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Hiring employees in Spain

Background checks in Spain

Options for employment in Spain

Language requirements in Spain

Corporate payroll requirements and payroll setup in Spain

Easily hire employees in Spain with our EoR solution

Employer of record in Spain

Hiring an employee in a foreign country usually involves setting up a local legal entity, like a branch or subsidiary. This can be a time-consuming, admin-heavy, and expensive process, which many businesses want to avoid if they’re only hiring a few employees.

If you want to hire workers in Spain, another option is to engage them as independent contractors. This can help you avoid the hassle of incorporating, as well as saving on employment costs like taxes and social security contributions. However, the Spanish government takes issues of employee misclassification very seriously, so this is a risky move for most companies.

Thankfully, there is a third option: using an employer of record in Spain to hire employees easily, quickly, and compliantly.

What is an employer of record (EoR)?

An employer of record (EoR) is an organisation that hires employees on behalf of other organisations. When you engage workers through an EoR, the EoR becomes those workers’ official employer for legal and tax purposes. They also typically provide HR services like payroll, benefits administration, and onboarding support.

Using an employer of record in Spain

Using an employer of record in Spain could allow you to expand your company without the hassle of setting up a legal entity or the compliance risks associated with engaging independent contractors. Companies offering employer of record services in Spain also usually handle various HR functions, like running payroll, managing pension schemes, and handling taxes and social security contributions. That means that working with an employer of record in Spain can drastically reduce your team’s administrative load.

However, the increase in remote work and advances in communications technology over the last few decades means that there are now many providers offering employer-of-record services in Spain and all over the world. When you’re browsing employer of record companies in Spain, you should ensure the one you choose will be able to meet your business needs.

Hiring in Spain without an employer of record

If you want to hire in Spain without using an employer of record, you’ll need a thorough understanding of local labour laws, tax legislation, and other regulations that could impact your business. For example, you’ll need to understand the minimum statutory benefits that all employees are entitled to by law, and the rules surrounding employment contracts.

In addition, you’ll need a solid understanding of the norms, cultural expectations and attitudes towards work that are common in Spain. This will help you to attract local talent and develop positive, productive relationships with your Spanish employees. In this guide, we’ll take you through some of the most important things you’ll need to know before you start hiring employees in Spain.

Hiring employees in Spain

Spain is divided into 17 regions or ‘autonomous communities,’ which each have their own laws and regulations. Most employment law is national in scope, but there are some differences between the regions in areas such as public holidays and social security benefits. If you’re hiring in Spain, it’s important to research the relevant laws in the region where your employees live and work.

Hiring laws in Spain

The Spanish Constitution (Constitución Española) is the main piece of employment legislation in Spain. It covers a number of key employment rights, including:

The right to access equal opportunities
The right to fair pay
The right to join a union
The right to receive social security benefits

Other key legislation includes the Workers’ Statute (Estatuto de los Trabajadores), which grants employees certain rights and sets the rules for things like job categories and minimum wages. The Ministry of Labor and Social Economy (Ministerio de Trabajo y Economía Social, MITES) is the government body responsible for Spanish labour laws.

The role of collective labour agreements in Spain

Collective labour agreements (or collective bargaining agreements) are agreements negotiated between employers and labour unions. They set additional rules for things like wages, holiday entitlements and other employee benefits. Around 90% of private-sector employees in Spain are covered by a collective labour agreement.

Collective bargaining agreements might provide for more favourable conditions than those set out in national labour law. In this case, employers have to abide by the collective bargaining agreement. Similarly, employers can choose to grant individual employees more favourable conditions in their employment contracts, but they can’t make them less favourable.

Employment contracts in Spain

Companies hiring in Spain have to provide every worker with an employment contract. Technically, this can be a verbal contract, but employers do have to provide a written statement of the most important conditions of employment to each employee, and lodge a copy with the Employment Office.

There are a few different types of employment contracts available when hiring employees in Spain, including:

Permanent contracts: This is the most common type of employment contract. It has no set end date and ends only when the employee either resigns or is terminated.
Temporary contracts: These can be used to employ workers on a temporary basis, for up to six months at a time. However, there are limitations on when temporary contracts can be used in Spain.
Training contracts: This is a particular type of work agreement designed for trainees and interns to receive on-the-job training. There are limitations on the duration of this type of contract.

