An employer of record in Spain refers to the entity that is allowed to employ local workforce on behalf of a company, typically a foreign company. This is an employment service through which a foreign company can outsource any matter related to employment, without having to learn the local law and practices. The main advantage of addressing to a Spanish employer or record is that the company can focus on other important business matters, such as registering a local legal entity and completing the basic incorporation aspects. If you need the services of a Spanish PEO (Professional Employer Organization), you can easily address to our law firm in Spain, where you can find all the necessary support and information.
| Quick Facts | |
|---|---|
| What is the employer of record in Spain (PEO)? |
An entity authorized to act as the official employer for workers on behalf of client companies. |
|
Elements in the employment contract |
– working days, – contract duration, – designated workplace, – type of work activities, – starting date of employment, – basic salary, etc. |
|
Probationary period in Spain |
Generally between 2-6 months |
| Income tax rates |
Progressive rates, from 19% to 47% of annual income |
| Social security contributions |
6.45% for employees and 30.40% for employers |
| Retirement age in Spain |
66 years and 6 months |
| Annual leave |
22 working days |
| Paternal leave |
20 weeks for each parent |
| Spanish PEO services |
– assistance with work permits and visas, – hiring new staff, – prepare employment contracts, – payroll processing, – management of employees’ benefits, etc. |
| Remote employment management (YES/NO) | YES, contact our lawyers for this option. |
| Working hours |
40 hours/week |
| Sick leave payment |
The employer provides sickness benefits from the 4th to the 15th day of illness. Afterward, payments can be reimbursed by the social security office. |
| Terms of contract termination |
Depends on the contract type. Our attorneys can help in any case of contract termination. |
| Why choose employer of record in Spain |
– facilitates the employment processes, – complies with local labor laws, – access to HR services, – the company can focus on its main business activities, etc. |
| Additional services provided by our team |
Our team can help individuals buy a property in Spain or assist in other legal or tax matters. |
Table of Contents
What are the main services of a Spanish PEO?
Once a foreign company will address to the employer of record in Spain, all matters concerning employment will fall under the responsibility and the supervision of the PEO in Spain.
Some of the basic services a company can obtain when addressing to the Spanish PEO are presented in the list below:
- legal assistance for work permits and visas for the employment of foreign employees;
- hiring the new staff following all the employment rules and regulations applicable in Spain;
- preparing the employment contract for the new workforce;
- full responsibility for payroll matters, taxation of the salary and other human resources matters;
- maintaining the evidence of holiday benefits, maternity leave, sick leave, etc;
- the company that hires the employer of record will also receive any updates concerning employment laws, etc.
However, please mind that the responsibility of the employer of record is limited to matters presented above and does not interfere with the company’s policies concerning their own employees.
This means that the day-to-day activities carried out by the employees are 100% regulated as per the internal rules of the company.
A major advantage for outsourcing employment matters to an employer of record in Spain is that all documents, procedures and compliance measures are carried out without the participation of the company that opted for this service.
Meanwhile, the company can take care of other matters related to incorporation, business licenses, selecting an office, etc., drafting and signing contracts and for all these, our law firm in Spain remains at your disposal. Our lawyers can also help you set up a limited company in Spain in approx. 5 weeks.
Spanish tax filings
Our Spanish PEO service can assist with Spanish tax filings. A PEO handles payroll processing, ensuring that all salaries, benefits, and deductions are accurately calculated.
Both employees and employers are required to contribute a percentage of the employee’s income to social security. This includes all income received by the employee, whether in cash or non-cash benefits. There is a minimum monthly contribution base, which varies depending on the employee’s professional category. There is also a maximum monthly contribution base set at EUR 4,720.50.
The standard rate for employees is 6.47%, but please note this rate can vary on the type of employment contract. Our Spanish lawyers can determine the exact rates, based on the contract. Employers are required to contribute 30.48% of the employee’s wages to social security. In addition to this general rate, employers must also pay a variable rate to cover occupational accidents. This rate depends on the type of work the employee performs. An employment of record in Spain will take into account this variable rate.
Social security contributions for a given month must be paid during the following calendar month. Our Spanish PEO automatically pays the contributions to the TGSS (Tesorería General de la Seguridad Social). This is an efficient method for companies to streamline the social security payment process and avoid any associated penalties.
Additionally, employers are responsible for withholding the PIT (personal income tax) from employees’ salaries. These taxes are progressive and vary on the income level.
Our services are available in all Spanish regions. Our lawyers in Madrid can offer assistance regarding labor law in this particular area.
What should companies know about employment in Spain?
Foreign companies expanding on the Spanish market must know that Spain follows the EU directives related to employment, but also national regulations.
In the following list, our Spanish lawyers have prepared a short presentation regarding few important employment matters:
- an employment contract in Spain must stipulate that an employee can’t work more than 40 hours per week (or maximum 9 hours per day);
- Spanish employees can receive 2 additional payments per year, besides their 12 yearly salaries – this usually happens before the Christmas holiday and the summer vacation;
- employment contracts can stipulate a probation period, which, in Spain, can be of minimum 2 months to maximum 6 months;
- employees are entitled to 30 days of vacation (days paid), and to this, an additional of 14 other days are free days due to the country’s national celebrations.
Please note that public holidays can differ, according to the Spanish region. For example, Catalonia has autonomous regional holidays which can be considered non-working days to some employees. Our lawyers in Barcelona can offer more details regarding the labor regulations in that region.
We invite you to watch a short presentation on the Professional Employer Organization in Spain:
Spain also regulates collective employment contracts; our law firm in Spain can provide in-depth legal information concerning the main differences that can appear between individual and collective contracts.
Of course, the employer of record in Spain can handle all the procedures related to the latter type of contract, in accordance with the current regulations prescribed by the Ministry of Employment and Social Economy.
Overtime regulations in Spain
As previously mentioned, the standard workweek in Spain is 40 hours. The specific distribution of working hours is determined by the employment contracts or collective bargaining agreements. Any hours worked beyond the standard workweek are considered overtime. An employment of record in Spain is useful for keeping detailed records of an employee’s working hours.
It is important to note that employees can work a maximum of 80 hours of overtime per year. Employers can choose to compensate overtime either by paying at least 75% more than the regular hourly rate or by providing equivalent paid time off. A Spanish PEO can handle the management and compensation of overtime.
For overtime disputes, it is recommended that you seek assistance from our Spanish attorneys.
Statistics about the workforce in Spain
Our Spanish lawyers have prepared some interesting statistics about employment in the country as of the first quarter of 2024:
- The total number of employed people stands at 21.25 million;
- Over the past 12 months, the number of employed people has grown by 615,800;
- The total unemployment rate in Madrid is 9.19%;
- The national unemployment rate for the male population is 11%.
In addition to our Spanish PEO services, we also have a dedicated team of property lawyers in Spain.
For more information related to the employer of record in Spain, we invite you to contact our team of Spanish lawyers. They can also help you if you want to open a business in Spain.