How to Hire in Spain Using an EOR (Employer of Record)

Expanding your team into Spain is a strategic move for any business looking to tap into Southern Europe’s skilled workforce and dynamic market. However, the complexities of Spanish labour law, payroll systems, and regulatory compliance can make international hiring a challenging and time-consuming task, especially for companies without a legal entity in the country.

This is where an Employer of Record (EOR) becomes indispensable. By acting as the legal employer on your behalf, an EOR enables you to hire full-time employees in Spain quickly, compliantly, and without the need to open a local branch or subsidiary.

Key takeaways

• An Employer of Record (EOR) lets you hire employees in Spain without setting up a local entity.
• Spain has strict labour laws covering contracts, working hours, paid leave, and severance— EORs handle these compliantly.
• Native Teams offers fast onboarding, cost transparency, and a complete employment infrastructure in Spain.

Why use an EOR to hire in Spain?

Spain has become a key destination for international hiring, thanks to its large talent pool, high levels of education, and growing tech hubs in cities like Madrid, Barcelona, and Valencia. Despite these advantages, employment in Spain is governed by a comprehensive legal framework that can be difficult to navigate from abroad. Employment contracts must meet strict statutory requirements, payroll and tax filings are frequent, and employee protections are strong, particularly around dismissal and benefits.

An EOR simplifies this process by assuming the role of legal employer while you retain control over day-to-day work responsibilities. An EOR handles your every step to hiring, from drafting contracts and processing payroll to managing taxes and social contributions, allowing you to hire in Spain with full compliance and zero legal risk.

For companies entering a new market, launching a short-term project, or simply seeking to avoid the high costs and administrative burdens of setting up a local entity, partnering with an EOR is an efficient and compliant solution.

How EOR works in Spain: step-by-step guide

Using an Employer of Record in Spain enables international companies to bypass the need to set up a local legal entity while still hiring Spanish talent legally and compliantly. Below is a step-by-step overview of how this process works.

Selecting an EOR provider

The first step is identifying a reliable EOR provider with established infrastructure and legal expertise in Spain. Providers with on-the-ground experience and a strong understanding of Spanish labour law are essential to ensure compliant hiring and smooth day-to-day operations.

Defining the role and compensation structure

Once a provider is selected, the hiring company defines the job description, gross salary, and any other employment conditions. These terms are shared with the EOR to form the basis of a compliant employment contract in line with Spanish labour regulations.

Drafting and executing the employment contract

The EOR prepares an employment contract in Spanish, ensuring it meets all mandatory legal requirements, including working conditions, notice periods, salary details, and statutory benefits. Once reviewed and approved by both parties, the contract is signed by the employee and formally registered.

Employee registration and onboarding

The EOR registers the employee with local authorities, including Spain’s social security system, tax office, and labour authorities. This includes obtaining the necessary identification codes, such as the NIE (Número de Identificación de Extranjero) for non-Spanish nationals.

Ongoing employment and compliance

After onboarding, the EOR assumes responsibility for payroll administration, monthly tax and social security declarations, paid leave tracking, benefits management, and termination procedures if required. Meanwhile, the hiring company directs the employee's daily work and performance, retaining full operational control.

Hiring in Spain: What you need to know

Hiring employees in Spain involves adhering to a set of well-defined legal requirements designed to protect workers' rights. Below is an overview of the most important employment elements to understand before entering the Spanish market.

Working hours

The standard working week in Spain consists of 40 hours, typically spread over five days. Daily working hours should not exceed nine, although collective agreements may allow for flexibility. Spanish law also mandates a minimum daily rest period of 12 hours between shifts and a weekly rest period of at least one and a half days.

Overtime is permitted but regulated. It must not exceed 80 hours per year, excluding hours compensated with additional time off. Compensation for overtime must be clearly stated in the employment contract or relevant collective agreement.

Paid leave

Employees in Spain are entitled to 30 calendar days of paid annual leave, usually equivalent to 22 working days. This leave must be used within the calendar year and cannot be replaced by payment except in the case of termination.

In addition to annual leave, Spain observes 14 public holidays, although this may vary by autonomous community. Other types of paid leave include maternity/paternity leave, sick leave, and time off for personal or family emergencies, all regulated under national and regional law.

