Do you want to hire an employee in Spain without a legal entity but need Spanish payroll? IPS can help you hire and pay employees in Spain in compliance with the law, even without a Spanish branch or permanent establishment.
There are 2 ways you can hire someone in Spain without a permanent establishment:
- Employer of Record (Spain) – here your employee is hired directly by us and deployed to you full time. This is also known as employee leasing in Spain.
- Direct employment in your company but with payroll according to Spanish law by registering your company as a foreign employer.
Both employment options offer its advantages and disadvantages. Contact us to find out which one suits your project better. We will be happy to advise you and find the best solution for your company.
IPS is your global payroll solution for a successful and fast international expansion without a permanent establishment.
Remote Work Full Time from Spain – Information for Hiring Employees in Spain
To ensure that you succeed abroad right away, IPS is here as your international payroll partner to assist you in hiring your employees correctly in Spain and preparing Spanish payroll in compliance with the laws of the country. Below is some data to help you understand the Spanish payroll system.
The social security system in Spain
If you have an employee living in Spain, he/she must be insured under local law (even if the employer is not in Spain). Part of the social security system in Spain is coverage for illness, injury and accidents at work, unemployment, and maternity and paternity leave. Also included is access to a state pension and other retirement benefits.
If you do not have an office in Spain, you will need a service like IPS’s to calculate and pay these social benefits correctly according to Spanish law. With international payroll services in Spain from IPS, you ensure that your employee is payrolled compliantly according to Spanish law.
Costs to the employer
If you want to hire and pay an employee in Spain, the non-wage costs for an employer are between 29 and 32% on the gross salary up to the contribution ceiling of € 4070.10. These are put together as follows:
- Pension and health insurance:
- Unemployment insurance:
- Vocational training levy:
- Wage guarantee fund:
- Work accident insurance:
Salary and bonuses
The annual salary is usually paid in 14 monthly salaries, with additional monthly salaries paid in the summer and at Christmas. If otherwise stipulated in the employment contract, the salary can also be paid in 12 monthly salaries.
Through our international payroll management, we ensure that you do not pay more than you have budgeted for!
Labor Law in Spain
Collective agreements are one of the most important legal sources for Spanish employment contracts. Usually, government templates are also used for employment contracts, which are updated regularly. Special regulations are therefore uncommon, as the templates already contain comprehensive provisions on the employment relationship. An employment contract must be registered with the labor authority.
- Fixed-term employment contracts are only possible under strict legal exceptions.
- A working week consists of 40 hours, with working hours from Monday to Friday.
- There are 14 paid public holidays in Spain. As a rule, a Spanish employee has at least 22 working days of paid vacation.
- Additional paid leave is covered by collective bargaining agreements, but is often paid in the event of death, marriage or hospitalization of close relatives.
- In case of absence from work due to illness, the employer is obliged to continue paying salary until the 15th day. After that, the social insurance takes effect. The illness must be confirmed by a doctor.
As your international payroll accountant in Spain, we ensure that you only pay what is necessary and recover the rest from social security.
Termination and severance pay
There is a notice period of 15 days for both parties.
In the case of individual dismissals, there must be economic, technical, organizational or production reasons. There are exceptions in the form of person-related reasons and absences due to illness above a certain amount.
In the case of wrongful termination, a severance payment of 33 days’ wages per year of service, up to a maximum of 24 months’ wages, is granted.
In the event of a lawful termination, severance pay of 20 days’ wages per year of service, up to a maximum of 12 months’ wages, will be provided.
As your international payroll company in Spain, we ensure that your employee is hired and payrolled correctly according to Spanish law.