Spain

Overview

Spain, a vibrant country renowned for its rich culture, stunning landscapes, and thriving economy, is a popular destination for tourists and businesses. 

As a member of the European Union, Spain offers a stable and business-friendly environment.

Expanding your business into Spain presents a wealth of opportunities. 

However, navigating the complex Spanish labor laws and regulations can be daunting, especially for foreign companies. 

This is where an Employer of Record (EOR) solution comes into play, providing a streamlined and compliant way to curb international business challenges.

Skuad offers Employer of Record solutions that accelerate and digitize your company's expansion in Spain without the need to create a subsidiary there. Spain’s growing GDP puts it among the top 15 economies globally, and its talented professionals are looking to collaborate with companies in the international arena. 

With experience and expertise in the Spanish mainland, Skuad makes the perfect partner for developing your business south of the Mediterranean Sea. Utilizing the Skuad platform gives you an immediate edge over your competitors. 

By leveraging Skuad’s high-tech infrastructure and network worldwide, you can easily access the best talent in Spain. 

While Skuad busies itself hiring, contracting, paying, and complying with the complex Spanish labor laws, you can channel all your energies to setting up and scaling your business. Learn about our offerings here.

To get an accurate estimate of your employee costs, consult a reliable source like Skuad -  EOR in Spain. Use Skuad’s cost calculator, which provides information for accurate budgeting and financial planning. The easy-to-use tool lets you quickly get an estimate by simply inputting your data. With a clear understanding of costs, you can make informed decisions about your expansion plans.

Spain at a Glance 

• Population: 47.5 million 
• Currency: Euro (EUR, €)
• Capital city: Madrid
• Languages spoken: Spanish
• ‍GDP: USD 1.42 trillion

Hiring Employees in Spain 

As with most nations in the EU, finding jobs in Spain is tricky. Spain’s labor laws heavily protect the country’s labor market and give significant preference to native employees. 

Traditionally, the compliance burden has been heavy and time-consuming for employers in Spain as the country has several legislative requirements. 

However, the recent economic strife has forced Spain’s judiciary to increase reforms in their labor laws and embrace flexibility in the job market.

Skuad is a Global HR platform that builds remote teams for SMEs and MSMEs around the globe. 

As your local payroll partner in Spain, Skuad can utilize its extensive knowledge of Spanish labor laws to safeguard your interests and ensure a smooth, uncomplicated recruitment experience for your company. 

By partnering with Skuad, firms can recruit, onboard, and manage remote teams in over 150 countries. 

While you focus on boosting your growth, Skuad looks after employment contracts, payroll, compliances, benefits, and a whole host of HR responsibilities for your company. 

With a tech-first approach, Skuad is a self-serve, centralized, and truly automated HR platform.

Contractors Vs. Full-Time Employees

Spain’s labor laws require employers to commit to their employees. Employers usually sign a contract with their employees, spelling out the terms and conditions of employment. 

The employees typically have two choices: fixed-term contracts or indefinite contracts (permanent). 

Fixed-term contracts are valid for a set time, like six months or a year, and are helpful for firms that want to test the performance of new employees before hiring them permanently. 

Moreover, employers do not have to offer a notice period before terminating a fixed-term contract. 

However, the rules dictate that employers cannot offer a person more than two successive fixed-term contracts for the same job position, each lasting a maximum of 12 months within a 30-month period. 

Once this time is exceeded, the employee becomes full-time and is automatically offered an indefinite contract.

Hiring in Spain

The hiring system in Spain is regulated and controlled by the government to guarantee the protection of the employees’ rights. The regulations are complicated: jobs are categorized based on various rules known as Collective Agreements. 

Simply put, a Collective Agreement is a tool through which employers and employees negotiate the terms and conditions of employment. 

They legalize work, working conditions, repayment of obligations, etc., and are renewed annually. 

Employers commonly log on to jobseekers portals like LinkedIn and InfoJobs to search for new employees. 

Although LinkedIn is widespread globally, InfoJobs is specifically targeted to the EU region. Recruiting new employees through such portals or social media adverts has its benefits. 

