Hiring Remote Workers in Spain
For starters, the Spanish working culture embraces work-life balance to a higher degree than their US counterparts. US employers may have heard of the ‘siestas’ that used to thrive in Spain, which essentially means a long afternoon break where employees could go home for hours before returning to work. In a globalized society and international competition, siestas are not as widely practiced in cities but are still the norm in more rural areas. Even if siestas are not practiced in the area your employee works in, lunch breaks are longer than the US at about two hours, and early finishes on Friday afternoons are also not peculiar. This is in contrast to the US where lunch breaks are strictly an hour and it is not unusual to eat at one’s desk by themselves. US employers should not assume that Spanish employees are not as hard-working as US employees because of their long lunch breaks, as working until 8 pm is also not uncommon. Deadlines are also slightly more relaxed in Spain than they are in the US, so the US employer will need to make it clear that the deadlines for projects are strict and cannot be extended.
Many younger Spanish people can speak English, but the same cannot be said for the older generation. Nevertheless, in a business context, it is reasonable to assume that international negotiations are conducted in English. If you have learned Spanish, keep in mind that there are different dialects across the country, so even though speaking the language will be highly appreciated, it may not be grammatically correct to your employee. Spanish people, in general, are also more emotive in conversation in contrast to the US, so strong displays of emotion should not be perceived as theatrical, but rather a cultural difference in strong communication skills.
Spanish workers value relationships with their employers, with trust and a good first impression, both critical in business culture. US employers will benefit from making time before and after meetings to answer any questions their Spanish employees may have.
What is the time difference to East Coast USA? West Coast USA?
The time in Madrid is 9 hours ahead of the west coast and 6 hours ahead of the east coast.
How is this commonly dealt with?
It is easier to communicate between those on the east coast and their Spanish employees than on the west coast. The start of the working day for those on the east coast will overlap with the end of the working day for those in Spain. On the west coast, communication will be possible if the employee in Spain is willing to stay back, or if the US employer has an early start.
What is a collective bargaining agreement?
US employers should also make themselves familiar with the collective agreement that is relevant to the company’s area of work. Collective agreements are considered to be legitimate employment law and come into force automatically in individual employment relations.
What are the typical working hours in Spain?
A Spanish employee is usually only permitted to work 9 hours a day, 40 hours a week unless there is either a collective agreement or an agreement between the employer and the employee’s representative that outlines a different arrangement of working hours. Employees must also have a 12-hour break between their shifts.
If an employee works overtime, employers need to provide time in rest or pay for the overtime worked, pending on what was agreed in the collective agreement or employment contract. The maximum amount of overtime hours allowed by Spanish law is 80 hours.
It is also a requirement by law to submit a timesheet to the employer, but most employers do it on the employee’s behalf. This is recommended so that the employer will immediately have them available if the employment authorities ask for the hours worked.
How do you recruit employees in Spain?
Common jobseeker websites a US employer can use to hire Spanish employees are LinkedIn and InfoJobs. Though LinkedIn is universal, InfoJobs is more specific to the Spanish and European region.
How do you interview remote workers in Spain?
Similar to most countries, remote workers are interviewed via online platforms such as Skype or Zoom. Giving references is not a common practice in Spain, so the US employer may need to ask them for references upon the interview.
Are Spanish resumes different from American resumes?
Spanish people usually put profile photos on their resumes. European resumes are also a lot longer than US resumes. Whereas US resumes aim for one page, European resumes do not have a strict page limit.
Is making an offer to an employee in Spain different from hiring in the US?
Legally, a written or oral contract is both allowed, but a written contract is more common.
A US employer can either offer an indefinite contract or a temporary contract. As the name suggests, a temporary contract is for a set period of time, and an indefinite contract has no official end date.
For more information, please click here.
Paying Remote Employees in Spain
Do Spanish employees get paid differently to US employees?
In Spain, the employer is responsible for the employee’s social security deductions, and employers also withhold a percentage of the pay for the employee’s income tax.
How often do Spanish employees get paid? Can we pay bimonthly?
Spanish employees are paid monthly with 12 payrolls per year.
There are actually 14 payments per year according to Article 31 of the Estatuto De Los Trabajadores which mandates a Christmas bonus and summer bonus. But there is a provision where the two additional bonus payments (Pagas Extras) can also be paid out pro-rata. The US employer can pro-rate the bonus payments and pay a portion of them each month. This would be shown on the payslip as Prorrata Pagas Extras.
What are some common benefits that foreign employers offer remote employees in Spain?
Remote work inherently provides many benefits, including increased productivity, shorter (if any) commute times, flexible work scheduling, and more savings for the employer and employee. Many foreign employers provide additional allowances to their employees such as payment of business expenses, internet and telecom allowances, and the ability to work from a co-working space if so desired.
Can employers pay a stipend for expenses?
Employers regularly pay a stipend for reasonable expenses such as travel where necessary.
These payments are taxable as they are considered as additional income. If the US employer wants to make the stipend tax free, they would need to process it as an actual expense reimbursement.
At Shield GEO, we provide our remote employees in Spain with a health and wellbeing allowance which primarily goes towards health insurance. We also provide our employees with a stipend for their internet expenses and pay for a co-working space, if they choose to use one.
How is work equipment provided to remote employees in Spain?
Employers can provide their employees with all the equipment they need to do their job, provided it is genuinely for work usage.
For example, at Shield GEO, we ensure our remote employees have the correct equipment to complete their day-to-day tasks efficiently. We provide our employees with a laptop, keyboard and mouse, and a headset for conferencing. At our employee’s primary place of work, we also provide a monitor, desk, ergonomic chair, and desk lamp.
Can employers pay remote workers in Spain in USD?
Salary payments in Spain must be processed in Euros.
For more information, please read the related FAQ: Can we set the local salary in foreign currency?
In Spain, it’s a common practice to break up the total gross salary into salario base (base salary), convenio bonus (based on the collective agreement), etc. The reason for this is complex but it has to with certain amounts triggering tax and social security. Please click the image below for an explanation of a payslip in Spain.
Key Terms Explained:
- Empresa: Employer details
- Trabajador: Employee details
- F. Alta: (Fecha de alta) – the day the employee was registered with S.S. for this employer
- Antigu.: (Antigueded) – employee’s start date with the company
- D.N.I.: Employee ID number
- No Afiliacion S.S.: Employee tax ID number
- Periodo Devengado: Payroll period
- F.Cobro: Payroll date
- 1)Percepciones Sujetas a Cotiz: Taxable earnings
- 2)Percepciones Excluidas de Cot.: Exemptions
- Devengo: Earnings
- Salario Base: Base salary; used to calculate unemployment benefits and severance
- Plus Convenio: Bonus based on the collective agreement; depends on the classification of the type of work performed
- Paga Extra Prorrateada Verano: Pro-rated summer payment
- Paga Extra Prorrateada Navidad: Pro-rated Christmas payment
- Aportacion Seguro Salud: Health insurance bonus for private health insurance
- Deduccion: Deduction
- DTO. Cont. Comunes: tax to protect an employee if they can’t work in the future
- DTO. Base Accidente: contribution in case there is a workplace accident
- Retencion IRPF: General income tax; varies throughout the year
- Total Devengo: Gross amount
- Total Dedu.: Social security and other deductions
- Liquido Total a Percibir: Net pay
- Determinacion de Las Bases De Cotizacion a La Seguridad Social…: Table displaying how the employees S.S. is calculated
- Contingencias Comunes Importe Remuneracion Mensual: S.S. cost that the employer pays to cover employee leave due to accident, sickness, or permanent disability
- Importe Prorrata Pagas Extraordinarias: Pro-rated extra payments
- At Y Ep: Contribution for work-related accidents
- Desempleo: Unemployment insurance
- Formacion Profesional: Depending on the collective bargaining agreement, the employer may have to pay a certain amount for training courses and studies
- Fondo Garantia Salarial: Wage guarantee fund
PTO and Holiday Entitlements in Spain
How much PTO do remote employees in Spain get?
According to Spanish law, employers must give employees at least 30 calendar days of leave. These 30 calendar days include weekends, however, it will usually result in around 23 days granted by the employer. This cannot be substituted for payment in lieu. An employee’s PTO does not expire and can accrue indefinitely, with the employer required to pay it out when the employee leaves the place of employment.
The vacations cannot transfer to different legal entities. It is advisable for the employee to enjoy the leave, or to be paid out by the employer once the employment relationship is ended.
Can we offer unlimited PTO in Spain?
Spain already has a significant amount of PTO compared to the US. Therefore, a US employer will likely not be incentivized to offer unlimited PTO, and the concept of PTO is not familiar to Spanish employees. The US employer may decide to offer above the maximum of annual leave but legally cannot offer below.
Do I have to track PTO?
A US employer will need to track PTO as there is a set amount of annual leave days prescribed by the government. This is further encouraged as PTO does not expire at the end of the year and can be carried over to the next. Annual leave also has to be paid out if the employer terminates the agreement, which is another reason why tracking is important. Spain additionally set a law last year where employers have to track working hours.
What are the sick leave entitlements?
If your employee is sick for up to three days, there is a sick leave payment made from the US employer. However, from the fourth day to the fifteenth day of sick leave, the employer must pay for the sick leave and this is not reimbursed from social security. After the fifteenth day, reimbursement from social security starts.
Each case of sick leave is dealt with case by case. Employees must provide a doctor’s certificate before it is paid by social security depending on the employee’s contributions and seniority. The employee must visit a recommended social security doctor (not a private one) to obtain a medical certificate. The time taken for sick leave will be determined by the doctor. Once the employee has this certificate, it needs to be forward to the employer to process the sick leave.
Employees who have fallen ill or have suffered an accident can have their employment contract be suspended for up to 18 months while they recuperate. The employer normally pays the worker this temporary sick pay, and it is then reimbursed by the social security department.
There are no accruals for sick leave. There is no maximum entitlement to sick leave per year. Only the days that are necessary to recover are given.
The employee must have had contributed 180 days to social security prior to taking extended sick leave.
What are the national public holidays in Spain?
