Employer of Record Spain
Infotree Global Solutions assists organizations planning for expansion in Spain by providing employer of record services in Spain. If you wish to recruit professionals in Spain, you can easily accomplish it with us without even having an establishment in Spain. Our team of dedicated professionals would take up all the recruitment and payroll management responsibilities for your organization. From searching for ideal employees to hiring and onboarding them, we take every step on your behalf with total compliance.
Our Spain employer of record would give you insights into the compensation, benefits, and facilities required for your employees in Spain. Here are some of the important factors you need to know before you start hiring in Spain:
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Hiring in Spain
Spain is one of the largest growing economies in the world with a GDP of $1.45 trillion and approximately 47.50 million residents. It can provide an advantageous position to a foreign business due to its strong strategic location and easy access to other evolving markets. Therefore, businesses look forward to the growing opportunities in Spain with great hope.
For a foreign business expanding operations in Spain, it is essential to understand the recruitment process and the ground rules related to it. Although working with an Employer of Record significantly reduces the hassle, it is still ideal to know beforehand.
Here are a few necessary points to note –
- The first step includes an initial telephone interview with the human resource team. At this step, the candidate is required to give a short explanation of their work history.
- The hiring process in Spain typically starts with the negotiation of the employment contract drafted before the beginning of operations. This contract outlines compensation for the given role, benefits, termination clauses, and other essential details
- Businesses must register their employees with the concerned authorities and social services for easy access to the benefits.
- The company must register a new contract with social security equality for confirmation of employment. The requirement also makes it necessary for the business to complete the registration with the Public Employment Service within ten days of becoming operational.
- If the company is allowing for a probation period for their employees, the employment contract must mention precise details related to it. The probation period in Spain usually lasts up to two months, with an exception for companies with less than 25 employees.
- Once the negotiation of the employment contract is completed, a candidate profile is then taken forward for approval from the management. If their profile fits the job description, the candidate is asked to appear for an interview. In such cases, it is ideal to take additional assistance from a reliable Employer of Record Spain to make the process seamless.
The opportunity to expand business in Spain comes with the necessity to become familiar with the local employment compliance rules. A business must become familiar with the local employment compliance rules and regulations as it is a fundamental requirement. Our Employer of record service in Spain handles all your concerns about hiring international expertise.
Working Hours – In Spain, employees are entitled to a maximum of 40 hours per week and 9 hours per day for a full-time role from Monday to Friday. As per Spanish labor laws, there must be an elapse of 12 hours between the end of one working day and the beginning of the next. However, once an employee completes a work duration of 6 hours, they can take a small break of 15 minutes.
Moreover, working hours are also specified in the employment contract outlining the maximum and minimum working hours for the prospective employee. The contract must specify these with accurate precision. Additionally, an Employer of Record can help you manage and look after employee compliance effectively.
Compensation – As you considered the compensation factor, it is necessary to stay mindful of the necessary regulations regarding the pay. Here are the necessary things to know –
- As per the local rules and regulations, the minimum wage in Spain is around €1,125 gross and is payable in 14 installments of €965 per month to allow for the double salary to employees in June and December.
- While the rules and compensation are regulated by law, the employment contract can also regulate the range of legal salary for an employee. Therefore, an employer and their employee may also agree on a salary in a different range depending on the terms of the employment contract and negotiation.
Bonus – A bonus is a form of extra payment made to the employees every year, in addition to the basic pay. The employment contract must specify any essential details concerning the bonus. Employees in Spain are entitled to receive two bonuses every year. These are paid in June and December. The amount of bonus is agreed upon by employer and employee with mutual consent. However, an important detail concerning the bonus is that if an employer violates his/her disclosure obligations, then the employees are entitled to receive the bonus pay.
Probationary Period – In Spain, the duration of the probationary period at any organization usually lasts between two to six months and depends upon the type of employment contract. The probation period must be documented while drafting an employment contract.
- Probation period of six months for college graduates and specialists.
- Probation period of two months for other employees
- Probation period of three months for employees other than college and junior college graduates working in a company with employees’ strength of less than 25.
- Probation period of one month for temporary fixed-term contracts for less than six months/li>
Termination and Severance – The common reasons for termination of an employee as per the Spanish rule include structural, operational, and ethical grounds. The employers must also provide an advance written notice of at least 15 days with the salary for the same period.
However, if an employer terminates an employee on unfair grounds, the employee is entitled to the following –
- The severance pay must be equal to 33 days of the compensation for each year of the service up to one year.
