Expand your organization into Spaineven if you don’t have a Spanish entity
As a developed Western European country, Spain is a common destination for many organizations looking to expand their operations. Large cities such as Madrid and Barcelona have significant economies, and many foreign businesses look to build a presence there.
While Spain is an excellent place to expand, the relaxed business culture can be a shock to many organizations, and delays are commonplace. The language barrier is a common hurdle, but administrative procedures, regional variations, cultural differences, and long waiting times can also hold businesses up and cause costs to spiral unexpectedly.
At New Horizons, we offer extensive outsourcing services to help foreign organizations establish a presence in Spain quickly and efficiently. Our Spain PEO & Employer of Record and payroll outsourcing services can give you everything necessary to expand your business, whether or not you already have an established entity in Spain.
Our in-house recruitment team can even find, recruit, and onboard your local workforce, as well as handling any ongoing HR administration. Our team will provide everything you need to expand into Spain rapidly, while potentially saving you thousands in setup costs.
Our Spain PEO simplifies your expansion
New Horizons enables your business to expand its operations into Spain, without needing to up a legal subsidiary.
Employment & Labor Laws in Spain
Employment contracts in Spain
Spain’s employment laws are unique, and industries/job types can have their own sets of regulations. It is therefore important that you always completely understand the relevant regulations when trying to expand and hire a workforce in the country.
You should always provide new employees in Spain with a formal contract of employment with all relevant details of the employment agreement. This should be written in Spanish, with any references to compensation using the local currency of the Euro.
Employees will usually expect a non-fixed-term contract, as these carry more legal protections than a fixed-term contract.
By partnering with our Spain Employer of Record & PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Spain
The normal working week in Spain is 40 hours, and most office employees work Monday to Friday. Some businesses may offer an extended lunch break, but this is based on individual preference.
Public holidays in Spain
Spain has several public holidays that are nationally recognized.
There are also region-specific holidays in areas such as Catalonia, which is an autonomous region with many of its own administrative procedures and regulations.
Spain vacation leave
Employees in Spain usually receive 22 days of paid vacation leave per year, in addition to the public holidays.
Spain sick leave
Employees in Spain can receive 60% or more of wages when they are unable to work through sickness or injury. This is covered by the government (although employers may need to pay and then receive a refund), and must be reviewed every 18 months.
Some employers may choose to contribute more to sick employees, but this depends on individual employment contracts and agreements.
Parental leave in Spain
Mothers in Spain can take up to 16 weeks of paid maternity leave, at least six of which need to be taken after birth. To receive this benefit, the mother has to have paid social security benefits for at least 180 days in the last seven years (or 360 days across their lives). Standard paternity leave is 30 paid days.
Mothers can also take up to one year of unpaid maternity leave and are legally entitled to resume the same role. They can take another two years, but will not have a guarantee of returning to their role afterward.
Terminations and severance in Spain
When employees on indefinite-term contracts are terminated in Spain, a severance payment of around one month’s wages per year of employment is usually due. Also, an additional month of pay is usually paid upon termination.
These rules do not usually apply for employees in a probation period, which is generally two months, but can be more for certain roles.
Workers who feel they have been unjustly terminated can take legal action, which may complicate matters.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Spain PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in Spain
Spanish workers are taxed progressively, so higher earners pay more in taxes than those at lower incomes. The tax rate is between 19% and 45%.
Corporate tax is set at 25%, although other taxes may apply depending on the specific circumstances.
Employers need to contribute to a social security fund which comes to around 30% of each employee’s salary, with an upper limit of just over €3,500.
Health coverage in Spain
Spain has a social healthcare system that is funded by the government, so employers do not need to offer private health insurance. However, some companies do choose to, particularly for senior-level positions, and it can be a desirable feature for many potential employees.
Spain compensations & benefits
Compensation Laws in Spain
As of June 2020, the minimum wage in Spain is €1,108.30 per month. Some roles and industries may have a higher minimum if this has been negotiated and agreed upon.
Benefit management in Spain
Establishing a Spanish benefits system for your workforce can be difficult as a foreign organization. With the language and cultural differences, and a complicated, unique collection of employment laws, running a comprehensive and compliant benefits system can be very time-consuming
At New Horizons, we specialize in establishing and running Spanish employee benefits systems. We’ll handle everything, using our experience to ensure you are ready to commence operations in Spain quickly and efficiently.