There are 14 public holidays per year, two of which are local holidays. In any case, the following holidays are observed as national public holidays: Christmas Day, New Year’s Day, May 1st (Labor Day), and October 12th (Spanish National Day).
Note that regionally there are different holidays in Spain. A tip to the US employer is to find the government website of the province that your Spanish employee is located in. There can never be more than 14 holidays in total on a working day, and each year changes as to when the following Monday can be taken off (if the holiday falls on a weekend), and when a public holiday will stay on a weekend. Therefore, it is important to not rely on previous calendars.
How many paid public holidays are there per year?
The government may transfer all national holidays that take place during the week to the following Monday. This is also applicable to the national holidays.
What happens if my employee works on a Spanish public holiday?
Normally for people paid on a salary basis, they either have the public holiday off or it is not unusual to choose to have another day off in the same week. If the US employer requires the employee to work on the public holiday and does not provide another paid rest day, according to Article 47 of the Regulación de la Jornada, they will need to pay the employee 75% extra of their daily rate.
Social Security in Spain
There are two types of social security in Spain, a general scheme and a special scheme. Your Spanish employee will most likely be in the general scheme, as the special scheme is tailored for the self-employed, coal miners, or sea workers.
Does the employer have to pay SS? What does it cover?
The employer has to pay social security and is responsible for registering their employee into the General Social Security Scheme. Registration is compulsory. Social security paid by the employer covers healthcare, pension, and further benefits which can be found in the payslip section of the article. Employers will usually pay 23.6% on top of the gross salary in social security payments.
Does the employee have to pay SS? What does it cover?
When you start or finish a new job, you will get a notification that an employer has registered and deregistered you.
Social security comes out as 4.7% but it does not include the income tax which can exceed 20% of an employee’s gross salary. Sometimes your employer will take out more to ensure you don’t owe money, and it is also dependant on situations such as bonuses. Similarly to the US, it is all regulated when you file your taxes though, so if you paid too much social security you will get it back.
What is the 401K equivalent for remote employees in Spain?
The 401K equivalent in Spain is covered by the social security system and classified as the old-age pension. The difference is that a 401K is a private scheme in the US, but in Spain, as employees are paying a high amount into the social security equivalent, employees often stick to this option only. An additional private version is very uncommon in Spain, and usually not often by employers.
More information can be found here.
Do Spanish employees need health insurance? What does it usually cost?
Public medical insurance is included in the employee’s social security. When employees pay social security tribulation taxes, public healthcare is included. They can go to the medical consult of the public health system, and when employees need to go to a specialist, they need permission/authorization from their family doctor.
Private medical insurance is a taxable benefit. This does not matter whether the employer pays it directly, or whether the employer reimburses the employee. Private insurance may be easier for international remote workers because it has more access to English speaking doctors
Terminating Remote Employees in Spain
Are there probation periods in Spain?
There is no legal requirement for a probation period, and it can be waived if both parties agree to do so. During the probation period, the employer or the employee 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.
It is always good to discuss and come up with an agreement to give time to both the employer to find someone else and the employee to find other employment.
If a probation agreement is implemented, it will depend on the collective agreement, the position, and the type of contract.
Depending on the job title and level:
- 6 months: college/junior college graduate specialists
- 3 months: non-college/junior college graduate specialists at companies with less than 25 employees
- 2 months: all other employees
- 1 month: temporary fixed-term employment
Is there ‘at will’ termination in Spain?
It is a requirement for both the employer and the employee to provide 15 days’ notice if they intend to terminate the contract. Therefore, there is no ‘at will’ termination in Spain. If the US employer would like to provide more notice in the employment contract, they can.
Before terminating an employee, the employer must have a clear reason and proof, as well as evidence of warnings to the employee in writing before the actual termination process takes place. Reasons can be different and many: economical, probation, performance, violation, and others. No matter what the reason is, there must be supporting proof as well as warnings to the employee in writing before the actual termination process takes place.
Do you have to pay for severance in Spain?
Severance pay is dependent on the reason for termination but they include:
- payroll month
- notice period
- vacation balance
- if there is a special agreement in place between employee and employer in terms of a termination payout.
This all depends on the position of the employee (employee/manager/executive), and very often during negotiations, the employer pays one month of salary. There is a maximum to how much severance can be paid at 24 months severance. For temporary contracts, it is 12 days per year worked. For indefinite contracts, it is 33 days per year worked, up to a maximum of 24 months paid. But for temporary contracts, if the reason is not justifiable the employee could also be eligible for 33 days.
Again, it is dependent on the reason for termination and also what sort of contract the employee is on (temporary or indefinite). For example, if the employee resigns or is dismissed for disciplinary reasons, severance pay is not paid.
Usually, in these situations, the employer and employee agree on whether or not the employee is to continue working for the remainder of the notice period.
Is it difficult to terminate an employee in Spain?
As mentioned above, Spain does not have ‘at will’ termination like the US so termination will naturally seem to be more difficult. Generally, as long as a justified reason is there, termination is not overly complicated. Like any European country, the employment termination laws are centered on protecting the employee, and severance pay is required upon termination.