- The employer must also provide 6 hours of paid leave in case of an advance notice period.
Keeping a track of these important details is not always easy from the perspective of a foreign business expanding in a new environment. It is always wise to go with assistance from a Spanish Employer of Record to make the process easy. Seeking professional help during business expansion is always a good decision as it enables you to expand your business hassle-free.
Compensation and benefits in Spain form an important part of employment law compliance. To maintain it, employers are entitled to pay the minimum wage. However, it has been observed that many employers add more benefits to stay competitive in the challenging business environment. Being your Employer of Record in Spain, we provide you with the required guidance. Employees working in a company established in Spain are entitled to the following employee benefits –
Maternity Leaves – According to the standard maternity leave rules in Spain, female workers are entitled to maternity leave of 16 weeks. However, there are certain extensions to this rule. In the case of twins, employees can get maternity leave of up to 18 weeks while the extension goes up to 20 weeks in the case of triplets.
In the case of a child with a disability, female employees can demand an extension of up to two more weeks. However, it must be noted that the maternity leaves in Spain are paid. It implies that no employer can dismiss the employee during this period. Moreover, the social security system is responsible for paying 100% of the mother’s social security contribution case during the maternity leave span.
If you are looking forward to getting traditional help to manage these employee entitlements, working with an Employer of record in Spain can be immensely helpful.
Sick leave – It can be considered if an employee is unable to perform their duty due to sickness or injury that took place while doing the job at the workplace. Any expense arising during this period is covered by the government, although the companies must pay a certain portion of this expense. Therefore, the social security system is responsible for paying 75% of the monthly salary to an employee on the second day of sick leave.
Moreover, the employees are entitled to 50% of their monthly compensation starting from the fourth day of sick leave if the injury or sickness is not related to their job. The employer is responsible to pay this percentage of compensation for 15 days while the social security system compensates for up to 20 days. Starting from the 21st day, the benefits from the social security system go up to 75% of the employee’s monthly salary.
Paternity Leaves – According to the legislation passed in 2018, male employees are now entitled to up to 5 weeks of paid paternity leave. It is permitted to be used in the first year of the baby’s life, but the employee must apply for at least six weeks of this duration immediately after the delivery or adoption. The employee can also apply for an extension for up to 2 weeks in case of multiple births including twins and triplets. If a business does not follow these leave policies, it may face serious litigation. Both paternity and maternity leave policies are extremely strict in Spain, which provides stronger work protection to employees. Therefore, a business must always comply with these rules.
Vacations – The rules concerning employee entitlements are lenient in comparison to other countries across the world. Any employee working in an organization based in Spain is entitled to receive up to 22 days of paid vacation every year. However, it must be noted that this is in addition to the mandatory public holidays.
Health Benefits – Spain has some of the best rules concerning employment entitlements and compliances when it comes to the welfare of employees. These benefits also include health care, which is taken care of by the public healthcare system. Due to this system, employers are not responsible to create separate funds for private health insurance for their employees. However, it is important to note that the same is always at the will of an employer. They may or may not choose to offer health coverage for their employees. Most executives often request supplementary health benefits and life insurance from their employers.
As your employer of record in Spain, we assist you in identifying the best and the most cost-effective insurance coverage for your employees and their dependents.
Pension – As per the reforms implemented in 2013, the legal age for pension has been increased from 65 to 67. Apart from this, Spanish pension rates related to earning are among the highest in entire Europe. The rate for pre-tax pension stands at 81% of the gross annual salary. The employers must contribute 23.6 percent of the employees’ salary, and employees contribute around 4.7% of their salary. For self-employed workers, they are themselves responsible to pay all of their contributions. Companies calculate pension rates for the employees depending on their salaries and the period served.
Other Benefits – Other miscellaneous employment benefits in Spain include specific provisions and statutory leave entitlements apart from the mandatory ones. These include overtime benefits additional coverage and insurance depending on the employment contract and a paid time off. However, it must be noted that these are entitled only to permanent employees and employees on a probation period.
Payroll Tax in Spain
Talking about the applicable tax categories for foreign businesses in Spain, it is necessary to understand the applicable categories. Here are the main tax categories –
Income Tax – The employee income tax structure in Spain follows a progressive scale. The taxation rate starts at 19% and goes up to 45% varying according to the annual income and region an employee belongs to.
VAT (Value Added Tax) – As per the OCED consumption tax trends, the standard VAT rate in Spain stands at 21.0% covering all taxable goods and services. The country follows a set of broad rules in case of VAT rates as these are set by the European Union (EU).
