borders without worrying about legal hassles.

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