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Employing Staff in Spain

- Updated: 16/05/2013
Employing Staff in Spain

Employment in Spain is regulated strictly - the main purpose being to protect the rights of the Employee. It’s important both as an employer or employee to be aware of the different types of work contracts, holiday entitlement and social security requirements when considering the options of working in Spain, and to be sure which set of regulations will apply to the job that you are considering.

The regulations are complex: jobs are grouped into categories, and each category has a different set of regulations, called the "Convenio Colectivo". These Convenios regulate, for example, the legal salary range for each job, hours in a work day, vacation days per year. The following points, though, are generally observed across all categories...

  • A Standard 40-hour week.
  • 14 payments or 16 1/2 payments annually.
  • Holiday entitlement of 21 Working days for each full year worked.
  • There are no sick days as such. If an employee is unwell, they should get a doctor to sign a baja to confirm that they are unable to work ( With a baja, social security then takes over to pay the salary of the employee after a period of time.)
  • If you lay off someone, you pay 45 days of indemnization for each year that they have worked for you. If you fire someone with sufficient cause, then there is no indemnization payment necessary. In either case, though, you must pay something called a finiquito, which mainly covers any vacation that the employee has not yet taken. Make sure you get this finiquito signed by the employee.
  • The employee has an additional right to extra leave for the following circumstances : 15 days (including weekends) for a marriage, 2 days for the birth of a child or the death of a family member, 1 day for home relocation, and 4 months for maternity leave.

Advice to employers in Spain

  • Be aware that salaries are usually much lower in Spain than in the UK - check around to see what the going rate is for the type of work that you are offering
  • When making an offer to a potential employee make sure you quote a gross annual salary (sueldo en bruto) rather than a net salary (Always a good idea to put this in writing to avoid any confusion)
  • Companies have traditionally avoided giving indefinite contracts because of the difficulties in laying off such employees, and the high compensation package involved. As such, the Spanish mentality is such that receiving an indefinite contract is almost as important as what salary they will actually receive.
  • Do Not underestimate the Importance of understanding Employment Law in Spain. Spain is not at all a litigious country - Unless it is when somebody has been fired , and they believe it to be unjust.

Types of work contracts

Indefinite contracts

This category includes the normal indefinite contract as well as several types of indefinite contracts with government incentives. The main characteristics of the normal indefinite contract are:

  • The contract is presumed to be normal indefinite , unless clearly stated otherwise in writing.
  • Severance pay for improper dismissal is a maximum of 45 days salary for every year worked, up to a maximum of 42 months equivalent salary.
  • There are no Social Security subsidies or any other financial incentives.

Indefinite contracts with incentives may be used when hiring:

  • Workers over 45 who have been unemployed for at least one year.
  • Women unemployed for more than a year who have been hired for work in sectors where women have been traditionally under-represented.
  • Workers between 30 and 44 who have been unemployed for more than a year.
  • Unemployed workers under 30 years of age & Workers with disabilities.

The main characteristics of an indefinite contract with incentives are:

  • Severance pay for improper dismissal is 33 days salary for each year worked with a maximum of 24 months equivalent salary.
  • Subsidies of up to 75% from the employer's social security contribution.
  • Tax benefits.

Temporary contracts

The main types are:

  • Contract for a specific project or service, arranged for the purpose of performing work or providing a service which is temporary but of uncertain duration.
  • Casual contract due to production overload or backlog. The maximum duration of this type of contract is six months in any twelve-month period.
  • Contract to sit in for employees entitled to return to their job. The duration of this contract is the period during which the absent employee retains the right to return to his or her job.
  • Work experience contract. This contract can be arranged with university or junior college graduates or persons with vocational qualifications or recognised equivalent qualifications, provided that not more than four years have elapsed since they completed the related training. The duration is from six months to two years.
  • Trainee contract. This type of contract can be arranged with workers aged 16 to 21 who do not have the necessary qualifications to obtain a 'work experience contract'. The duration of this contract ranges from six months to two years, although it may be extended to three years by a collective labour agreement.

