Payroll & Employment Guide Spain

Employment contracts in Spain define all the terms and conditions of employment. They can be either written or verbal, though certain types must always be provided in written form.

Notice periods: From 15 to 30 days, depending on the termination reason.

Termination of employment: Termination in Spain is strictly regulated. It is not an "at-will" employment environment; employers must justify dismissals.

Types of dismissal & notice periods

1. Objective dismissal:
   • Grounds: Economic, technical, organisational, or production-related reasons.
   • Notice: 15 days' written notice (or pay in lieu).
   • Severance: 20 days’ salary per year of service (capped at 12 months).
2. Disciplinary dismissal:
   • Grounds: Severe misconduct (absenteeism, insubordination, breach of contract).
   • Notice: No statutory notice required (unless CBA specifies).
   • Severance: None (unless ruled unfair by a court).
3. Collective dismissal (ERE):
   • Grounds: Affecting a significant portion of the workforce (e.g., >10% in companies with 100-299 employees) within 90 days.
   • Process: Requires a consultation period with employee representatives.
   • Severance: Minimum 20 days’ salary per year of service (capped at 12 months).

Unfair dismissal consequences: If a court declares a dismissal unfair:

• Reinstatement: With back pay; OR
• Compensation: 33 days’ salary per year of service (capped at 24 months).

Resignation: Employees must provide notice as stipulated in the contract. Under the Consulting CBA, the requirement is 15 working days. Failure to provide notice allows the employer to deduct the equivalent amount from the final settlement.

Probation period termination: During the probation period, either party can terminate the contract without notice and without severance pay, provided the decision is not discriminatory.

Employers in Spain are typically required to provide health, pension, unemployment, and disability benefits, as well as paid time off. Many of them also offer extra perks to stay competitive in the job market. Understanding both of them is essential to attracting and retaining talent.

• Mandatory benefits: Health, pension, unemployment, and disability benefits.
• Common perks: Remote work allowance (€18.21/month), daily travel allowance (€58.92/day), meal vouchers, transport reimbursements, and others.
• Leave policies: Paid leave, sick leave, maternity/paternity leave.

Mandatory social security: Employers and employees contribute to the social security system, covering healthcare, unemployment, and pensions.

Remote work support: Under Law 10/2021, if remote work exceeds 30% of working time:

• Expenses: Employers must compensate for expenses incurred (as detailed in the employment agreement or CBA).
• Equipment: Employers must provide and maintain all necessary means and tools.

Consulting & market research CBA benefits: For companies falling under this specific Collective Bargaining Agreement (CBA), additional benefits apply:

• Training grant: An annual grant to support education and skill-building relevant to the role.
• Travel allowances: Specific per diems for professional travel. Allowances are adjusted based on overnight stays and duration.

Leave entitlements:

Annual leave: Employees are entitled to a minimum of 30 calendar days (or 22 working days) of paid vacation per year.

• At least one vacation period must span a minimum of two weeks.
• Employees unable to take leave due to sickness can use their entitlement after recovering (within 18 months).
• Spain observes 14 public holidays annually (national, regional, and local).

Sick leave (temporary incapacity): Allowances vary based on the cause of the illness:

• Non-work-related illness/accident:
  • Days 1–3: No salary (0%).
  • Days 4–20: 60% of the contribution base.
  • Days 21+: 75% of the contribution base.
• Work-related accident: 75% of the contribution base from the day after the accident.

Parental leave (maternity & paternity): Spain offers equal, non-transferable leave for both parents.

• Duration: 16 weeks for each parent.
  • Mandatory: The first 6 weeks must be taken immediately after birth.
  • Remaining 10 weeks: Can be taken consecutively or intermittently within the first year.
• Allowance: 100% of the regulatory base salary (paid by Social Security).
• Job protection: Returning employees are entitled to the same position.

Other paid leaves

• Marriage: 15 calendar days.
• Bereavement: 2 working days (4 if travel is required).

Relocation: 1 day.

Spain has a comprehensive tax and social contribution system that employers must comply with. Employers must withhold personal income tax from employees’ salaries and make mandatory contributions to social security schemes. Additional rules may apply to royalties, dividends, and VAT for business operations.

