How to Hire in Spain
Expanding into Spain offers plenty of opportunities for companies seeking growth and development. The country has a diverse and resilient economy across various sectors such as tourism, technology, renewable energy, and more. With supportive government policies, ease of doing business, and access to resources and infrastructure, Spain provides a conducive environment for companies to thrive.
Positioned at the crossroads of Europe, Africa, and the Americas, Spain serves as a gateway to international markets, facilitating trade and business expansion. As a member of the European Union, companies expanding into Spain benefit from access to a large consumer market, trade agreements, and EU funding opportunities.
For businesses wondering how to hire in Spain, there are three options for expansion:
- Hire directly with a legal entity
- Hire through a global PEO
- Hire independent contractors
How to hire employees in Spain
Hiring strategies should be based on the unique needs and circumstances of the business. There’s no one-size-fits-all solution for global expansion. Review these three common hiring practices to determine the best route for your business.
1. Hire directly with a legal entity
Hiring foreign employees must be done through a local subsidiary or branch. For employers that want to hire directly and maintain full control, they will need to establish their own legal entity in Spain. This can sometimes be a time-consuming process that involves the following seven steps:
- Register the company’s name
- Open a Spanish bank account
- Draft Articles of Association
- Sign Public Deed
- Register Public Deed
- Obtain a NIF number
- Complete a D1-A Form
Related: 10 things to know about setting up a legal entity overseas
When you create an entity, you are responsible for ongoing compliance with changing Spanish labor laws, tax obligations, and collective bargaining agreements. This includes timely payment of salaries, contributions to social security and other mandatory benefits, and adherence to local employment regulations. But this also means you have complete control over the operations and administration of your business.
When to hire directly:
- You have already researched and tested the Spanish markets
- You plan to operate long-term in Spain
- You will be hiring a large workforce in Spain
If hiring and paying employees directly is the best path for your business growth, consult with experts on the best entity structure for your operations. Global advisors will ensure your entity is tax-efficient and compliant with all local employment laws.
Related: 7 questions about international entity setup, answered
2. Hire through a global PEO
A global professional employer organization (PEO) is a third-party service provider that acts as the legal employer for your workers in Spain. You enter into an agreement with the PEO, and they hire and manage your employees in Spain on your behalf. This is also sometimes referred to as an employer of record, or EOR.
These partnerships are often the best choice for growing companies because the PEO manages the payroll, tax withholdings, benefits administration, and compliance. This allows the business to focus on other growth priorities, instead of dealing with the administrative HR burden.
Related: 5 ways an employer of record helps fast-growing companies hire workers globally
Hiring through a PEO offers growing businesses speed and flexibility, without the need to establish their own entity. Because the PEO is responsible for all employment requirements, they ensure full compliance and mitigate risks. It can also be a cost-effective solution for businesses looking to reduce overhead costs associated with maintaining their own entity.
When to hire with a global PEO:
- You want to research and test the Spanish market for viability
- You have a small headcount of workers in Spain
- You don’t want to manage the administrative burden of HR and payroll
Partnering with a global PEO gives you access to a global network of established entities. Their global expertise allows you to hire faster and eliminates the burden of compliance entirely. This allows your business to focus on the day-to-day tasks of your employees, rather than managing shifting administrative requirements.
Related: Converting from contractor to employee: A roadmap for global employers
3. Hire independent contractors
Independent contractors are temporary workers hired to perform specific tasks or projects. These individuals are subject to a different set of legal and tax requirements from regular full-time employees.
Related: Independent contractor compliance? It’s kind of a big deal
When hiring independent contractors in Spain, it’s essential to ensure that the working relationship is clearly defined and compliant with local laws to avoid misclassification issues and potential legal liabilities. This includes drafting detailed contracts outlining the scope of work, payment terms, and intellectual property rights, among other considerations.
When to hire independent contractors:
- You want to engage a worker for a short-term project without paying salaries or benefits
- You want to reduce the HR burden when hiring
- You want to lower overhead costs
If this is the route you take, make sure you fully understand the contractor management requirements. Businesses that treat their contractors like employees will be subject to penalties and lawsuits.
If this is the route you decide to take, it might be worth it to consider using a contractor management solution. With Contractor Unity, companies can pay contractors in multiple countries using a single, streamlined platform.
Related: Eliminate international contractor risk
FAQs for how to hire in Spain
One of the main obstacles international businesses face when establishing a global workforce is navigating local employment laws.
In Spain, employment laws include requirements such as probationary periods, local leave entitlements, severance pay, national holidays and vacation, and standard working hours.
Here are some common questions around standard employment practices in Spain that expanding companies should understand.
What is the minimum wage?
As of 2024, the minimum wage in Spain is €1,134 per month.
What is the standard working hours?
A typical work week in Spain is 40 hours. Any hours an employee works beyond 40 is overtime. When this occurs, employers must pay at 175% of the employee’s regular wage.
How long is a probationary period?
This can vary. The maximum probationary period for most employees in Spain is two months. But in the case of more qualified technicians, it can be as much as six months.
How do terminations work?
Employment contracts can outline this requirement more explicitly, but Spanish law requires employers and employees to provide 15 days’ notice.
Do I have to pay severance?
Yes. Even with a just cause, severance pay in Spain amounts to 20 days’ wages for each year of the employee’s service. However, there is a limit of 12 months of wages.
What kind of leave does Spain require?
- Annual leave: The minimum requirement is 30 days’ paid annual leave. But many employees will participate in collective bargaining agreements (CBAs) that require more.
- Maternity leave: Mothers in Spain receive 16 weeks of paid maternity leave.
- Parental leave: Fathers are also entitled to 16 weeks of paid paternity leave.
- Sick leave: Employers must provide 17 days’ paid sick leave at 65% of their salary and 75% for any days after that.
Hire with confidence
No matter how you want to hire employees in Spain, we can help you find and retain the best talent. Global PEO Services, a Safeguard Global company, helps businesses with their workforces in 170+ countries. Our team of experts can help you navigate the challenges of HR and payroll to keep you compliant as you expand your international operations.