For one, employers may find information on various probable applicants. Multiple sources also reduce the risk of not finding a talented person for the job. 

However, human resourcing is a complex and cumbersome process, and in a heavily regulated job market like Spain, it is easy for an organization to misstep compliance. 

Therefore, in Spain, the hiring process is best serviced under the guidance of professionals. 

That’s where Skuad steps in. As your Employer Of Record, Skuad can virtually manage your entire HR process in compliance with the local Spanish law. 

While an experienced team at Skuad hires and manages the top talent in the country for you, you can focus on more important work like expansion, operational management, and marketing. Learn more now.

Set Up an Entity

Spain, a vibrant and dynamic country, presents a unique landscape for establishing a business entity. Its robust infrastructure, skilled workforce, and strategic geographic location within Europe offer immense potential for growth and success. 

Notably, Spain's talent pool is known for its multilingual abilities, making it attractive for companies seeking to hire internationally.

However, like any other country, Spain presents its own set of challenges when hiring employees in Spain. 

Navigating the intricacies of Spanish bureaucracy, understanding the complexities of labor laws, and potentially dealing with political volatility can be problematic. 

Here’s a list of pros and cons:

Pros

• Strategic Location: Spain's strategic location within Europe provides access to a large market and facilitates trade with other European countries.
• Skilled Workforce: Spain boasts a skilled and multilingual workforce, offering a competitive advantage for businesses.
• Favorable Tax Regime: Spain offers various tax incentives and benefits for businesses, particularly in certain sectors.
• Strong Infrastructure: Spain has a well-developed infrastructure, including reliable transportation, communication, and energy systems.
• Business-Friendly Environment: The Spanish government actively promotes foreign investment and provides support for businesses.

Cons

• Bureaucracy: Setting up a business in Spain can be a complex process involving numerous administrative procedures.
• Language Barriers: While English is widely spoken in major cities, navigating the legal and administrative processes may require Spanish proficiency.
• Competition: Spain has a competitive business landscape, requiring careful market research and strategic planning.
• Labor Laws: Spain has a robust labor protection system, which can involve higher labor costs and complexities.

Learn more from Skuad experts today!

Hire Employees in Spain with an EOR Solution

Working with an Employer Of Record Services in Spain is the best way to enter a complex labor market. 

An EOR like Skuad decentralizes the entire HR process and is cost-saving in the long run. 

With Skuad’s remote and virtual HR platform, you do not need to set up a subsidiary on the Spanish mainland anymore. 

Moreover, outsourcing employment through Skuad’s EOR solutions in Spain means that you do not have to worry about compliance or legal hurdles. 

The seasoned professionals at Skuad ensure that all local Spanish laws are complied with and that your company’s function in Spain remains smooth and hassle-free. 

Custom-made employment contracts as per specific requirements, quick amendments to the existing agreements, and the convenience of e-signing documents are just some of the many additional advantages of working with experienced EORs like Skuad.

Types Of Visas In Spain

It’s important to note that the family members of foreigners have to apply jointly or individually for their work and resident visas if they wish to accompany the said foreigners to Spain. Spouses do not get work permits without job offers.

Work Permit

Getting a work permit in Spain is a lengthy, scrutiny-heavy procedure. As such, the country prefers hiring native citizens over foreigners. This is mainly due to the Spanish government's restrictive policies, adopted to cure the country's rampant unemployment. However, with their recent economic downturn and a global pandemic, the authorities have gradually relaxed their immigration policies.

Skuad has a rich network of local partners in Spain that can assist in processing work and residence permits for foreigners in the country. As a reputed EOR in Spain, Skuad looks after all the essential rules and obligations related to local employment. On Skuad’s virtual and fully automated HR platform, you can review your remote employees’ performance and operations from anywhere in the world. Book a demo now.

Onboarding and Agreements 

Here’s how an Employer of Record in Spain can proceed with onboarding. 

What is Onboarding?

Onboarding refers to all the activities recruiters perform to help employees settle in the new company. 

