Spain is the second largest country in the European Union and its economy ranks 28th among 44 countries in the Europe Region. Spain’s economy is facilitated by structural reforms, transparent judicial/regulatory systems, and sound economic institutions. The country’s GDP (PPP) is $38,286 per capita. Steady modernization has helped Spanish economy grow continually with the industry sector contributing nearly 27% to the country’s GDP. The total value imports and exports is equal to 65.5% of GDP.
Principal Language: Spanish
Government: Parliamentary monarchy
Capital City: Madrid
Major Cities: Barcelona, Valencia, Seville, Zaragoza
Employment contracts can be verbal or written. However, written contracts are to be incorporated if the work is to be performed for longer than 4 weeks or is required by a statute. Either party can ask for the contract to be drafted at any time during the employment. Regardless of whether the employment contract is formalized in writing, employers are required to provide a written statement to their employees specifying the following details:
- Name and address of the employer;
- Hours of work and schedule;
- Professional classification;
- Remuneration and frequency of payment;
- Commencement of employment and, if applicable, date of termination;
- Collective bargaining agreement, if any changes are made to name and address of the employer.
Certain provisions of an employment contract must be in writing such as minimum employment length and trial period. Also, some employment contracts must be in writing such as:
- Contracts covering senior executives;
- Contracts for employees working from home;
- Contracts covering part-time employees;
- Contracts for employees who work abroad;
- Internship contracts;
- All temporary contracts lasting more than 4 weeks.
Maximum work schedule is determined by individual employment contracts or collective agreements, but an absolute limit of 40 hours per week based on an annual average is set by the Stature of Workers. The work schedule should not exceed 9 hours in a day. Employees are entitled to a continuous rest period of at least 12 hours between shifts. A rest period of a 1½ day must be provided including all Sundays and Saturday afternoon or Monday morning.
Employees who work for more than 6 hours continuously are entitled to a 15-minute break. Employees aged less than 18 can work for no more than 8 hours in a day and must be provided 2 days of rest per week. They must also be given a 30-minute break after continuously working for more than 4.5 hours. Work done between 10 p.m. and 6 a.m. is treated as night shift and is paid at the rates determined by the collective agreement.
Employees get 9 national holidays across the country, which are below:
- Jan. 1: New Year's Day
- Good Friday
- May 1: International Workers' Day
- Aug. 15: Feast of the Assumption
- Oct. 12: Spanish National Day
- Nov. 1: All Saints' Day
- Dec. 6: Spanish Constitution Day
- Dec. 8: Immaculate Conception Day
- Dec. 25: Christmas Day
Apart from national holidays, each region (Andalucia, Asturias, Aragon, the Balearic Islands, the Canary Islands, the Basque Country, Cantabria, Castile and Leon, Catalonia, Extremadura, Castilla la Mancha, Galicia, Madrid, Navarre, Murcia, Valencian Community and the La Rioja) decides its own 3 extra holidays and each council decides 2.
The social security system pays sick leave benefit in the event of occupational injury or illness except for the first day of absence. The benefit is paid at the rate of 75% of employees’ monthly wages subject to social security tax. Employees are not required to meet any conditions to qualify for sick pay. In the event of illness or injury unrelated to work, employees do not receive wages for the initial 3 days of sick leave. From 4th to 20th day of sick leave, employees are entitled to 60% of their monthly wages subject to social security tax.
Foster and adoptive parents are entitled to 16 weeks of adoption leave for each child and 2 more weeks for each additional child. In case both parents work, they can take adoption leave simultaneously or successively.
Fathers of newborn children can take 4 weeks of paid paternity leave. 2 days of paid leave is also provided for a child birth, with 2 extra days for each child in case of multiple births, foster care, or adoption. The social security system pays paternity benefit at the rate of 100% of employees’ maximum amount of covered wages.
Employees are entitled to their full wages in the following circumstances:
- 15 calendar days for their marriage
- The time required to comply with a public obligation, for example, jury duties or voting
- 2 days in case of the birth or death of a child, illness or accident of a close relative and 4 days if travel is needed
- The time required to execute worker representation and union duties
- 1 day for moving into a new residence
Employees with at least 1 year of seniority can take 20 hours of training leave associated with the company’s activity.
Women employees can take 16 weeks of maternity leave and 2 additional weeks for each child in case of multiple births. Out of these 16 weeks, at least 6 should be taken immediately after the child’s birth and the 10 can be taken before. Both parents can take maternity leave successively or simultaneously, but the leave should not exceed 16 weeks in total. The social security system pays maternity benefit at the rate of 100% of employees’ maximum amount of covered wages.
Employees in Spain are entitled to at least 30 days of paid annual leave at their regular pay. The duration can be increased via individual employment contracts or collective agreements. For employment periods less than 1 year, annual leave is reduced proportionally. Though unused annual leave is usually not carried over to the next year, there are exceptions to this rule, for example, maternity or pregnancy leave. Employer and employees need to decide together when employees can take annual leave. In case of disagreement between them, the dates for annual leave are decided by local labor authorities.
The legal retirement age is 65 for 36 years and 3 months of employment and 65 years and 5 months for those with lesser tenure. Service requirements and age will gradually increase to 65 years for those with 38 years and 6 months of service and 67 for those with lesser service duration by 2027. The social security system provides benefits including medical care, workers’ compensation, retirement pensions, hospitalization, unemployment compensation, and disability payments. The Spanish social security system generally covers the following:
- Loss of ability to work due to an employment-related accident, an occupational disease or maternity
- Old age
- Loss of job
- Family requirements (assistance for children aged less than 18 or disabled)
All employees including non-Spanish nationals who work in the Spanish territory are required by law to register with the social security system.
The Social Security system in Spain includes the state pension scheme. The pension scheme is financed by payroll tax on salaries where employees pay 4.7% of their salaries while employers pay amounts equal to 23.6% of employees’ salary.
Employees registered to work in Spain who make social security contributions are covered by the state healthcare. Those who are not registered to work in Spain but have been in Spain before April 2012 and earn less than EUR 100,000 can register for the healthcare as a Spanish resident via local Instituto Nacional de la Seguridad Social (INSS). Individuals can also access state healthcare by contributing each month to ‘pay-in’ public health insurance schemes which are run by autonomous regions. The monthly fee is EUR 60 for those aged less than 65 and EUR 157 for those above 65.
There are 2 types of unemployment benefits in Spain: contributory and non-contributory.
Contributory Unemployment Benefit
Both employers and employees are required to make contributions to a contingency fund. The benefit is based on the number of contributions and previous average wages. To qualify, individuals are required to register with the employment office as available to work and they must make contributions for a minimum of 360 days over the last 6 years.
Noncontributory Unemployment Benefit
This benefit is conditional and applies to individuals who are not entitled to contributory benefits whether due to lack of contributions or an extended period without work.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Spain and hire their employees without having to establish a branch office or subsidiary in Spain.
- Your candidate is hired via our Spain PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Spain laws.
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- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
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Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.