Are you considering expanding your company’s operations to Spain?
Expanding into new markets is a great way to broaden your talent pool and further grow your business; however, growth does not come without obstacles. Employers must understand and adhere to local labor laws in each country they operate in to avoid costly compliance issues.
Although Spain has various labor laws that employers must understand and follow, here are some of the common laws you need to know when considering outsourcing employees and expanding to Spain.
Spain labor laws
Like much of the rest of Europe, Spanish labor laws are an amalgamation of multiple different statutes, decisions and practices. The 17 regions of Spain are technically autonomous communities with a modicum of their own power to regulate employment and guidance over matters such as public holidays; however, most employment legislation is a national matter.
The Estatuto de los Trabajadores, or “Workers Statute,” is the key piece of legislation governing employment. It regulates individual and collective employment relations. This legal principle is also buffered by collective agreements, employment contracts and other legislation including:
- The Spanish Constitution (December 17, 1978)
- Law 31/1995 on Work Risk Prevention
- Law 5/2000 on Labour Infractions and Sanctions
- Law 3/2007 on Equality between Men and Women
- Royal Decree law on urgent measures to reform the labor market (February 10, 2012)
- Law 3/2012 of on urgent measures for labor reform (July 6, 2012)
- Royal Decree law 16/2013 on measures to improve hiring
- Royal Decree 2/2015 on Statute of Workers
- Royal Decree 8/2015 on Social Security
1. Employment contracts
In Spain, it’s legal for an employment contract to be verbal or written. However, a written work contract is typically required if there is an additional statute, either party makes a formal request, or if the work is to be conducted over a specified period of time that exceeds a month.
For employers hiring in Spain, having a written work contract is a smart way to protect both the business and the employee. But there are also cases where it’s legally required. Spanish employment contracts need to be in writing if the employee is a senior executive, an intern, a part-time employee
, or an employee working abroad. Either way, a written contract can and should clearly set job expectations and establish what the role entails.
Contract specifics notwithstanding, all employers are legally obligated to provide the following written statement detailing the essential employment conditions, including:
- Employer name and address
- The type of work
- Work schedule and hours of work
- Date of employment initiation (and termination date, if applicable)
- Holiday and sick leave
- Collective bargaining agreements
The Public State Employment Service also requires a copy of the contract within 10 days of its inception.
2. Spanish work hours
Like much of the rest of Europe, long workweeks are not common practice in Spain.
The Statute of Workers sets an upper limit of 40 hours worked per week on average. There is a maximum working day of nine hours, though those numbers may be subject to collective agreements or individual employment contracts.
Generally speaking, Spanish employees are entitled to a rest period of at least 12 hours between shifts—and it must be uninterrupted or else it resets. Similarly, almost all industries require workers to have a weekly period of rest that is at least a day and a half. So, for example, that would mean Sunday plus Monday morning or Saturday afternoon.
- Employees who work six hours uninterrupted are entitled to at least a 15-minute break.
- Employees under 18 may work eight hours per day but must be given a 30-minute break should their workday exceed 4.5 hours straight and weekends off.
- Work conducted between 10 p.m. and 6 a.m. is considered a night shift and requires premium pay (determined via collective agreement).
- Employees are restricted to 80 hours of voluntary overtime per year.
To avoid legal issues, employers are required to keep a meticulous record of the working hours employees logged, with the time of start and end for each employee. And these records must be maintained for at least four years.
3. Spanish minimum wage
Over the past decade, Spain has made a concerted effort to expand and raise its minimum wage. Between 2000 and 2020, the monthly minimum wage increased by approximately 60%, increasing from €600 to €965.
Today, the unofficial, though commonly practiced minimum salary for a full-time job is €1,108 gross per month. This is typically paid out over 14 installments each year, with double payments in July and December. Employees must be paid on a monthly basis at the least. Payment can be in the form of:
- Legal tender
- Bank deposit
That said, each industrial sector may have its own slightly different minimum salary due to collective bargaining agreements.
4. Spanish vacation and holiday
Spain places a notable emphasis on work-life balance. To that end, Spanish employees can enjoy both holiday leave and time off for public holidays.
A full-time worker is expected to take up 22 working days (30 calendar days) of paid holiday time each year. They have the option to divide it up or take it all at once; however, they’re required to have one extended period that’s at least two weeks long in total.
There are public holidays as well as local and regional holidays. And if a certain holiday occurs on a Sunday, the time off is automatically credited to the following Monday. National Spanish holidays include:
- New Year’s Day, “Año Nuevo” (January 1)
- Good Friday “Viernes Santo” (April 15)
- Labor Day, “Día del Trabajo” (May 1)
- Assumption of Mary, “Asunción de la Virgen” (August 15)
- Spain’s National Day/Columbus Day (October 12)
- All Saints’ Day, “Fiesta de Todos los Santos” (November 1)
- Spanish Constitution Day, “Día de la Constitución” (December 6)
- Immaculate Conception, “La Inmaculada Concepción” (December 8)
- Christmas, “Navidad” (December 25)
In addition to holiday pay, Spanish employees are entitled to sick pay for the first 15 days of absence. After that, the Sistema Nacional de la Seguridad Social will cover the rest.
But for this to apply, an employee must first undergo a medical examination by a doctor from the state health services. After they certify your illness or injury, you can stop working for a short time and claim an allowance for this temporary incapacity.
For extended non-work-related illness or injury, payments look like:
- Days 1-3 – No percentage of salary
- Day 4-20 – 60% of salary
- Day 21: 75% of salary (subject to social security)
Depending on the collective bargaining agreement, some employers may have to cover the difference between the social security provisions and the employee salary.
5. Employee termination
In Spain, there are a few platonic reasons why an employment contract might end, such as a two-party consent or established contract grounds. But then there are more common and potentially contentious cases where the employer wishes to conclude the work arrangement.
In that case, they must provide one of the following justifications according to the guidelines of Spanish employment law termination :
- Collective dismissal – This covers widespread layoffs across an entire company or within specific departments. For a company with less than 100 workers, 10 employees would be considered a collective dismissal.
- Individual objective dismissal – Although this is not commonly done—especially since Spanish courts tend to frown on such employment terminations—an employer may let go an employee because of:
- Employee incompetence
- Employee inability to adapt to a change in the role (so long as they have been provided adequate training and grace period)
- Economic, technical, production-related
,or organizational reasons
- Disciplinary dismissal – If an employee repeatedly violates the stipulations of their contract or fosters a hostile workplace, an employer has legal grounds to terminate the contract, and without severance.
For the first two reasons, an employee is entitled to severance pay. The standard severance pay is 20 days’ salary per year of service, with a 12-month limit. That is unless there is a previously established bargaining agreement with more generous remunerations. In either case, the severance pay is subject to taxes and social security contributions.
For a disciplinary dismissal, employees are not entitled to severance pay—unless a court adjudicates that they experienced unfair dismissal. In that case, they would then receive severance pay for 33 days’ salary per year of service, with a cap of 24 months’ pay.
In-country expertise can ensure labor law compliance
If you plan to hire workers in Spain, complying with the country’s labor laws is a matter of necessity. Failure to abide by Spanish law could result in costly penalties and fines.
Partnering with an in-country employment provider, one with local expertise on all the local laws and regulations, can help mitigate risk of noncompliance. Learn how an employer of record in Spain can help you ensure all your HR and payroll activities remain compliant as you expand operations.