Minimum salary

As of 2025, the national minimum wage (Salario Mínimo Interprofesional) is set at €1,134.00 per month if paid over 14 instalments (the traditional Spanish format), or €1,323.00 if paid over 12. These figures reflect the legal minimum that must be paid for full-time employment.

Many industries in Spain are also subject to collective bargaining agreements (CBAs), which may stipulate higher minimum salaries, role-specific pay bands, or additional benefits that must be applied.

Contracts and termination

Spanish labour law favours permanent employment relationships. Most employment contracts are indefinite unless justified under specific legal grounds. Fixed-term contracts are only valid for temporary roles and must be clearly defined in scope and duration.

Termination procedures are regulated and vary depending on whether the dismissal is disciplinary, objective (e.g. economic or organisational reasons), or mutually agreed. In many cases, employees are entitled to 15 days’ notice and severance payments based on their tenure and the reason for termination. For instance, unfair dismissal may require 33 days’ salary per year worked, up to a maximum of 24 months.

Social security and taxes

Spain operates a comprehensive social security system funded by both employer and employee contributions. Employers typically contribute approximately 30% of the employee’s gross salary, while employees contribute around 6.35%.

These contributions fund pensions, healthcare, unemployment benefits, occupational risk insurance, and other public welfare programmes. The EOR is responsible for making all required contributions and submitting monthly filings to Spain’s social security and tax authorities.

Income tax (IRPF) is withheld monthly by the employer based on the employee’s salary, personal circumstances, and applicable deductions. Tax rates in Spain are progressive and vary by region, but generally range from 19% to 47% in 2025.

Probationary periods and performance reviews

Most employment contracts include a probationary period, which must be defined in writing. The length of this period is typically two to six months, depending on the role and level of responsibility. During this time, the termination process is simplified, although employees still retain certain legal protections.

Regular performance reviews are not mandatory under Spanish law but are increasingly used by companies to support employee development and document any concerns related to performance, particularly in cases of objective dismissal.

Additional employment considerations

Employers should also be aware of Spain's 13th and 14th-month salary practices, common in many employment agreements. These extra payments—usually one in summer and one in December—are often stipulated in CBAs or included in the gross salary if paid monthly over 12 instalments.

Employers must also comply with local occupational health and safety laws, anti-discrimination regulations, and data protection requirements under the EU’s General Data Protection Regulation (GDPR), which applies to all employment-related data.

You can also read Spain’s hiring guide to get more comprehensive knowledge on Spanish employment rules and regulations.

Comparing top EOR providers in Spain

When selecting an EOR, factors such as onboarding speed, cost structure, compliance expertise, and local support are critical. Below is a comparison of leading EOR providers operating in Spain:

Legal and compliance risks when hiring in Spain with an EOR

While an Employer of Record significantly reduces the legal risks associated with hiring in Spain, it is not a complete exemption from responsibility. Businesses must still understand the underlying legal frameworks and ensure that their EOR partner is operating in full compliance with Spanish labour, tax, and data protection laws. Below are some of the most common areas where legal and compliance risks can arise.

Misclassification of employment

Even when hiring through an EOR, it's essential to maintain a clear distinction between employees and independent contractors. Misclassifying an employee as a contractor—intentionally or otherwise—can result in significant penalties, including back payment of wages, taxes, and social security contributions, as well as administrative fines.

Spanish labour law has historically restricted worker leasing only to licensed Empresas de Trabajo Temporal (ETTs), making generic EOR models legally precarious unless structured to align with EU jurisprudence.  

Although the EOR acts as the legal employer, the hiring company retains operational control over the individual. If that control mirrors the structure of an employee-employer relationship but the worker is engaged as a contractor, Spanish authorities may intervene. Proper classification and documentation are critical to avoiding scrutiny from the Labour Inspectorate (Inspección de Trabajo y Seguridad Social).

Non-compliance with Collective Bargaining Agreements (CBAs)

Many sectors in Spain are governed by collective bargaining agreements that specify working hours, compensation structures, bonuses, leave entitlements, and other employment terms. These agreements are legally binding and apply whether or not the employer (or EOR) is a direct signatory.

An EOR that fails to apply the correct CBA or misinterprets its terms may inadvertently breach labour laws. Employers should ensure their EOR partner has sector-specific expertise and the ability to apply the correct agreement based on the employee’s role and location.

