Employer of Record in Spain: Complete Guide 2026

An Employer of Record can help with the legalities of engaging talent abroad without a local, but the standalone EOR model is not legally recognized in Spain.

Instead, you can use a Temporary Employment Agency or a compliant workforce management platform with an ETT license for support to navigate the employment contracts, onboarding, payroll, statutory benefits, labor laws in Spain, and engage talent in Spain compliantly. 

Payoneer Workforce Management can help you with managing the employment aspects like HR, tax, compliance, and payroll responsibilities, while you may focus on your core business operations.

Book a demo to know how we can support hiring employees in Spain.

Continue reading to learn what engaging talent in Spain involves.

How to hire employees in Spain?

There are three main ways for U.S.-based companies to engage talent in Spain: setting up a legal entity in Spain, hiring contractors, or using a workforce management platform. Take a look at this table to understand better:

Setting up a local entity	Hiring independent contractors	Partnering with a workforce management platform in Spain
Legal business presence in Spain with full control and smooth operations within the country. It can be costly and time-consuming.	Self-employed contractors offer a great deal of flexibility. Risk of misclassifying other employees as contractors.	A workforce management platform in Spain with an ETT license helps you stay compliant with local employment laws. Faster and more flexible workforce deployment.

Companies trying to expand quickly often prefer workforce management support because it reduces administrative burden and helps manage local employment requirements.

 Why do you need a workforce management platform in Spain?

The EOR model in Spain is not legally valid, but an ETT-licensed workforce management platform helps businesses hire and manage employees in Spain without establishing a local entity. 

Companies planning an expansion in Spain can work with an ETT-licensed temporary employment agency for support with onboarding, payroll administration, compliance, and workforce management while reducing the time and costs associated with local entity setup.

From onboarding support to managing payroll and local labor law, working with an ETT-licensed temporary employment agency in Spain offers support to manage the employee life cycle seamlessly.

Payoneer Workforce Management offers assistance with compliantly engaging talent in 160+ countries, including Spain. Find out more about how we can help.

How to onboard employees in Spain?

Here are some steps with their essential details for a structured and compliant onboarding process :

Onboarding Step	Details
Payroll	Employees in Spain are paid in euros (EUR).
Benefits	Any benefits offered should comply with local Spanish labor laws.
Configure Devices and Work Accounts	All required devices are to be ordered with logins for all apps employees need for work.
Conducting Orientation	A structured first week plan that introduces the employee to company policies, workflows, and team members, with scheduled introductory meetings
Supporting Ongoing Integration	Maintain regular check-ins during the first few weeks to answer questions, address challenges, and help the employee become fully integrated into the team.

How are employees in Spain paid?

In Spain, the tax year aligns with the calendar year, commencing on January 1st and concluding on December 31st. Spanish employers typically pay their employees monthly, on the last working day of each month.

Minimum wage in Spain is €1,221 per month, paid in 14 installments across the year.

When paying your employees, it’s important to be aware of the required tax deductions in Spain. These include:

• Income tax: Employers withhold 19% to 47% of the employee’s salary for income tax, depending on their earnings.

Here are the income tax rates in Spain

Annual Taxable Income (€)	Tax Rate
Up to €12,450	19%
€12,451 – €20,200	24%
€20,201 – €35,200	30%
€35,201 – €60,000	37%
€60,001 – €300,000	45%
Over €300,000	47%

• Social security: Employees contribute 6.48% and employers contribute 30.57%.
• Professional training fund: Employees contribute 0.1% and employers contribute 0.6%.

Paying employees is easier with support from a compliant workforce management solution.

What are the employment laws in Spain?

When engaging talent in Spain, these are some employment laws you should be aware of:                                                              

Working hours	Maximum of 40 hours per week
Overtime	A maximum of 80 hours per year compensated by overtime pay or additional rest periods.
Probation period	Depends on contract type, employee skills, and company size. A maximum of 6 months is allowed.
Rest days	Must have  1.5 rest days per week, which can be accumulated over 14 days.
Remuneration frequency	Monthly employee salary payments, on the last working day of the month.
Break frequency during work	A break of at least 15 minutes must be given after 6 hours of continuous work.

