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Employment in Spain

As with other European countries, the Spanish labour market is highly regulated and heavily favours employees, making it notoriously tricky to navigate. There are numerous legislative requirements for employers to comply with, making compliance often costly and time-consuming. However, the global economic downturn has forced Spanish lawmakers to embrace political, social and legal reform in order to enhance flexibility within the Spanish job market.

Key points on employment in Spain

Hiring in Spain? Here's our latest article on employment in Spain.
  1. Contracts

  2. Probation Periods

    Where a probation period is agreed (provided that the worker has not performed the same functions before at the company under any type of employment contract, in which case the trial period would be null and void), it must be put in writing.

    The time limits for trial periods may be established in the respective collective bargaining agreement. However, as a general rule and in the absence of any provision in the collective labour agreement, the probationary periods cannot exceed:

    • Six months for college and junior college graduate specialists.
    • Two months for all other employees.
    • At companies with fewer than twenty-five employees, the trial period for employees who are not college or junior college graduate specialists cannot exceed three months.
    • One month in the case of temporary fixed-term employment contracts which are less than six months. Moreover, training contracts, indefinite-term employment contract in support of entrepreneurs and special employment contracts (domestic workers, senior managers, among others) have their own specific trial periods.

    During the trial period, the employer or the worker can freely terminate the contract without having to allege or prove any cause, without prior notice and with no right to any indemnity for either the worker or the employer.

  3. Termination Procedures

  4. Statutory Leave

    Working hours

    The maximum working hours are those agreed in collective labor agreements or individual employment contracts.The legal work week is 40 hours, although many companies have reduced working hours to 37 or 38. The Workers Statute maintains a 40-hour legal work week but permits total hours to be distributed irregularly over the year if such an arrangement is part of a collective bargaining agreement.

    Overtime is time worked in excess of the maximum ordinary working hours. Overtime regulations are dictated by national law and collective bargaining agreements. Paid overtime may not exceed 80 hours per year. Overtime can be taken as time in lieu within four months of the date on which the overtime was worked. It is generally voluntary.

    Annual leave 

    Each employee has the right to a minimum of one and a half days off per week, which may be accumulated by periods of up to 14 days. Workers are entitled to a minimum vacation period of 30 days, which cannot be paid in lieu. Employees are entitled to a minimum of thirty (30) days of paid vacation per year, which may differ by contract or collective agreement. In addition, there are fourteen (14) public holidays per year, which may differ slightly by region.

    Sick leave 

    Employees who have fallen ill or have suffered an accident can have their employment contract suspended during for up to 18 months. The employer normally pays the worker this temporary sick pay, and is then reimbursed by the Social Security department.

    Maternity leave 

    Female employees who are pregnant are entitled to 16 weeks paid maternity leave. The mother must take six (6) of these full-time weeks right after birth. The remaining ten (10) can be exchanged for twenty (20) weeks of part time work if the employee reaches an agreement with the employer.

    Other leave 

    Workers may be entitled to a reduction in their working hours in certain cases, for example: to directly care for children under 12 or family members who cannot take care of themselves, during the hospitalization and continuing treatment of a child in their care with cancer or any other serious illness that entails a long hospital stay and who requires direct, continuing and full-time care, until the child reaches 18 years.

    Workers are also entitled to paid leave in certain circumstances, such as marriage, performance of union duties, performance of unavoidable public or personal duties, breastfeeding, birth of children, relocation of main residence, serious illness or accident, hospitalisation or death of relatives up to the second degree of kinship, etc.

  5. Pensions and Benefits

    Generally, all employers, their employees, self-employed workers, members of manufacturing cooperatives, domestic personnel, military personnel and civil servants who reside and/or perform their duties in Spain are required to be registered with, and pay contributions to, the Spanish social security system. Spain has a number of bilateral social security agreements in force, provide relief from double social security taxation and for assured benefit coverage.

    Workers posted to Spain under the relevant social security agreements or regulations who continue to be subject to the legislation of their country of origin will not be registered with the Spanish social security system. On the contrary, when a worker is employed in Spain to carry out services in this country on a permanent basis (i.e. has received a residence and work permit), he or she must register with the Spanish Social Security System, irrespective of the worker’s nationality.

    Social security contributions are partly paid by both the employer and employee. Employees are classified under a number of professional and job categories for the purposes of determining their social security contributions. Each category has a maximum and minimum contribution base, which are generally reviewed on a yearly basis. Employees whose total compensation exceeds the maximum base, or does not reach the minimum base, must bring their contributions into line with the contribution base for their respective category.

    The rate of social insurance contributions is generally 6.35% for employees, and the rate for employer contributions is generally 30.15% of salary.The maximum monthly contribution base for 2015 is € 3,606 and the minimum is € 756.6 per month. Therefore, although an employee receives an amount that is higher than € 3,606, the contribution should not be higher than for the said amount.

    Please refer here for a full list of the maximum and minimum contribution bases for all categories.

    The employees’ portion of contributions are deducted at source from their remuneration. Employers must notify the Social Security General Treasury in each settlement period of the amount of all the remuneration items paid to their employees, irrespective of whether or not they are included in the social security contribution base and even if single bases are applicable.

Employee Entitlements

Information Explanation
Disclosure and Confidentiality of Personal Information ?
Spanish labour relations are covered under the terms and conditions of Organic Act 15/1999 of 13 December on Personal Data Protection.
Time Off Work ?
In addition to 14 public holidays per annum, employees are entitled to a minimum of 30 calendar days of paid vacation (generally taken as equating to 22 working days).
Standard salary continues to be paid during vacation periods. It is not possible for untaken holidays to be paid for in Spain.
Medical Leave ?
Employees absent from work due to illness or accident are guaranteed payment of certain minimum percentages of their salary. This works on three levels:
  • The State stipulates the minimum levels
  • Collective bargaining agreements may oblige companies to pay additional amounts
  • Companies may also pay further additional amounts voluntarily

Employment Termination

Information Explanation
Resignation / End of Service Payment ?
Employees are generally required to provide at least 2 to 3 weeks of prior notice, depending on collective bargaining agreements.
Employees from outside the European Economic Area, Norway, Iceland, Lichtenstein and Switzerland will require specific permits to work in Spain.
The processing of work permit applications normally takes 3 to 6 months.
Termination of Employment ?
In cases of dismissal due to economic, structural, or company production-related reasons, the company has to provide 15 days of prior notice. Indemnity is calculated as a sum equivalent to 20 days of gross salary per year of service.
In cases of dismissals for disciplinary reasons, no notice is necessary and no indemnity is to be paid. For other kinds of dismissals, companies generally pay indemnities equivalent to 33 days of gross salary per year of service (45 days of gross salary being applicable on periods of accrual up to 11 February 2012). A limit of 24 months of salary is normally applicable. In such dismissals, no prior notice is generally given.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Spain. For companies which intend to employ their staff directly through their incorporated Spanish entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Spain.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Spain.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly
– the company doesn’t have an appropriately incorporated entity in Spain
– the company wants to work within a defined budget
– the company wants to limit its initial commitment in Spain
– the company needs help with tax, employment, immigration and payroll compliance in Spain