Inadequate termination processes

Spanish dismissal procedures are detailed and highly regulated. Whether the termination is disciplinary, objective, or mutually agreed, it must follow a legally defined process and timeline. Failure to comply can result in a ruling of unfair dismissal, entitling the employee to severance payments significantly higher than the statutory minimum.

Even with an EOR in place, the initiating company may be involved in performance reviews or decisions related to dismissal. If these steps are not properly documented and legally justified, liability may arise despite the EOR's involvement. This is particularly relevant in terminations based on performance or business restructuring.

Delays in payroll, tax filings, or social contributions

Timely payroll processing and accurate submission of tax and social security contributions are non-negotiable under Spanish law. Delays—even minor ones—can lead to interest charges, fines, or audits. Employers must verify that their EOR partner has systems in place to manage all reporting obligations and meet monthly and annual submission deadlines.

This includes income tax withholding (IRPF), registration of new hires with the Social Security General Treasury (TGSS), and compliance with electronic payslip requirements.

Data protection breaches

Spain is subject to the EU’s General Data Protection Regulation (GDPR), which imposes strict obligations on the processing of employee data. Any personal data collected during hiring, onboarding, payroll, or performance evaluations must be handled in accordance with GDPR principles of transparency, consent, and data minimisation.

While EORs typically manage these responsibilities, the hiring company may still be regarded as a joint controller under GDPR, particularly if it processes or stores any employment-related data. Companies must ensure that their EOR has clear data handling policies and proper safeguards, such as encryption and restricted access protocols.

Misalignment of day-to-day control

An often overlooked risk in EOR arrangements is the potential misalignment between the legal employer (the EOR) and the operational employer (the client). While the EOR holds the formal employer status, excessive involvement by the client in HR decisions—such as issuing warnings, approving leave, or altering compensation—can blur the lines of authority and raise questions about the legitimacy of the EOR structure.

To mitigate this, it's important to clearly define responsibilities in the service agreement and ensure communication between the client and EOR remains coordinated and legally aligned.

Cost breakdown: What you'll pay as an employer

To illustrate what employing someone in Spain through an EOR may cost, let’s consider a scenario in which an employee earns a gross monthly salary of €3,000.

In addition to the salary, the employer is responsible for social contributions, which typically add around 30% to the gross salary, and an EOR service fee. Assuming a €450 EOR fee, the breakdown would look as follows:

• Gross salary: €3,000
• Employer social contributions (~30%): €900
• EOR service fee: €450
• Total monthly cost: €4,350

While this is an approximation, actual costs can vary based on region, seniority, and the benefits package provided.

Benefits of hiring in Spain with Native Teams as your EOR

Choosing Native Teams as your Employer of Record partner in Spain ensures a streamlined and compliant hiring process. Native Teams offers expert knowledge of Spanish labour law, fast onboarding, and a transparent pricing model with no hidden fees. Beyond compliance, your Spanish hires benefit from localised HR support, timely payroll, and access to statutory and optional benefits, ensuring a positive employment experience that reflects your brand values.

Conclusion

Hiring in Spain through an Employer of Record offers an efficient, legally compliant path to entering one of Europe’s most attractive labour markets. Whether you're looking to establish a remote team, build a regional presence, or support one key hire, an EOR like Native Teams removes the barriers and gives you the flexibility to grow quickly, without the red tape.

FAQs about EOR in Spain

Can I hire contractors in Spain instead of using an EOR?
While it's legally possible to engage independent contractors in Spain, there is a high risk of misclassification if the contractor works under conditions similar to an employee. Misclassification can result in fines, back pay, and mandatory employment contracts.

What’s the difference between EOR and PEO?
An EOR becomes the legal employer and assumes full compliance responsibility. A PEO (Professional Employer Organisation), by contrast, typically requires you to have a local legal entity and shares employment responsibilities through a co-employment model.

Is EOR legal in Spain?
Yes. EOR services are fully legal in Spain, provided they comply with local employment law and employee protections.

How long does onboarding take in Spain?
With Native Teams, onboarding in Spain can be completed swiftly, depending on the complexity of the role and required documentation.

What benefits are mandatory in Spain?
Mandatory benefits include social security contributions (health, pension, unemployment), paid annual leave, public holidays, and severance pay depending on dismissal conditions.

Can an EOR manage remote employees in Spain?
Yes. EORs are ideal for managing remote employees, ensuring they are fully registered and supported regardless of their location within Spain.