Corporate Tax – The rules and regulations concerning corporate tax are applied to business organizations and other entities on their income. The standard corporate tax rate for companies stands at 25%. However, the same comes down to a lower rate for newly established enterprises actively participating in economic activities.
It also includes different categories of tax incentives for investments, specifically in research and development and technical innovations. Companies are also entitled to tax credits and an applicable exemption system. These can be easily managed with the help of a Spain Employer of Record.
Employment Laws in Spain
The local employment laws in Spain include mandatory compliance with the recommended work hours, minimum wage requirement vacation, and parental leave for the employees. However, it must be noted that any employment law applicable for businesses based in Spain is governed by The Estatuto de los Trabajadores, or Workers Statute. It is the main legislation that regulates both individual and collective employment relationships existing between an employer and therefore prospective employees.
Type of Visa and Work Permits in Spain
For any individual intending to live and work in Spain, they need to deal with the Immigration Authority and Labor and Employment Authorities to obtain a work permit. The process gets a little bit easy for EU, EEA, and Swiss citizens as they can shift to the country without any restriction.
For employees from other countries, there are different categories for work permits for Spain depending on the category of employment. To work as a full-time employee in Spain, an individual is required to obtain a work permit. The application usually takes up to 8 months for processing. Upon getting approval from the Ministry of Labor, the foreign consultancy authority or Embassy looks after the matter and issues a work permit to the applicant.
Challenges When Expanding into Spain
While planning a business expansion in Spain, assessing the possible challenges is an essential step for any business. Not only does it make the expansion journey smooth but also prepares a business for any hurdles it may come across. Although getting assistance from a Spain Employer of Record can help, it is still recommended to get prior know-how of the possible hurdle. Here are three core challenges a foreign business may face –
Getting to know the market – For any foreign business looking forward to expanding their operations in Spain, it is first essential to understand the market structure. However, not many people know that Spain is not a market but a country where 17 autonomous communities operate. because of this diversity, there are different cultures, pricing patterns, and consumer behaviors. It implies that marketing strategies that work in one state may not necessarily work in others. However, you can easily get a competitive edge by using our Spain employer of record services and get professional assistance!
Finding the right local partners – Due to these differences in culture and language, it usually gets difficult for a foreign business to look for an ideal local business partner. The differences in varied cultures and language barriers can make the selection process difficult, which can become a great challenge for new businesses to combat.
Tackling the bureaucracy – Due to heavy paperwork and the mandate to obtain the necessary permissions from the concerned authorities, the process becomes too long to complete. Although the local Spanish administrations have been working on digitalizing the operations, the system is still bureaucratic on multiple levels. The process is not much difficult for the local businesses, but it can become a huge challenge for a foreign business to deal with.
Benefits of Employer of Record in Spain
To simplify your expansion process let Infotree Global assist you to deal with all the complexities. Be it hiring employees, distributing payroll, or taking care of expenses, we are there to assist you at every step. Partner with us and start your global business without worries.
Market Access – Relying on the professional expertise of an Employer of Record is the best way to enter an unknown market quickly. By using EOR services, an international organization can avail the expertise of Spanish employees to work for its company. Besides quick access to the Spanish market, the employer of record also enables the client to ease off worries related to payroll and HR.
In Country Laws – It is hard to ignore the importance of regulations and compliance in a foreign country. If you are operating a business in Spain, you need to be well aware of the payroll and taxation rules. With Spain Employer of Record services, a company can hire a foreign individual or local employees and deal with the complexities of the country’s rules. Be it income tax, social security contribution, expanse management, withholding charges, or business tax, an EOR or PEO company takes care of it all with total compliance.
Diverse Solutions – No matter whether you already have a company in an international location or you are going to establish the one, an employer of record can help you significantly. The employer of record Company can hire staff on your behalf without setting up a subsidiary in Spain. If your firm is already operating, using EOR for managing payroll tasks can be a great idea as they can present an effective solution to tax and accounting responsibilities in the country.
Why Infotree Global Solutions?
Infotree Global helps you with overseas business expansion by providing payroll and employer of record services in Spain. We assist you to have your employees on board to fulfill your business needs without establishing a local division in Spain. When you use our services, you are able to accelerate your business globally without worrying about legal formalities and delays. A team of experts is designated to work on your behalf to perform all your in-country tasks in compliance with local labor laws.
If you have expansion in mind and want to know more about how Infotree Global Solutions can provide an employer of record solution for your company, connect with us.