Using an employer of record in Spain

Hiring employees living in Spain to work for your international firm, like a U.S.-based company, can be a complex process. 

Before onboarding talent in Spain, you must fully understand local labor and employment laws to help your business stay compliant.

If you’re concerned about the legalities of hiring abroad, consider partnering with an employer of record. Spain’s local labor laws are easy to navigate with the support of an EOR offered by Payoneer Workforce Management (WFM). 

We act as the legal employer on your behalf, managing HR, tax, and payroll responsibilities while your team focuses on day-to-day operations.

Find out more about how Payoneer WFM can help your business. Continue reading to learn what an EOR in Spain does and how it helps.

How to hire employees in Spain

There are three main ways for U.S.-based companies to hire talent in Spain.

1. Setting up a local entity: Establishing a legal business presence in Spain allows you to operate smoothly within the country, but this pathway can be costly and time-consuming.
2. Hiring independent contractors: Working with self-employed contractors offers a great deal of flexibility, but be careful not to misclassify other employees as contractors.
3. Work with an employer of record in Spain: Handing over your global recruitment processes to a Spain EOR helps you stay compliant with local recruitment laws.

Partner with an employer of record in Spain

An EOR is a third-party company that employs workers on your behalf. In Spain, employer of record services allow you to hire talent locally without setting up a Spanish entity.

From hiring and onboarding talent to managing payroll and local labor law compliance, working with an EOR in Spain is an easy and hassle-free way to manage the complete employee life cycle.

Payoneer WFM offers EOR services in 160+ countries, including Spain. Find out more about how we can support your business.

How to onboard employees in Spain

When onboarding a new employee in Spain, you want to ensure the process is as smooth and seamless as possible. Here are some steps to consider:

• Add to payroll: Your employee should be paid in euros (EUR), unless they have explicitly agreed otherwise.
• Enroll with benefits: All benefits offered should comply with local Spanish labor laws.
• Configure devices and set up work accounts: Ensure all required devices are ordered for the employee and make sure they have logins for all the apps they need to do their job.
• Orientation: Set a schedule for your employee’s first week, making sure to set up introductory meetings with each member of their new team.
• Support ongoing integration: Check in regularly during the first weeks to answer questions and address challenges.

Pay employees in Spain

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 currently EUR 1,184, 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. There is also a new “solidarity contribution” for yearly earnings over EUR 4,909.50 per month, starting from 0.77% borne by the employer and 0.15% by the employee.
• 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 hassle-free with the support of an EOR. 

Spain’s rules on paying employees can be found in more detail here.

Employment laws in Spain

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.

Here are the employment laws you need to be aware of when hiring in Spain.

• Working hours: Your employee should work a maximum of 40 hours per week.
• Overtime: The overtime should not exceed 80 hours per year, and should be compensated with overtime pay or additional rest periods.
• Probation period: Probation periods vary by contract type, employee skills, and company size, but this should not exceed 6 months for a highly-skilled employee.
• Rest days: An employee has to have 1.5 rest days per week, which can be accumulated over 14 days.
• Remuneration frequency: Spanish employers typically pay their employees monthly, on the last working day of the month.

Minimum wage in Spain

The current minimum annual wage in Spain is EUR 16,576, which is equivalent to $19,501. 

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 1,184 ($1,392.93) 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 cost of living, so it’s crucial to stay updated on the latest minimum wage rates to ensure your business stays compliant.

Working with a Spain EOR like Payoneer WFM is one of the best ways to do this.

Employment contracts in Spain

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

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 an employer of record in Spain helps ease the challenge of creating contracts that adhere to local employment laws.

Leave policy in Spain

To ensure your business stays compliant with leave policies in Spain, consider partnering with an Employer of Record. 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 equates to 22 working days per year for every employee.
Sick leave	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. Their employer pays this. If the employee is still unwell after 16 days, they receive 75% of their normal wage, paid by the Spanish social security system.
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 hiring in Spain, but this can be both complex and time-consuming if you’re not based locally. 

Consider partnering with an Employer of Record in Spain to easily manage your employees’ PTO while staying compliant with Spanish leave policies.

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.

The most common types of work permits in Spain include:

• Highly-qualified permit: For professionals working in industries that require specific skills and training, valid for 2 years
• Employed worker permit: For individuals working in in-demand occupations
• Seasonal worker permit: For employees who wish to carry out seasonal work in Spain, valid for 9 months 
• Digital nomad permit: For individuals who work remotely from Spain for a company based outside of Spain

The cost of a work permit in Spain varies depending on the country of residence and the permit being applied for. However, the consular visa fee for U.S. residents applying for a highly-qualified visa is currently $190. 

Costs usually include a residence permit application fee and a consular visa fee.

Background check in Spain

While running background checks on new employees is not a legal requirement in Spain, it’s an increasingly common process among employers.

Popular types of employee background checks in Spain include:

• Employment history
• Education history
• Reference checks
• Work authorization checks

However, criminal record checks are usually banned in Spain, and must not be carried out unless the candidate is applying for a job in one of a select few industries. These include public administration, the police, and the army.

Employment termination in Spain

Under Spanish labor law, an employer may terminate an employee’s contract for disciplinary reasons, when the employee has done something wrong, or for objective reasons. 

Examples include:

• Repeated and unjustified absences from work (disciplinary)
• Verbal or physical offences 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. 

Company registration in Spain

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

1. Choosing a company structure (SL/SRL, SA, Autónomo, Sociedad Civil, etc.)
2. Completing the legal formalities based on the chosen structure (notarial deeds, company statutes, etc.)
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 Spain EOR is a much simpler and easier option for most U.S.-based companies.

PEO in Spain

If you’re looking for support with hiring and onboarding employees in Spain, you may choose to work with a PEO (Professional Employer Organization) or an EOR. 

Spain PEOs are a good option if you have already set up a local entity and are just looking to outsource HR responsibilities in your business.

However, if you haven’t already set up a local entity, it’s best to partner with EOR services. A Spain EOR acts as the legal employer on your behalf. 

This includes managing taxes, benefits, timesheets, and payroll, all while staying compliant with local labor and employment laws.

Payoneer WFM: Leading EOR services in Spain

For one of the best employer of record services in Spain, employers should look no further than Payoneer WFM. 

From onboarding new hires quickly and compliantly without a local entity to running global payroll securely and within a few clicks, Payoneer WFM has everything your business needs to hire, pay, and manage your global team.

FAQs about the Spain employer of record 

1) What is an employer of record in Spain?

An EOR in Spain is a third-party organization that employs talent on your behalf and streamlines hiring and onboarding processes for employees working in Spain, including managing compliance with local labor and recruitment laws.

2) Who is the best employer of record in Spain?

Payoneer WFM is a leading employer of record in the global market, including Spain. It becomes easier to adhere to Spain’s local labor and employment laws with Payoneer WFM’s support.

3) How much does EOR cost in Spain?

The cost of an EOR depends on the service provider. For instance, Payoneer WFM offers Employer of Record services in Spain starting at $349 a month. Overall, the cost of working with an EOR is far lower than the cost of setting up a local legal entity.