Hiring foreign workers in Spain

It’s possible to hire foreign workers in Spain, subject to certain conditions. Like many EU countries, Spain has a two-tier immigration system:

Tier 1: EU/EFTA citizens
Tier 2: Non-EU/EFTA citizens

Tier 1 immigrants can live and work in Spain without a visa, but tier 2 immigrants must apply for a work permit before coming to Spain. This typically means securing a job before arrival. Any foreigners who stay in Spain for three months or more must apply for a Foreign Identity Number.

Background checks in Spain

In Spain, there are certain background checks that employers have to carry out before they can hire an employee. There are also other employment background checks that you can carry out if you want to.

Required background checks in Spain

First, employers in Spain must check if any potential employees have the right to work in Spain. For Spanish and EEA citizens, this means checking an ID document like a passport or ID card. If you want to hire a worker from outside the EEA, you need to verify that they have a valid work permit.

Permissible background checks in Spain

Employers can also perform background checks in Spain to verify their potential employees’ work history, education, and references. However, they can only do this with the explicit consent of the potential employee. In many cases, the relevant companies and institutions prefer to transfer the information directly to the candidate so they can pass it on to a potential new employer themselves.

Limitations on employment background checks in Spain

There are certain limitations on the background checks that employers can carry out in Spain. Specifically, employers can only carry out criminal records checks in certain circumstances. This is because information regarding criminal records is considered confidential in Spain, and disclosing it could violate data protection regulations. Under Spanish law, requesting a criminal background check and rejecting an employee on the grounds of their criminal history could also be considered discrimination.

There are exceptions to these rules for certain sectors, where employees are legally required to request and carry out background checks on potential employees’ criminal records. Specifically, this type of background check is allowed in Spain for the following roles and sectors:

Public administration
State/local police
The army
Managers in financial institutions
Insurance agents
People who work with minors
People who work at casinos

Options for employment in Spain

If you want to hire workers in Spain, you need to ensure they are classified correctly. Spain is a country with very strong employment protections. However, these are typically only available to employees, not independent contractors.

That means that the Spanish government takes the issue of employee misclassification very seriously because it could mean workers miss out on their statutory entitlements. Companies that misclassify their employees as independent contractors in Spain can face severe fines and penalties. Generally speaking, if you want to hire workers in Spain, you can either give them an employment contract or take them on as an independent contractor.

What is employment in Spain?

In Spain, a person is generally considered an employee if they have an employment contract and are dependent on their employer for work. The employer instructs the employee on how, when, and where they perform their work. Employees can be engaged on a permanent (indefinite) contract or a fixed-term (temporary) contract. However, there are limitations on when temporary contracts can be used.

There are also other types of employees in Spain, such as those employed under training contracts, apprenticeship contracts or work experience contracts. These are specific types of employment in Spain, which are designed to help employees receive on-the-job training while earning a salary for their work.

Self-employment in Spain

Generally speaking, a person engaged under a service agreement rather than an employment contract would be considered self-employed in Spain. However, the actual reality of their working arrangements is more important than the contract they have signed when considering if they should be classified as an employee or a self-employed independent contractor.

Workers are typically considered to be self-employed in Spain if:

They have a high level of control over their work
They’re not included on any organisational chart
They provide their own tools and equipment
They are paid for work achieved, rather than time worked
They have the right to work for multiple employers at the same time

In Spain, there is also a third category of worker, which falls somewhere between employed and self-employed status. These workers are known as ‘dependent self-employed.’ These are workers who:

Receive at least 75% of their annual income from one client
Do not have any employees or subcontractors
Have their own organisational infrastructure and equipment
Are paid only when certain goals are achieved

Agency workers in Spain

Employers in Spain can also hire temporary workers through employment agencies. These workers are employees of the employment agency that engages them and are effectively loaned out to end clients, or ‘user firms’. There must be a signed written agreement between the temporary work agency and the user firm. Temporary agency workers in Spain are entitled to equal treatment to permanent employees of the organisations they work for. There are penalties for improper use of temporary agency workers.