In Spain, employment laws are covered in the Workers’ Statute, known as the Estatuto de los Trabajadores. The Labor Guide provides further information on Spanish labor legislation.

What is the minimum wage in Spain?

The current minimum annual wage in Spain is approximately EUR 17,094.

Spanish employment laws state that employees must receive 2 additional mandatory payments a year, known as 13th- and 14th-month pay. 

Most employers divide their employees’ yearly salary into 14 payments, with employees usually receiving double payments in July and December. 

An employee on minimum wage will therefore be paid 14 installments of EUR 1,221 throughout the year.

The Spanish minimum wage also applies to employees working as seasonal and domestic workers and is calculated based on their working hours and contract type.

Minimum wage is reviewed and adjusted by state governments periodically to align with inflation and the cost of living, so it’s crucial to stay updated on the latest minimum wage rates so your business stays compliant. 

Working with a compliant workforce management solution, like Payoneer Workforce Management, offers a way to hire and pay employees in Spain.

Book a demo today!

What are Employment Contracts in Spain?

In Spain, employment contracts can either be written or verbal. However, a written contract is strongly advised to maintain clarity for both parties and avoid any ambiguity.

Based on the role, employers can issue a fixed-term/ definite contract or an indefinite contract. For shorter engagements, one can explore part-time contracts or contractor agreements (for independent contractors).

In Spain, employment contracts must include:

• The employee’s full name and address
• Job title and description
• Contract type (e.g., fixed-term or permanent)
• Start date (and end date if the contract is fixed-term)
• Agreed salary and any additional compensation
• Benefit entitlements
• Typical working hours
• Details of the probation period
• Termination rules and processes
• Employee’s statutory rights

Working with a workforce management platform in Spain helps ease the challenge of creating contracts that adhere to local employment laws.

What is the Leave Policy in Spain?

To stay compliant with leave policies in Spain, consider partnering with a workforce management platform. Spain’s leave policies include:

Leave type	Entitlement
Public holidays	Spain observes 14 paid public holidays, all of which are offered to employees as paid time off.
Vacation leave	Employees in Spain get 30 calendar days of vacation per year. This allowance typically includes weekends, which equate to 22 working days per year for every employee.
Sick leave	The first 3 days are unpaid; however, the employees are entitled to paid sick leave at 60% of their normal wage if they are unwell and unable to work for more than 3 days, i.e., from the 4th day. Their employer pays from the 4th to the 15th day, and from the 16th day it is paid by the Spanish social security system at 75% of the normal wage rate.
Parental leave	New parents can take 16 weeks of paid leave at 100% of their normal wage to care for their new baby.
Other	Spain also gives employees 15 days of paid leave when they get married, and 1 day of paid leave when they move home.

Understanding and staying compliant with these leave policies is critical when engaging talent in Spain, but this can be both complex and time-consuming if you’re not based locally. 

Consider partnering with a workforce management platform in Spain, like Payoneer workforce management, for assistance in managing employees’ PTO while staying compliant with Spanish leave policies.

Do foreign nationals need a work permit in Spain?

Spain requires all non-EU/EEA nationals to have a work permit and visa if they wish to work in the country.

Work permit requirements in Spain can differ based on the employee’s nationality and the nature of the role they will be performing.

Both employers and candidates should refer to official government sources to verify the specific rules, documentation, and procedures involved.

How is a background check done in Spain?

While running background checks on new employees is not a legal requirement in Spain, it’s an increasingly common process among employers. However, there are restrictions in Spain on what employers can check.

What employers can check –

• Identity verification
• Educational qualifications
• Professional licenses/certifications
• Employment history and references
• Information directly relevant to the job

These checks must comply with the EU GDPR and Spain’s data protection law (LOPDGDD), and employers must follow the principles of necessity, proportionality, and purpose limitation.

Key restriction: Criminal record checks.

According to the Spanish Data Protection Authority, AEPD (Agencia Española de Protección de Datos), it is not legally possible to require candidates for a job position to provide a criminal record certificate. 

Except in those exceptional cases authorized by law and with appropriate safeguards, examples include –

• Working with children or vulnerable persons
• Certain public sector positions
• Police, military, or security-sensitive roles
• Other roles where a specific statute mandates screening.