Transitory employment needs may be met through workers provided by temporary work agencies.

I would like to have employees in Spain. How should I proceed?

There are various alternatives. You can create a Spanish company – and then the company hires these employees. This carries a cost, if your business is just starting or if you only need employees in Spain for a limited time. If you don't plan on having an actual business in Spain, then you could register your foreign business with the social security office. Another alternative is to have the prospective employee set up as being self-employed (autónomo).

How much would I have to pay to social security?

This table shows the typical figures:

  Percentage of gross paycheck
Reason for contribution Employer Employee Total
Standard 23,6% 4,7% 28,3%
Unemployment* 6,0% 1,6% 7,6%
Other** 2,0% 0,1% 2,1%
Total 31,6% 6,4% 38,0%

These percentages may be slightly different depending on your work contract (*). Salary guarantee in case of bankruptcy; professional studies; additional amount based on the employee's professional classification (**).

# A Royal Decree was passed in Parliament on 10.02.2012, which effectively changed the bias from being in the favour of the employee to the employer, in a bid to stimulate the economy and create much-needed jobs. As such a number of reforms will be made to the current laws - which can be read about in more detail by clicking HERE.

Information courtesy of Strong Abogados

Comment on this Article

 
@Samantha - Very dubious! This is a perfect example of how black money is paid to employees. Considering your employer is contracted by the Junta, he should know better and the Junta will not be very happy if they find out! Unfortunately, this is how Spain works (or doesn't work!). You MUST insist on full disclosure in your payslip. DO NOT SIGN YOUR PAYSLIP! If you sign it, you agree to it and there is no recourse should you find yourself in the dole queues... Also, because he is declaring LESS on your payslip, HE is not paying the social the correct amount of tax for you which affects your pension, unemployment and health benefits. Just remember, if he is not paying the correct amount for you, where is that money going... Straight into his back pocket no doubt! BEWARE!!
Ed Bishop - Sat 10th Nov 2012
@Lynn - It's difficult to say without knowing the fine print of your contract. However, something to bear in mind, salaries in Spain are usually based upon a 30 day month, eg. if you earn €3,000 a month, you effectively earn €100 per day including the weekends even though you might not actually work the weekends. What this means is that your holiday entitlement works the same... I'm guessing the 9 days holiday were the working days (mon-fri) in 2 different weeks, what they do is deduct the weekend in between, but this should only be 11 days not 14, so I would query it with your employer. You will normally find that your holiday entitlement is 30 days per year... ie. 1 Month under this rule or 22 days without 4 weekends.
Ed Bishop - Sat 10th Nov 2012
I am contracted by a private academy to teach extra curricula English for schools under the Junta. After completing my first month I recieved the full cash payment I was expecting but was informed that my payslip would arrive much later and would only show a much lower amount in line with the agreement the Junta issues I.e. 7 Euros per hour. I wish to declare my full earnings as I have a large mortgage to cover. Is this situation correct or is my employer gaining some benefit by this action?
Samantha Greer - Fri 9th Nov 2012
I have an indefinite Contract and work in a restaurant. I physically took 9 days holiday, but the employer has stopped me 2 weeks. Is this correct please ?
Lynn - Fri 9th Nov 2012
It is worth noting that you will probably be quoted a gross salary that will INCLUDE the employers contributions. Holiday pay will not be as you expect as it will be assessed and they will make deductions for such items as not having to cover travelling costs. This will almost certainly happen if you work under a public service or Junta contract, if you on such contracts it is unlikely you will get the 13 or 14 payments per year. The rules on Temporary Contracts are about to change and anyone that works for the same employer for a period of 2 years within a 3 year period will automatically become entitled to the same terms and conditions of a person on an indefinite contract.
Carbine - Mon 3rd Oct 2011
Always be aware that in almost all cases the salary quoted will be a gross salary that will also INCLUDE the employers contributions for Social Security.
Carbine - Tue 6th Sep 2011
 
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