A smooth onboarding process enhances employees' productivity, leads to their satisfaction, and improves retention rates. 

Before moving on to the onboarding process, let us see the types of employment agreements in Spain. 

Types of Employment Agreements 

Spanish employment laws include several contract types that allow organizations to hire employees in Spain who can accommodate various work arrangements. 

The different types of employment contracts that employees can enter into through EOR in Spain are as mentioned below: 

• Permanent or indefinite contracts: In these, the employer and employee enter into an ongoing agreement that terminates only if the worker resigns or both parties mutually decide to dissolve the agreement. 
• Temporary contracts: These are fixed-term contracts with a definite commencement and ending date. Spanish organizations that are looking to meet their short-term employee requirements to accomplish their tasks usually opt for this kind of agreement. 
• Apprenticeship, internship or training contracts: These contracts are designed for young professionals, such as fresh graduates, who might be looking forward to entering the market, learning new skills, gaining experience, and earning a living. 

Some of the critical components of employment contracts in Spain are mentioned below: 

• The employer and employee identification should be thoroughly disclosed to establish authenticity and maintain credibility. 
• Commencement and termination (if any) date of the contract. 
• Description of the job role. 
• Details about the salary, payment, and other perks like allowances (if any) and bonus. 
• Job location. 
• The notice period for both parties. 

Compliance with the terms of employment helps ensure transparency, sets clear expectations for both the employer and the employees, and prevents disputes or misunderstandings. 

Tips for Successful Onboarding of New Employees in Spain 

Here is how you can plan the process of hiring and onboarding to get new employees acquainted with the new work culture in Spain:

• Completing the background check: Employers should conduct a thorough background check in Spain on the candidate they plan to hire. They should seek all the information relevant to the position the individual is being hired for, such as education history, prior experience, etc. 
• Sending an offer letter: It is not legally mandatory to send in a written job offer letter to employees in Spain. Nevertheless, keeping the hiring process documented might be a good idea.
• Finishing the necessary paperwork: Employers must finish formalities such as legal agreements, tax forms, or non-disclosure agreements based on the company's onboarding software. 
• Enrolling the employee in various benefits: Employees in Spain are entitled to various Spanish benefits that comply with Spanish labor laws under the European Union, the Workers’ Statute, the Spanish Constitution, and so on. Companies should enroll employees in all the benefits.
• Adding the employees to Spain payroll: Employees working in Spain should ideally receive payments in euros (EUR) unless they have agreed to accept the payment in some other currency.  
• Handing over the gadgets: Whether employees work on-site or remotely, employers should provide the right tools and gadgets to accomplish the task.
• Setting up their official accounts: Employees should be able to identify themselves as part of the organization hiring them. The organization is responsible for setting up all the accounts an employee will need. 

Ticking the Onboarding Checklist 

Hiring from across the globe? Make sure you follow this checklist: 

• Send a warm welcome message to the employee. This makes the employee feel at home. 

• Send some fun facts about the organization. Sending an agenda helps the employee know how to get started. 

• Schedule a one-to-one meeting with the manager or mentor in person or via video call. This can help boost personal relationships. 

• Plan a warm-up or introductory session to get the new employee acquainted with the organization's other employees. 

• If the employee is working on-site, give an office tour. 
• Give them all the essential contacts so they know whom to contact for which issue.

Payroll And Taxes In Spain

Firms entering Spain can find it incredibly challenging to navigate the complexities of the Spanish taxation system. The major challenges include diligently complying with various income taxes, social security, compensation, VAT, and several such businesses and permanent establishment concerns. 

There are two ways to manage your payroll and taxation in Spain. You can either set up your team or seek assistance from seasoned professionals like Skuad. They have a dense network of partners on-field and can systematize your entire payroll management. Book a demo now to learn more.

To avoid expenses related to additional staff, legal counsel, and accounting firms, subsidiary companies in Spain need the assistance of local HR professionals, such as Skuad’s online HR platform. These professionals have the knowledge and experience to manage Spain's complex taxation, compliance, and payroll procedures.