Language requirements in Spain

If you hire employees in Spain, it’s best practice to write all official employment documents in Spanish. Since this is the main language used in Spain, writing your documents in Spanish ensures your employees understand the terms and conditions they’re agreeing to.

Legally, only the basic copy of (copia básica) of the main terms of employment is required to be in Spanish. This is a mandatory document that outlines the key terms of the employment and must be lodged with the Employment Office. Employers can choose to give their employees additional employment agreements, which can technically be in any language.

However, in the case of conflict with an employee, courts will only consider a Spanish translation of the relevant documents. That means that providing an official Spanish version is highly recommended.

Spanish visa language requirements

Most Spanish visas don’t require applicants to prove they have a particular level of Spanish competency, and speaking Spanish is not necessarily a requirement to work in Spain. However, people coming to Spain on student visas may be required to meet certain requirements to be accepted on a course.

Spanish citizenship language requirements

People who have lived in Spain for at least 10 years can apply for Spanish citizenship. As part of the application process, they must pass both a civic integration exam and a language test. The language certificate required is known as the DELE (Diploma de Español como Lengua Extranjera). Applicants typically have to have at least A2-level Spanish to be considered for citizenship.

Can employers require Spanish language for a job in Spain?

There is no specific requirement to learn Spanish in order to work in Spain. However, some employers prefer to work with employees who speak Spanish, as it is the main language used in Spain and will make it easier for employees to communicate with their colleagues, managers, and customers.

Corporate payroll requirements and payroll setup in Spain

Companies that want to hire employees in Spain generally need to have a corporate presence and be registered for payroll taxes. Foreign employers can sometimes engage employees, subject to certain business, corporate, social security, and tax considerations.

Payroll taxes in Spain

Employers in Spain are required to pay certain contributions for each employee they engage. They must also withhold taxes and employee contributions from their employees’ wages, and remit them to the tax authorities.

Payroll taxes in Spain include:

Social security
The wage guarantee fund
The professional training fund
Working accident insurance

Payroll frequency in Spain

Employees in Spain must be paid monthly. Most employers pay their employees at the end of each month.

13th and 14th salary in Spain

It’s common practice in Spain to pay employees two additional payments each year, in addition to their monthly salary. These are generally paid in the summer and the winter. Collective labour agreements sometimes provide specific rules for 13th and 14th salary payments.

13th and 14th salary payments are taxable at the same rate as employees’ wages, which means that employers have to withhold the correct amount of tax and forward it to the tax authorities.

How to set up payroll in Spain

The exact process of setting up payroll in Spain depends on your specific circumstances. For example, foreign employers that want to hire and pay Spanish workers have to meet additional requirements. As a general guide, here are the steps you’ll need to follow to set up payroll in Spain:

Register with the Spanish Tax Agency: All companies wanting to employ people in Spain have to register with the Spanish Tax Agency (Agencia Estatal de la Administración Tributaria). Once you’ve registered, you’ll receive a tax identification code, which allows you to pay social security contributions on behalf of employees.
Collect details about employees: Employers in Spain have to collect and store certain details about their employees, including their name, nationality, tax residence, job title, and social security number.
Report new employees to the State Employment Office: Every new employee must be registered with the State Employment Office within 10 days of employment.
Provide an employment contract: Employers must also provide their employees with at least a copia básica, which outlines the main terms and conditions of their contract. These documents need to be lodged with the Employment Office.
Establish payroll policies and processes: Most employers in Spain have specific policies in place that guide how they handle payroll. In Spain, payroll must be processed monthly.
Calculate deductions and pay employees: Employers have to calculate and withhold the correct taxes and contributions from each employee’s earnings and make payments to the tax authorities. They must also provide employees with a payslip detailing their pay and deductions.

Easily hire employees in Spain with our EoR solution

Hiring employees in Spain usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.

Through our EoR solution, you can confidently hire employees in Spain, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.

Read about EoR services

Compliantly hire workers anywhere with CXC

With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.

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