Personal income tax rate: From 19% to 47%.

VAT: 21%

Tax allowances: Personal allowance, family allowances, disability allowance, home purchase, and others.

Additional tax reliefs: R&D&I deductions, film production deductions, employment creation, and others.

Employees in Spain must receive 12 monthly salaries per year, in accordance with the terms outlined in their employment contracts. Employers must comply with the national minimum wage, withhold income tax, and deduct social security contributions from the employee’s gross salary.

Timely salary payments and accurate payslips are mandatory to remain compliant with Spanish labour laws.

Salary structure: Remuneration includes cash and in-kind benefits (in-kind cannot exceed 30% of total salary).

• Extraordinary payments (pagas extraordinarias): Spanish law mandates two extra payments annually, typically in July and December. Each is generally equivalent to one month's salary.
  • Note: Salaries are often distributed in 14 payments (12 monthly + 2 extra).

Payment timing: Monthly, accompanied by a payslip.

Minimum wage: The government reviews the minimum guaranteed interprofessional wage periodically based on CPI, productivity, and the economic outlook. Collective agreements may establish higher minimum thresholds for specific professional groups.

Salary payment deadline: The last working day of the month

Taxes and contributions payment deadline: Contributions are paid monthly in arrears, and taxes are paid quarterly.

Payroll declarations deadline: Social security contributions must be submitted before the 20th of each month, and the taxes must be presented the next month after the quarter ends.

Payroll currency: Euro

Other payroll-related details:

• Social security contributions - Intergenerational Equity Mechanism (MEI): Employer contribution 0.75%
• Solidarity contribution (employer portion) - applied to salary portions above the maximum contribution base:
  • 1st bracket: 0.96%
  • 2nd bracket: 1.04%
  • 3rd bracket: 1.22%

Spanish labour laws are mainly defined by the Workers’ Statute (Estatuto de los Trabajadores), and they cover employment aspects such as working hours, paid leave, minimum wage, and termination rights. In addition, many industries are regulated by collective agreements, which establish more specific and favourable conditions.

Employers must be familiar with both general frameworks and sector-specific obligations to stay compliant.

Total employment cost:

• Employers’ contributions: 30.48%
• Employees’ contributions: 6.47%

Minimum wage: €1,381 per month

Probation period: From 2 to 6 months

Working hours: In Spain, the standard workweek is 40 hours, aiming to balance work commitments and personal time.

• Daily limits: Employees cannot work more than 9 hours per day.
• Rest periods:
  • Daily rest: A minimum of 12 hours between the end of one workday and the start of the next.
  • Weekly rest: At least one and a half days of uninterrupted rest (typically Sunday and Saturday afternoon).
• Breaks: If the workday exceeds 6 continuous hours, a break of at least 15 minutes is mandatory.
• Overtime:
  • Limited to 80 hours per year.
  • Generally voluntary (unless force majeure).
  • Compensated by a premium rate (min. 75% higher) or equivalent paid time off within four months.
• Registration: Employers must keep detailed records of all working hours to ensure transparency (Law 8/2019).

Night work

Defined as work performed between 10 PM and 6 AM. Night workers have specific protections, including limitations on hours and mandatory health checks

Foreign citizens who want to reside and work in Spain must obtain an appropriate work visa or residence permit, depending on their nationality, job role, and length of stay. The type of permit, documentation, processing time, and fees vary based on whether the applicant is from an EU/EEA country or a non-EU country.

Types of permits: EU Blue card, Highly qualified worker visa.

Process length: Two to three months

Process cost: €2000

Partnering with an EOR in Spain enables you to hire employees locally without the need to establish a legal entity. The EOR becomes the legal employer and takes over responsibilities such as:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

PEO services in Spain offer HR and administrative assistance while you retain full legal responsibility as an employer. These services are a great fit for companies with existing legal entities in Spain that need help managing operations, such as:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides payroll calculators that are adapted to the local labour laws of Spain. Using our calculator, you can easily estimate net and gross salaries, as well as contributions, taxes, and other mandatory deductions in Spain.

Here is a list of public holidays in Spain: