An Employer of Record (EOR) is the legal employer for workers. It handles HR responsibilities like payroll, taxes, and compliance while the company directs the employees’ day-to-day tasks. This setup allows businesses to hire globally without establishing a local entity.
Hiring workers from Spain offers benefits due to the country’s highly educated workforce and its position as a gateway to both European and Latin American markets. Spain is known for its talent in technology, tourism, and renewable energy sectors. The country’s recent introduction of the digital nomad visa has also made it an attractive destination for remote workers and startups.
Employment in Spain has been improving recently, with the unemployment rate decreasing. According to recent data, Spain’s labor market is becoming more flexible, with an increasing number of skilled professionals entering the workforce. The country’s emphasis on education and vocational training has resulted in a pool of well-qualified candidates across various sectors.
To use an EOR in Spain, there are 6 basic steps to ensure you are set up properly:
- Find talent to hire in Spain
- Compare using an EOR to setting up a legal entity in Spain
- Get the information needed from your talent
- Choose an EOR provider with expertise in Spain
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR manages payroll, taxes, and benefits administration, ensuring compliance with local laws and regulations, thus simplifying the employment process for companies.
Different labor laws in Spain, such as those governing work hours, termination processes, and mandatory benefits, must be considered when hiring remotely. The hiring process in Spain involves identifying talent, ensuring compliance with local employment laws, and executing contracts, typically facilitated by an EOR for companies without a local presence.
1. Find talent to hire in Spain
Businesses should leverage a combination of local and international platforms to find talent to hire in Spain. LinkedIn remains a crucial tool for talent acquisition, allowing companies to search for candidates actively seeking opportunities and to headhunt passive candidates.
Local job boards like InfoJobs and Infoempleo are popular among Spanish job seekers and offer extensive listings across various industries. These platforms are particularly useful for finding candidates with specific skills and experience relevant to the Spanish market.
Industry-specific job boards and professional associations can be valuable resources for specialized roles. For example, the Spanish Association of Information Technology and Communications (AETIC) is a good platform for finding IT talent.
Recruitment agencies with expertise in the Spanish market, such as Adecco and Randstad, can provide tailored solutions for companies seeking to navigate the complexities of hiring in Spain, especially in light of the country’s collective bargaining agreements.
2. Compare using an EOR to setting up a legal entity in Spain
When working with employees in Spain, you need to consider working with an EOR to set up your own legal entity. An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Spanish market or expand quickly without significant upfront investment.
An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows companies to start operations in weeks, compared to the months required to establish a legal entity.
On the other hand, setting up a legal entity in Spain offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
Here’s a comparison of key factors:
| Factor | Employer of Record | Setting Up Legal Entity in Spain |
|---|---|---|
| Setup Time | 1-2 weeks | 2-3 months |
| Initial Cost | Low (typically only employee costs) | High (significant registration fees and capital requirements) |
| Ongoing Cost | Moderate (EOR fees + employee costs) | Variable (operational costs, compliance, etc.) |
| Complexity | Low (EOR handles most administrative tasks) | High (requires understanding of Spanish business laws) |
| Control over Operations | Limited (company directs daily work, EOR handles employment) | Full (complete control over all aspects of business) |
| Compliance Management | Handled by EOR (payroll, taxes, social security) | Company Responsibility (requires local expertise) |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) |
| Local Expertise Required | Minimal (EOR provides guidance) | Extensive (need for local legal and tax advisors) |
| Suitable for | Market entry, testing Spanish market, short to medium-term projects | Long-term presence, full operations, strategic expansion |
| Risk | Lower (EOR assumes employer liabilities) | Higher (company bears all legal and financial risks) |
3. Get the information needed from your talent
To hire employees in Spain, you need some information about them. Typically, you’ll need the following essential personal information:
- Employee’s full name
- National Identity Number (DNI) or Foreigner Identification Number (NIE)
- Address
- Date of birth
- Bank account details for salary payments
Additionally, you’ll need a comprehensive job description, including title, duties, and place of work. Employment contracts in Spain should detail the contract type, start date, salary, work hours, and other employment conditions.
It’s important to note that employment contracts must be in writing and Spanish. The contract should include details on remuneration, work hours, holiday entitlement, and notice period for termination.
4. Choose an EOR provider with expertise in Spain
When choosing an EOR provider to work with in Spain, it is crucial to select one with deep expertise in the Spanish market and a strong understanding of local labor laws to ensure compliance and smooth business operations.
Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance in Spain. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as visa and work permit support, employee benefits management, and payroll processing. It’s important to choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in Spanish labor laws, including collective bargaining agreements.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. Evaluate their pricing models, look for transparency in fees, and assess the cost-effectiveness of your business.
What are the best EOR providers to use in Spain?
Here’s a table listing the top EOR providers for Spain and why each was selected:
| EOR Provider | Why It’s a Good Fit for Spain |
|---|---|
| Deel | Extensive experience in European markets, strong compliance support for Spanish labor laws, and expertise in managing collective bargaining agreements |
| Remote | User-friendly platform for managing employees in Spain, offers specialized knowledge of Spanish labor laws and provides support for remote work arrangements |
| Rippling | Robust payroll and HR platform, offers detailed guidance on Spanish employment regulations, and provides support for equity compensation |
| Oyster HR | The competitive pricing structure offers dedicated support for navigating Spain’s complex regulatory environment and provides flexible solutions for various business sizes |
| Remofirst | Competitive pricing structure offers dedicated support for navigating Spain’s complex regulatory environment and provides flexible solutions for various business sizes |
These EOR providers offer services tailored to the unique challenges of hiring in Spain, including compliance with local labor laws, management of collective bargaining agreements, and navigating the complex Spanish business environment.
5. Communicate your hiring needs to the EOR
Communicating your hiring needs to the EOR to ensure the process aligns with your company goals and legal requirements is important. Provide a detailed job description, including the title, responsibilities, required qualifications, and skills.
Specify the job’s expected start date, location (including whether it’s remote or onsite), and any specific requirements related to Spanish labor laws or collective bargaining agreements. Outline the proposed salary, bonuses, commission structures, and other compensation benefits, keeping in mind Spain’s cultural norms and expectations.
Clarify the contract terms, including whether it’s a full-time or part-time position, and detail the working hours, including any flexibility or shift requirements. Discuss your company culture, growth plans, and how the position fits into future expansion in the Spanish market.
By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance with Spanish labor laws and collective bargaining agreements.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with Spanish labor laws and employment practices.
The EOR drafts employment contracts that comply with Spanish labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements.
If necessary, the EOR assists in obtaining work visas for non-EU employees, collects personal and bank account information for payroll, and outlines the onboarding procedures under Spanish employment laws. They’ll ensure your company complies with collective bargaining agreements and other local regulations, adjusting contracts and practices as laws change.
Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture, ensuring a smooth start for your new Spanish-based employees.
What help does an EOR provide in Spain’s payroll, taxes, and benefits administration?
The EOR will support Spain’s payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles social security contributions.
For payroll, the EOR manages regular pay periods, typically monthly in Spain, and ensures compliance with the mandatory 14 salary payments per year (12 monthly payments plus two extra payments, usually in July and December). They handle year-end reporting and ensure all payroll-related documentation is maintained as per Spanish labor law.
In terms of taxes, the EOR manages personal income tax deductions, which in Spain are progressive and range from 19% to 45%, depending on the income bracket. They also handle social security contributions, typically around 6.35% for employees and 29.9% for employers.
For benefits, the EOR typically administers mandatory benefits such as paid vacation time (minimum 30 calendar days per year), sick leave, and maternity/paternity leave. They may also manage other benefits such as private health insurance, pension plans, and meal vouchers, which are common in Spanish employment packages.
What labor laws do you need to consider when hiring in Spain?
When hiring in Spain, a few key labor laws must be considered. Spain’s approach to labor laws generally protects employee rights, emphasizing collective bargaining agreements and specific leave entitlements.
Employment contracts
The Workers’ Statute governs employment contracts in Spain and must be in writing. Key elements that must be included are:
- Job title and description
- Compensation details
- Hours of work
- Leave entitlements
- The notice period for termination
It’s important to note that temporary contracts are heavily regulated in Spain, with strict rules on their duration and renewal.
Working hours and paid holidays
The standard work week in Spain is 40 hours, typically distributed over five days. Spain observes 14 public holidays annually, which are paid days off for employees. Employees are entitled to at least 30 calendar days of paid vacation per year.
Taxes
Spain operates a progressive personal income tax system. Employers are responsible for withholding and remitting these taxes to the relevant tax authorities.
Severance pay
Severance pay in Spain depends on the contract type and the reason for termination. For unfair dismissals, severance pay can be up to 33 days’ salary per year of service, with a maximum of 24 months’ pay.
Collective bargaining agreements
Collective bargaining agreements play a significant role in Spanish labor law. These agreements can set terms for entire industries or specific companies, often providing more favorable conditions than the statutory minimums.
Here’s a summary of these key labor laws:
| Labor Law | Key Points |
|---|---|
| Employment Contracts | Must be written, include job details, compensation, and working hours |
| Working Hours | 40-hour standard work week, 14 paid public holidays |
| Paid Holidays | Minimum 30 calendar days of paid vacation per year |
| Taxes | Progressive personal income tax system |
| Severance Pay | Depends on contract type and reason for termination |
| Collective Bargaining Agreements | Can set industry-wide or company-specific employment terms |
How does the hiring process work in Spain?
Employers typically follow a structured process when hiring staff in Spain while adhering to local labor laws and cultural norms. The process usually involves:
- Defining the job requirements and creating a job description
- Advertising the position through various channels, including local job boards and LinkedIn
- Reviewing applications and resumes
- Conducting initial screenings, often via phone or video calls
- Holding in-person or virtual interviews with shortlisted candidates
- Performing background checks and contacting references (with the candidate’s permission)
- Making a job offer to the selected candidate
- Negotiating terms and finalizing the employment agreement
- Completing required documentation, including registering the employee with social security
- Onboarding the new employee
Throughout this process, employers must ensure compliance with Spanish labor laws, including the requirement for written employment contracts and adherence to relevant collective bargaining agreements. It’s also important to be aware of cultural sensitivities and norms in Spain, such as the importance of personal relationships in business settings and work-life balance.
Is Spain a relatively easy country to hire employees remotely through an EOR?
Yes, Spain is becoming an increasingly accessible country for hiring employees remotely through an Employer of Record (EOR). The country’s well-educated workforce, improving digital infrastructure, and recent introduction of the digital nomad visa make it an attractive destination for remote hiring.
Here are five pros and three cons for hiring employees in Spain:
Pros
Cons
Despite these challenges, the benefits of accessing the Spanish talent market often outweigh the complexities, especially when working with an experienced EOR provider who can navigate the intricacies of Spanish employment laws and practices. The country’s growing focus on innovation and technology and its high quality of life make it an attractive option for companies looking to build diverse, talented teams.