How does termination work in Spain?

Under Spanish labor law, terminations are possible in the following scenarios:

1.  Employee Resignation
2.  Objective Dismissal (business shutdown, redundancy of role, etc)
3.  Disciplinary Dismissal (misconduct, Performance issues, Absence without Leave, etc.) Examples include:

• Repeated and unjustified absences from work (disciplinary)
• Verbal or physical offenses against the employer (disciplinary)
• Continued poor performance despite support and training (objective)

If you have to dismiss the employee due to economic, technical, organizational, or production-related reasons, they will be entitled to severance pay. This equates to 20 days of pay for every year they’ve worked for you, up to a maximum of 12 months’ pay.

In the case of objective terminations, the employer must give the employee 15 days’ notice. Disciplinary dismissals require no notice. 

How to register your company in Spain?

To hire employees directly, companies must register a legal entity. This includes:

1. Choosing a company structure
2. Completing the legal formalities based on the chosen structure
3. Registering the company in the local Commercial Registry
4. Securing any sector-specific licenses or permits

Further information can be found on the Spanish government’s website. However, using a workforce management platform in Spain offers a simpler option to streamline processes for most U.S.-based companies.

Find out more about how Payoneer Workforce Management can help your business.

What is PEO in Spain?

A Professional Employer Organization (PEO) is a service provider that helps businesses manage HR, payroll, benefits administration, and compliance responsibilities. Unlike a workforce management solution or temporary employment agency, a PEO does not become the legal employer of workers.

How does a workforce management platform compare to a PEO in Spain?

Typically, a PEO (Professional Employer Organization) and a workforce management company both support you with HR and payroll tasks when building an international team. However, there are some important differences to consider:

Consideration	Workforce management platform	PEO
Legal employer of the worker	Can support through an ETT licence (Temporary Work Agency)	No, you remain the employer
Your own local entity is required	May not be required	Yes
HR and payroll support	Yes	Yes
Engage talent without incorporating	Yes	No
Compliance with local labor laws	Supported through the platform’s entity	You own it

What happens if you hire in Spain without a workforce management platform?

If you engage local Spanish talent without a compliant structure, the exposure is real. Three risks stand out, each with a financial or operational consequence, and a clear way a workforce management platform addresses them.

1. Misclassification. Treating an employee as a contractor to avoid local registration can lead to back pay, unpaid contributions, and penalties. Spanish authorities may require payment of unpaid social security contributions, employment benefits, and potential penalties. A workforce management platform employs the worker through an ETT license, so the relationship is structured correctly from day one.

2. Employment law non-compliance. Spain has detailed requirements covering employment contracts, working hours, leave entitlements, termination procedures, and employee protections. Failure to comply can lead to labor disputes, compensation claims, and regulatory scrutiny. A workforce management provider helps businesses navigate these obligations and maintain compliance throughout the employment relationship.

3. Payroll and social security errors. Employers must correctly calculate and remit income tax withholdings and social security contributions while maintaining accurate payroll records. Errors can result in fines, interest charges, and administrative burdens. A workforce management solution supports compliant payroll administration and helps businesses keep pace with regulatory changes.

How can Payoneer Workforce Management support hiring in Spain?

When it comes to onboarding and paying employees in Spain, companies may search for Employer of Record (EOR) services in Spain, but this model is not permitted. A workforce management platform with an ETT license may assist with HR and payroll coordination.

With Payoneer Workforce Management, organizations can grow international teams while worrying less about complex local labor laws and complicated global payroll. 

Book a demo today to see how we can help.

Frequently asked questions (FAQs)

About the author

Martyna Krawczyk

HR and Immigration Lawyer, Global HR Operations 

Martyna Krawczyk is an HR and Immigration Lawyer and Associate within the Global HR Operations team at Payoneer Workforce Management (formerly Skuad). She holds an LPC LL.M. from the University of Law in the UK and an Associate CIPD certification. Martyna also serves as Vice President of the Labour Law Association of Poland and was recognized at the Wolters Legal Hackathon 2024. Her areas of focus include international employment law, cross-border workforce compliance, and global immigration, supporting organizations in managing international workforces.