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How to Hire Your Employees in Spain After Brexit: A Guide for UK Employers

The passage of Brexit posed a number of new challenges for UK companies, including what to do about EU citizen employees.  By leaving the EU, the UK removed the ‘right to movement’ and visa free travel for any EU nationals.  However, any employees already living and working in the UK prior to December 31, 2020, could remain in their position visa-free under the settlement scheme with some caveats.

But some EU employees may wish to return home for personal reasons, and if they stay away long enough could lose their rights under the settlement scheme.  This guide will discuss how to continue employing workers who return home to Spain from the UK, or how to hire new remote Spanish employees.

What Brexit means for UK companies hiring in Spain

Even with Brexit, Spanish employees can apply for work visas with their UK employer like any nationality.  And for those who wish to return home to Spain or are new employees, there are compliant ways to hire them. 

Nothing in Brexit prevents a UK company from hiring remote employees abroad, but now the relationship would be subject to Spanish labor laws.  The UK employer would expect to make social contributions in Spain, either through their own entity or a third party.

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How to hire and pay employees in Spain after Brexit

Set up a legal entity in Spain

If the UK employer has other business interests in Spain aside from hiring employees, it could set up its own branch or subsidiary.  In that case, the Spanish employee could be hired directly and placed on an internal payroll.  If the only nexus to Spain is hiring workers, then there are less costly and complex options.

Hire your employee through an employer of record

UK companies can also hire Spanish employees using an employer of record (EOR).  The EOR becomes the legal employer and runs a local payroll for the Spanish employees.  The result is that the employees receive all Spanish entitlements, as well as the calculation of tax withholding and social contribution payments.

Can UK companies hire remote workers in Spain as contractors?

Workers can be hired in Spain as contractors as well, which in many ways is simpler for the UK company.  But with former employees, there is a risk with this hiring method, as there would be a track record of employment.  The former employee could make a claim of misclassification under Spanish law, and that they are still be treated as employees but have lost all their benefits.

This risk is less with newly hired contractors, but the UK company would need to be careful not to pay a regular salary or control the worker’s schedule or work methods.  Either way, contractors tend to be less committed, and need to have some degree of business independence when it comes to setting up the contract, tax filing, and registration steps.

Using Shield GEO to legally hire your employees in Spain

Shield GEO has experienced employers of record in Spain who can offer fully compliant employment without the risk of hiring contractors.  The EOR administers Spanish employment on your behalf, ensuring compliance and employee satisfaction.

New remote employees

If your company has recruited a new remote employee, they can be put on the payroll of the EOR right away, while you train and manage them in their role.  They would have the rights and benefits just like any Spanish employee and would receive their payslip straight from the EOR.

Existing employees relocating to Spain due to Covid, visas, etc.

This method works equally well with existing employees who wish to relocate to Spain from the UK.  There is a two-step process where the employee would be legally terminated in the UK (along with any severance or unpaid leave), and then re-hired by the Spanish EOR.

One issue with existing employees is that they may want to make sure that any seniority is carried over to the Spanish employment and that their compensation and benefits are the same.  For example, the former salary paid in GBP would need to be equivalent to Euros. 

Spanish labor law would now cover their entitlements, but items like health insurance, pensions, and allowances need to be reviewed.  There are some portability rights within Brexit that could ease the transition and preserve some benefit levels.

If you have new or existing employees in Spain, Shield GEO can offer you end-to-end support and employment administration, at a reasonable cost and with little or no delay.  We make international employment simple.

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The information in this article is subject to changes in local legislation.

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