Taxes 

Let us now have a look at the Spanish payroll taxes:

Employer Tax Obligations

Spanish employers should contribute approximately 23.60% of an employee's gross salary to social security for general contingencies, 0.70% for professional training purposes, and 5.50% for unemployment insurance.

The employer must pay 0.20% of the employee’s salary for the Wage Guarantee Fund (FOGASA). It offers financial support for severance pay, unpaid wages, etc., in case an employer cannot fulfill its financial obligations. 

The table below shows all the Spain employer payroll taxes:

Employer Taxation

Social Security Contributions 

Social security in Spain consists of:

• Health insurance and pensions for employees that are entirely supported by the state.
• Financial assistance to employees during times of distress. 
• There are funds for professional training, wage guarantee funds, unemployment funds, insurance for accidents that may happen while working, etc. 

Employee Tax Deductions 

• Employees pay around 1.55% of their gross salary as unemployment insurance and 0.1% as professional training fund. 
• Spanish employees must also pay an income tax governed by a tax system. Employees with varying incomes and personal circumstances pay different amounts. 
• There are two types of income taxes in Spain- Personal Income Tax and Non-resident Income Tax. The table below shows the tax details to be paid by the employee. 

Employee Taxation

VAT

• The standard VAT rate in Spain is 21%, and reduced rates of 10% and 4% are applicable on certain services and goods. 

Other tax contributions and incentives

• Corporate Income Tax: Spanish companies are subject to a corporate income tax of 25%.
• Wealth Tax: Individuals who have a significant amount of wealth may have to pay a wealth tax, the rates of which may vary from one region to another. 
• Local Taxes: Some local services, economic activities, or real estate may have to pay local taxes imposed by local bodies. 

Compliance

Employment Laws in Spain 

Spain's labor laws originate from various sources, such as the Spanish Constitution, judicial decisions made by the labor courts, the Workers’ Statute, and collective dismissal agreements. 

Spain's employment laws enlist the fundamental rights of workers to ensure a safe working environment for all workers, including those hired through Employer of record companies in Spain. 

• Employee rights: Employees in Spain are entitled to punctual salary payments. They can form unions or participate in them freely. Employees can set up work councils within their workplace. They are also free to consult and participate in an organization, collective strike, or negotiation.  
• Remote working: Employers and employees may enter into a mutual agreement to establish a ratio for working in person and remotely. ‍
• Discrimination: Article 14 of the Spanish Constitution enlists an individual's right against discrimination. Similarly, Article 17.1 of the Workers’ Statute prevents discrimination against employees based on their gender, birthplace, sexual orientation, conviction, religion, age, gender identity, ethnic origin, and so on. ‍
• Protection against sexual harassment: To promote a safe working atmosphere for all employees, companies should promote conditions that aim to prevent sexual harassment and establish measures and procedures for its prevention. 
  Companies should conduct campaigns and training to promote awareness on the matter and prepare proper channels for prompt reporting of harassment by someone who faces it.‍
• Data protection and employee privacy: This complies with Article 13 of the EU General Data Protection Regulation. When obtaining personal data from employees, the employer should inform the concerned individual why the data is required, whether the data will be processed elsewhere, and so on. This can help curb the potential chances of data breaches. ‍
• Protection for full-time or part-time employee rights: The rights of full-time and part-time employees in Spain are also protected. They are safeguarded against unfair dismissal, guaranteed minimum salary, and entitled to employment benefits like paid leaves and social security. 

Employee or Contractor Classification 

Employees in Spain fall under two categories of employment contracts: indefinite contracts and temporary independent contracts. While indefinite contracts are permanent and do not have a specific termination date, temporary contracts are for a short or fixed duration. 

Specifying the kind of employment contract helps define the relationship between an employer and an employee, ensures fair practices on both parties' ends, and clarifies the obligations of both ends. 

Employers decide what kind of contract they want to enter into with an employee based on their requirements and the task they want the individual to accomplish. They inform EOR in Spain, which then proceeds with the formalities accordingly. 

