Payroll in Spain

What does the payroll process in Spain involve?

When you employ workers in Spain, you have to run a Spanish payroll process. This process always involves:

• Collecting information from your employee or contractor – including a copy of their NIE certificate and passport
• Calculating gross pay – how much your employee has earnt in a month, based upon the hours worked, and rate of pay
• Calculating net pay– how much your employee has earnt once you’ve deducted tax, benefits, and social security contributions
• Paying your workers – you’ll also have to provide a payslip and keep payroll records
• Transferring deductions to the relevant authorities – the employer is responsible for paying tax, benefit, and social security contributions on behalf of their employees

This basic payroll workflow can be applied to most countries. However, when you start delving into the details, it’s clear that no two countries share the same payroll process.

For example, did you know that some employees are paid double in July and December in Spain? Or that an employer has to contribute a whopping 23.6% of an employee’s salary to Spain’s Department of Social Security?

There’s a lot to get your head around. So now, let’s take a closer look at Spain’s payroll requirements.

What do you need to know about payroll in Spain?

A few Spain payroll basics

The currency in Spain is the Euro (€, EUR). Employers pay employees on a monthly basis, with payments typically made on the last day of the month.

Working hours in Spain

Spanish employees are allowed to work a maximum of 40 hours per week.

Traditionally, the workday starts at around 9 am. Places of work close at around 2 pm for siesta. Employees return to work at 4 pm-5 pm and then work until 7 pm-8 pm.

Some companies in Spain no longer stick to this tradition and instead grant their employees just one hour for lunch, in line with many other European countries.

Overtime rules in Spain

If an employee works more than 40 hours a week, this is considered overtime. The rate of pay for overtime is stipulated in collective agreements. These agreements may be negotiated at a company or industry level.

An employee can work a maximum of 80 overtime hours per year.

Minimum wage requirements in Spain

In Spain, there are two ways to pay your employees.

You can pay them monthly, in 12 monthly installments, at a minimum wage of €1,166.70 per month.

Alternatively, you can pay them in 14 installments (with extra payments made in July and December), at a minimum wage of €1,000 per month.

Either way, employers have to pay their employees a minimum wage of €14,000 per year.

Severance pay in Spain

Employers have to give at least 15 days’ notice to terminate a contract with an employee. If they fail to give this notice, they can offer a salary payment in lieu.

If an employer has to pay severance pay, it is calculated at a rate of 20 days’ salary per every year of service, capped at 12 months’ salary.

Severance pay in Spain

As part of Spain's payroll statutory requirements, employers and employees need to make the following contributions.

Employer contributions

• 23.6% - Social Security
• 5.5% - Unemployment
  
• 0.2% - Salary Guarantee Fund
• 0.6% - Professional Training

Employee contributions

• - 4.7% - Social Security
• - 1.55% - Unemployment
• - 0.1% - Professional Training
  

Income tax

Income tax in Spain is charged at a progressive rate. Below you’ll find the tax bands set by the Spanish government for 2022.

Each region of Spain has the right to set its own income tax rates. As a result, you should check that regional rates are in line with national rates for any Spanish workers you employ.

• Up to €12,450: 19%
• €12,450 to €20,200: 24%
• €20,200 to €35,200: 30%
• €35,200 to €60,000: 37%
• €60,000 to €300,000: 45%
• More than €300,000: 47%

Employee leave entitlement in Spain

Public holidays

Spanish workers get 14 paid public holidays per year. Some of these public holidays vary between regions.

Paid leave

All full-time workers are entitled to 22 days of paid holiday per year.

Sick leave

Common disease or non-work-related injury: Employees who fall into this category are entitled to 60% of their salary, payable from day four to day 21 of their sick leave. If they can’t return to work after day 21, sick pay rises to 75% of the usual salary.

Occupational disease or work-related injury: Employees in this category are entitled to 75% of their usual salary from the first day of absence.

Sick pay benefits can continue for up to 12 months. In some cases, it can be extended to 18 months. Employers are responsible for paying sick pay and then claiming it back from the Department of Social Security.

Maternity / Paternity leave

Women are entitled to at least 16 weeks of paid maternity leave. In some cases — for example, multiple births — they are entitled to more.

Mothers have to take six uninterrupted weeks of leave immediately following the birth of their child. They can then take the remaining ten weeks’ maternity leave any time in the first year following the birth of their child.

As of January 2021, men are also entitled to 16 weeks of paternity leave on the same basis as women.

These rules also apply to both men and women who foster or adopt a child.

The Department of Social Security pays employees directly during their maternity and paternity leave. Employers do not need to pay employees during this time.

Breastfeeding leave

Women can take breastfeeding leave in addition to their maternity leave. They can either:

• Take one hour off each day until the child is nine months old
• Accumulate these hours to take full working days as paid leave
  

Employers are responsible for paying for breastfeeding leave.

Other leave allowances

Employees are entitled to:

• Two years of unpaid leave to care for a seriously ill family member
• Two days leave (rising to four if travel is required) to care for an ill family member or following the death of a family member
• One day’s leave for employees who are moving house
• 15 days’ leave for employees who are getting married
• Paid leave for public duties, for example, to fulfill their role as a local councilor or school governor.
  

Payroll compliance in Spain

As an employer, it’s your responsibility to abide by these employment and payroll regulations and to register all employees correctly for tax and social security purposes.

You also have to ensure that all taxes and contributions are paid to the relevant authorities by the stipulated deadlines each month.

Fail to do so and you’ll face late payment charges. You may also face additional charges and penalties, which are fixed on a case-by-case basis.

Payroll services in Spain: How to start building your team?

Once you’ve decided to take on a Spanish employee, there are a number of different ways to approach payroll.

You can handle it in-house, getting your existing HR team to learn about and navigate the Spain payroll process. You can also choose to outsource payroll to a dedicated HR and payroll company in Spain** while continuing to run an in-house payroll process for local team members.

Alternatively, you can outsource all payroll operations — for employees in Spain, at home, and anywhere else in the world— to a global payroll provider like Skuad.

So what are the benefits of this third option?

Simple workflow

With just one payroll partner, your payroll process gets a whole lot easier. You can manage your company’s international payroll from one intuitive dashboard, meaning there’s much less opportunity for error.

100% compliant

Here at Skuad, our payroll and employment law experts know exactly what your process needs to look like in Spain (and beyond!). We’ll advise you of your responsibilities and make sure you stick to them too.

Improved employee experience

Skuad also provides great additional features. With us, you get access to excellent exchange rates, great benefits packages, and a smooth onboarding experience for your employees.

Hiring flexibility

Because Skuad provides payroll services for 160 different countries, you have the flexibility to create a global workforce, choosing the best talent whatever their location.

Want to start hiring and paying in Spain — and across the world?

Book a free platform demo to see what Skuad can do for  your business.