Employment Law

Spanish Employment Contract

Spanish employment laws are unique and industries/job types can have their own set of regulations. Therefore, it is important that you always fully understand the legal requirements related to your industry before expanding and recruiting in Spain.

You should always provide new employees in Spain with a formal employment contract containing all relevant details of the employment agreement. This should be written in Spanish and mention compensation in local Euro currency.

Please note that temporary employment contracts of more than four weeks are required by law to have a written employment contract .

Employees will often expect to enter into an open-ended contract because these contracts have more legal protections than fixed-term contracts.

Please note that if an employee is to serve as a remote worker, a remote work agreement is also required . It sets out how employees can be reimbursed for remote working expenses, health and safety and general remote working conditions. This is a requirement of Spain's remote working law, which was passed into law at the end of 2020.

Working with our Spanish employer of record and PEO, our team of local experts can provide assistance in drafting strong employment contracts that comply with local regulations.

Fixed Term

Indefinite

Spanish Working Hours

The normal working week in Spain is 40 hours, with most office employees working Monday to Friday. Some businesses may offer an extended lunch break, but this comes down to personal preference.

Throughout the working day, a 15-minute break is required after 6 hours of continuous work.

Employers in Spain are required to provide workers with at least one and a half days of uninterrupted rest per week.

Holiday Policy

Spain Vacation

In addition to public holidays, employees in Spain generally receive 23 days of paid leave per year.

While these 23 days can usually be split as the employer and employee wish, the employee is entitled to at least two consecutive weeks of leave .

Spanish Sick Leave

Employees in Spain can receive 60% or more of their wages when they are unable to work due to illness or injury. This is borne by the government (although the employer may need to make a payment and then receive a refund) and must be reviewed every 18 months.

Some employers may choose to make larger contributions to sick employees, but this depends on the individual's employment contract and agreement.

Parental Leave in Spain

Mothers in Spain can take up to 16 weeks of paid maternity leave, of which at least 6 weeks must be taken after the birth of the child. To receive this benefit, the mother must have paid social security contributions to the Instituto Nacional de la Seguridad Social for at least 180 days in the past 7 years (or 360 days in a lifetime).

Mothers can also take up to one year of unpaid maternity leave and are legally entitled to resume the same role. They can spend another two years, but there's no guarantee they'll be able to return to their original jobs afterward.

Working mothers also receive a tax deduction of €1,200 per year for each child under three years of age.

Due to changes in the law in 2021, fathers are now also entitled to 16 weeks of paid leave.

Paid parental leave (whether maternity or paternity leave) is funded by the government, not the employer, and is funded at 100% of an individual's employment wages.

Termination and Severance in Spain

In Spain, when an employee on an indefinite contract is terminated, severance pay equal to one month's salary for each year of service is usually payable. In addition, an additional month's salary is usually paid upon termination.

Note that hiring and firing in Spain is not as "at will" as in the United States. Termination of employment "for cause" is permitted only if probable cause is provided for by law. These possible reasons are:

• Dismissal was mutually agreed upon. This applies if an employee resigns or a fixed-term contract expires
• Objective dismissal. This can happen, for example, when there is a layoff due to a reorganization and the position is made redundant
• Disciplinary dismissal. On this basis, fair procedures must be followed before dismissing an individual, including notice and conciliation/conciliation.

Severance pay is not payable if an individual is terminated for disciplinary reasons.

These rules generally do not apply to employees who are on probation, which is usually two months but may be longer for some positions.

Workers who believe they have been unfairly dismissed can take legal action, which can complicate matters.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. A Spanish PEO can reduce risks for foreign companies and provide guidance during the process.  

Spanish Taxes

Taxes on Spanish workers are progressive, so higher earners pay more tax than lower earners. Tax rates range from 19% to 45%.

Corporate tax is 25%, but other taxes may apply depending on circumstances.

Employers are required to contribute to the social security fund, amounting to approximately 30% of each employee's salary, subject to a cap of just over €3,500. Employees themselves must contribute to the fund at the rate of 6.35%.

Spain's social security funds cover a wide range of areas (hence the high amounts), covering health care, incapacity, maternity, death and survival, disability, retirement and unemployment.

Health Insurance in Spain

Spain has a government-funded social health care system, so employers are not required to provide private health insurance. However, some companies do choose to do this, especially for senior positions, which can be a desirable feature for many potential employees.

Salary and Benefits

Spanish Compensation Law

As of June 2020, the minimum wage in Spain is €1,108.30 per month. Certain positions and industries may have higher minimum requirements if negotiated and agreed.

Welfare Management in Spain

As a foreign organization, setting up a Spanish benefits system for your employees can be difficult. Running a comprehensive and compliant benefits system can be time-consuming due to language and cultural differences, as well as complex, unique employment laws.

Spanish Employer of Record, specializing in administering the Spanish employee benefits system. We'll use our experience to handle everything, ensuring you're ready to launch your business in Spain quickly and efficiently.