Fines/Penalties

• Companies or employees who do not adhere to legal regulations may face legal repercussions. 
• In addition to fines and penalties, not maintaining legal standards tarnishes the business’ reputation. 

IP Protection 

• In Spain, IP Protection safeguards a business's intellectual properties, including copyrights, trademarks, patents, and designs. 
• The Spanish Patent and Trademark Office (OEPM) handles the registration. 
• International agreements like EUIPO and WIPO provide broader protection across borders.

Payroll

While hiring employees through Employer of Record in Spain allows you to source the best talent from across the globe, it is also challenging in many ways. 

While paying foreign employees is difficult, Skuad’s Employer of Record in Spain makes the process smooth.  

How to Pay?

Here’s how an organization can process the Spanish payroll:

• Collect all the information from the individual who has been hired. 
• Calculate the gross pay of the employee based on how much they have worked and the rate of pay decided when they were hired. 
• Calculate the net pay after deducting the taxes, benefits, and social security contributions. 
• Pay the employee and provide a payslip. Keep the payroll records. 
• The employer has to forward all the deductions made by the employee on their behalf.

Best Ways to Pay Employees in Spain 

• Salaries can be paid in either 12 or 14 installments.
• In the 14-installment system, employees receive 12 regular monthly payments. They also receive two extra payments:
  • One in July (during the summer holidays).
  • One in December (during the Christmas holidays).

Benefits and Compensations

Employees hired through Employer of Record companies in Spain are entitled to several benefits, which are discussed below. 

Employee Benefits

Employees working in Spain enjoy the following benefits:

• Social security: Spanish companies safeguard the interests of employees and provide them with social security in times of distress, such as unemployment, temporary disability, etc.  
• Health benefits: The Spanish law mandates all local employees should have healthcare insurance. 
• Leaves: Employees are entitled to annual leaves, sick leaves, maternal leaves, and others to maintain their work-life balance and fulfill their tasks. The section dealing with leave policy will discuss these leaves later. 
• Bonuses: Employees are entitled to two statutory extraordinary bonuses a year. One bonus is paid around the Christmas holidays, and the other is paid in a month fixed by a collective agreement or by the employer and the employee representative. 
  The collective agreement generally fixes the bonus amount at least equal to the employee’s basic monthly salary. It can also be paid in 12 prorated payments.

• Rest periods: Spanish employees should get a minimum rest period of 12 hours between two working days. 
• Severance pay: Employees are eligible for severance payment if a contract terminates. This amount helps the employees sustain the period while they transition between jobs. 

Government Benefits 

In Spain, social security benefits are managed by Tesoreria General de la Seguridad Social—TGSS, a government agency. 

All employees should enroll in the General Social Security Fund, where the premium is 28.3% of the employee’s salary. The employer pays 23.6%; the rest is deducted from the employee. 

In addition, the Spanish government pays around 80% of the final gross annual salary to the employee as a pension, one of the highest rates in the world. 

Insurance Benefits 

Medical Insurance: Spanish law mandates health insurance for all employees, even those hired through the EOR services in Spain. 

Coverage starts as early as the employee's first working day. The insurance plan includes prescription drugs, maternity leave, and hospitalization benefits. 

Life and Personal Accident Insurance: Employees are also entitled to life and personal accident insurance, for which they must pay a 100% premium. 

The coverages are as follows: 

• In case of permanent disability, an amount equal to twice the annual salary is paid (fixed in some cases). 
• In case of death, twice the annual salary is provided. 

Worker Rights 

The employees hired through EOR Spain enjoy several rights that safeguard their interests as employees. They are discussed below: 

Working hours

Article 34.1 of the Workers' Statute states that the average Spain working hours per week for a full-time employee in Spain is 40 hours. 

Your employees should not exceed the functional business hours in Spain.

Spain Minimum wage

In Spain, the minimum annual wage is €14,000, regardless of the employee's profession. 

This translates to a monthly minimum wage of €1,166.70 if paid in 12 installments, or €1,000 if paid in 14 installments. 

This consistent national minimum wage ensures a baseline standard of living for all workers.

Specific labor laws

Here’s a list of the Spain labor laws:

• Probation Period: 3 to 6 months, depending on the position.
• Notice Period During Probation: No notice period is required.
• Notice Period After Probation: 15 working days.
• Working Hours: 40 hours per week.
• Overtime Hours:
  • Maximum of 80 hours per year.
  • Overtime is allowed up to this limit.
  • Overtime pay is 1.75 times the regular hourly rate (+75%). The exact rate can vary based on employment contracts and collective bargaining agreements, but the standard rate is +75%.
• End-of-Service Benefit: No end-of-service benefit.
• Annual Bonus:
  • Spanish employees are entitled to a 13th and 14th-month salary, known as pagas extraordinarias (extra or special pay).
  • These payments are made in summer and around the Christmas holidays.
  • Salary is typically divided into 14 installments instead of 12. However, some companies, like Skuad, opt for the standard 12 monthly installments without separate payments for the 13th and 14th months.

Severance pay

• Employers should give a minimum of 15 days’ notice before terminating a contract with an employee. 
• If an employer fails to give this period’s notice, they must offer a salary payment. 
• This amount relieves the employee and helps him transition into a new job smoothly. 

Working conditions

• The employer is responsible for providing a safe and comfortable working atmosphere to the employees. 
• The work area should be devoid of any threats, such as discrimination and sexual harassment. 

Anti-discrimination laws/acts

• Spain has strict laws that prohibit discrimination on the grounds of race, gender, disability, religion, opinion, sexual orientation, and so on. 

Health & Safety

• Companies should offer employees safe and hygienic working conditions, but failing to do so can considerably impact their productivity.

Remote & Hybrid Work

Remote readiness refers to a company’s ability to perform efficiently and productively outside the conventional office setup in the Spanish business culture. 

Flexible Work Arrangement

Article 13 of the Workers’ Statute in Spain regulates remote work, offering a flexible work arrangement. 

However, an employer or employee cannot unilaterally decide on remote work. It has to be mutually agreed upon by both parties. 

Before the remote & hybrid working setup commences, it should be formally documented. 

Technology Requirements

The employer and the employee should be well equipped with the technology that can amplify the remote & hybrid readiness of the business in Spain's culture. 

This includes checking for a stable internet connection and the required hardware and software availability. Both ends should be trained for the smooth execution of the remote collaboration. 

Adherence to data security standards and privacy should also be maintained in the remote setting to protect sensitive information. 

Infrastructure Requirements

Employees opting for remote & hybrid work should ensure that they have adequate means to complete the task efficiently. 

Alongside the hardware and software required for the task, the employee should have an ergonomic set-up to support virtual collaboration as and when required.

Salary 

An employee's salary depends on his skills, expertise, and experience. As of 2024, the average salary in Spain is € 2,710 gross per month. 

Salary Calculator

When hiring in a different country, you can simply use the salary calculator to understand the minimum salary in Spain, and trending market rates clearly. 

All you have to do is select the role and country you want to hire. It will give you an insight into what it will cost to hire an employee in the country. 

You will get information about compensation data and salary trends so you can offer competitive salaries to talented employees. 

Leave Policy

Listed below are the Spain leave policy employees are entitled to: 

Annual/Earned Leave: Minimum 22 working days or 30 calendar days per year. Collective Agreement may set a minimum of 23 working days. Companies can offer more.

Sick Leave: Paid sick leave for up to 365 days if 180 days of Social Security contributions are made in the last five years. Extendable for another 180 days. Without contributions, unpaid medical leave.

Maternity Leave: Maternity leave in Spain is for 16 weeks, extendable to 18 weeks in case of complications.

Paternity Leave: 16 weeks paid leave (18 for multiples), 6 weeks mandatory after birth; the rest until the child turns 1.

Childcare Leave: 16 weeks per parent, available until the child reaches 12 months. May be extended in specific cases.

Care Leave: As needed.

Bereavement Leave: 2 days, or 4 days if travel is required.

Compassionate Leave: Up to 4 days.

Wedding Leave: 15 working days.

Breastfeeding Leave:

1. One hour per day or two half-hour breaks until the baby is 9 months old.
2. Option to reduce the working day by half an hour.
3. Accumulated leave can be converted into full days.

House Moving Leave: 1 working day.

Accident/Illness/Death of a Family Member: 5 working days or more based on circumstances.

Jury Duty: As long as needed.

Union Leave: As established by law or contract.

Leave Carry Forward Policy: No carry forward unless agreed in the employment contract.

Menstrual Leave: Spain’s menstrual leave policy allows women to take three days (extendable to five days) of monthly leave while menstruating.

Public Holidays

The public holidays in Spain are as listed below:

Background Checks in Spain 

An EOR undertakes the responsibility of the following background checks in Spain before hiring employees: 

• Criminal record check: Checking the criminal records of employees they are hiring to ensure workplace safety and protect the company’s reputation. 
• Educational details check: Cross-verifying the candidate's academic qualification as mentioned in their CV. 
• Past employment record check: Confirm the employee's employment record, as mentioned in their CV. 
• Medical screening: Some jobs require employees to meet certain physical fitness standards, and a medical screening may be essential for those purposes. 
• Credit history check: This helps in assessing an individual’s financial activity. 

Once a candidate is found to be fit, they will be allowed a Visa to travel to Spain.

Probation And Termination

In Spain, the probation time is defined by the collective agreement of the job profile. But, without a Collective Agreement, the trial time cannot exceed six.

• Six months for undergraduates / junior college specialists, two
• Two months for all others

Permanent contracts, training contracts, and special employment contracts have their own stipulated probation period.

Termination details

Learn more from Skuad experts today!

Termination & Offboardings

A smooth offboarding process can ensure that the departing employees speak well about an organization’s business culture in Spain. 

Offboarding an employee in Spain involves the following steps: 

1. Notifying all the departments about the employee's departure. 
2. Exit interview of the employee to understand how their experience has been.
3. Transfer of charge to a new employee and handing over gadgets and other essentials. 
4. Revoking the departing employee’s access to all digital media. 
5. Final payments and documentation. 
6. Updating the company records.

Cultural Considerations 

The cultural norms in Spain are different from those in other countries. Foreign employees hired through Employer of Record in Spain may initially find it challenging. However, the collective effort of both the employer and the employee can help employees adopt the business etiquette in Spain and foster a great work environment. 

Employers can offer cultural training to employees working abroad to adapt to cultural diversity. They can also conduct team-building activities to ensure the new talents' smooth integration and blend with the existing team. 

Incorporation: Setting Up A Spanish Subsidiary 

Regardless of the type of business, there are eight important steps to set up a business subsidiary in Spain. Briefly, they are: 

1. Obtain tax identification number as a foreign investor
2. Register with Spain’s Commercial Registry 
3. Open a corporate bank account
4. Notarize company documents from Spanish notary
5. Complete Form D1-A
6. Deposit form with Directorate-General for Trade and Investments
7. Pay transfer tax and stamp duties
8. Register a subsidiary with appropriate authorities, such as social security and tax departments, and procure the deed of incorporation issued by the Commercial Registry.

However, before setting up your company in Spain, you must review these factors: 

1. Business: The Directorate-General for Trade and Investments (DGCI) can ask local firms with foreign shareholders and Spanish subsidiaries of non-residents to submit an annual report and any other additional information, as directed, on the status quo of their foreign shareholding.
2. Location: Regulations, expenses, and Human Resource availability vary from one region of Spain to another.  
3. Language: Although 99% of Spaniards speak Spanish, some regions use native languages, such as Catalan, more. 

Using Skuad as your EOR solution can largely simplify setting up a subsidiary in Spain. As your local partner, Skuad understands the complex employment regulations in Spain and can ensure that your subsidiary complies with the local labor laws. For instance, Skuad can draft your contracts with employees or help you register with the Commercial Registry. Read about our services here.

Professional Employer Organization (PEO)

A Professional Employment Organization (PEO) provides MSMEs with end-to-end HR services such as payroll management, compliance, health benefits, tax management, hiring, training, etc. A PEO can be seen as a firm's affordable, outsourced HR wing. 

However, if a company wants to have its HR function in-house, it can employ a company that offers Employment Of Record (EOR) services. Unlike a PEO, an EOR is a firm's legal employer. In every other way, an EOR is similar in services to a PEO. 

When expanding, your firm should choose between a PEO and an EOR. Eventually, it all comes down to your project's scope, scale, and future business opportunities.

Organizations planning to expand into new territories are better suited with a global EOR, which becomes the legal employer on behalf of the organization. Instead of associating with a PEO, a co-employment partner, organizations have more to gain by utilizing the services of an EOR solution. 

The EOR solution safeguards organizations from unexpected policy changes, loss of control, and potential risks, as the EOR bears every legal liability for the organization. In addition, the EOR handles payroll in Spain, tax, and employment law compliances. To learn more about Skuad's EOR solution, contact Skuad today. 

Conclusion: Why Is Skuad Ahead Of The Curve In Spain?

Spain is a highly regulated market focusing on protecting employees' constitutional rights. As a company looking to expand with a remote team in Spain, it is important to review the complexities of the country’s labor laws, especially provisions under its several collective agreements and the intricacies of Spain’s complicated taxation system. You must also understand how the benefits and obligations of employees differ based on whether they are from EU/EEA regions or not. 

With rapid virtual management and automation progress, global HR platforms like Skuad have democratized employment opportunities in Spain. With Skuad, companies need not go through the arduous journey of setting up subsidiaries—they can simply trust their local partners to hire exceptional talent. At the same time, they can focus on expanding their business operations.

FAQs

1) What is an Employer of Record in Spain?

In Spain, an Employer of Record (EOR), also called the employer of record España,  is a service provider that acts as the legal employer for staff on behalf of another company. The EOR handles all employment-related duties such as payroll processing, tax withholdings, social security contributions, and compliance with local labor laws. This service mainly benefits companies that want to operate in Spain without establishing a physical presence.

2) Is employer of record legal in Spain?

Yes, using an Employer of Record is legal in Spain. It is a recognized practice that allows companies, especially those outside of Spain, to hire local employees while the EOR España manages all legal and HR responsibilities. This arrangement helps companies quickly enter the Spanish market with reduced legal and administrative burdens.

3) What is the employment law in Spain?

Employment law in Spain is governed by the Statute of Workers, which outlines employers' and employees' rights and obligations. This includes regulations on working hours, contracts, dismissal procedures, wages, and leave entitlements—the law protects workers' rights while providing frameworks for employment relationships and collective bargaining.

4) What is the notice period for employees in Spain?

The notice period for employees in Spain varies based on the contract and collective agreements, but generally, for permanent contracts, the employer or the employee must give 15 days' notice before terminating the contract. This period can be longer for managerial positions or as specified by any applicable collective bargaining agreement.

5) What is the EU employer of record?

The EU EOR is a service that enables companies to hire employees in European countries without actually establishing a legal entity. It handles all the aspects of employment, such as the employment contract, taxes, payroll, and compliance with the country's legal standards. EORs play an important role in helping businesses scale into EU markets. 

6) What is the difference between a PEO and an EOR?

PEOs and EORS both provide flexibility in hiring skilled professionals from overseas. A PEO acts as an outsourced HR for companies that already have an entity, and an EOR manages all the employer-related responsibilities for companies that do not have entities in specific locations. 

7) What are the benefits of EOR?

EOR Spain streamlines the hiring process while adhering to total employment and labor laws. It helps businesses expand quickly without having to establish a legal entity. It also reduces the administrative burden on companies by managing taxes, employee benefits, payroll, and other related matters. 

8) How much does an EOR cost in Spain?

With Skuad, you can expand to Spain and work with Spanish talent, starting just $349.