How to hire employees in Spain

Spain offers foreign companies a compelling entry point into Southern Europe. Skilled multilingual workforce, strong tourism and services sectors, strategic location connecting Europe and Latin America, and growing technology hubs in Madrid and Barcelona.

But cultural vibrancy doesn't mean regulatory simplicity.

Spain enforces comprehensive employment regulations with strict compliance expectations across collective bargaining agreements, mandatory social security contributions, and detailed labor reform requirements. Early missteps in contract structure, contribution calculations, or employee classification trigger costly disputes, regulatory penalties, and expansion delays that compound with every hire.

Hiring employees in Spain requires:

• Clarity on hiring models (entity vs. Employer of Record vs. contractor)
• Mandatory employer obligations under Spanish labor legislation
• Payroll tax structures and social security contributions
• Termination protections and notice requirements
• Legal distinctions separating compliant employment from misclassification risk

This guide walks you through each step: choosing the right hiring model, onboarding your first employee, managing payroll, navigating termination rules, and avoiding compliance traps that catch unprepared employers off guard.

Core truth: Hiring employees in Spain requires the right hiring model and strict adherence to local labor laws. One hire done wrong costs more than doing ten right.

What Are Your Employment Options When Hiring in Spain?

Before posting a job or signing an offer letter, decide how you'll employ talent. Foreign companies typically choose between three models: establishing a local entity, partnering with an Employer of Record (EOR), or engaging contractors. Each has distinct implications for compliance risk, cost structure, and operational control.

Entity setup → means full legal presence. Register a Spanish company (SL or SA), handle all employer obligations directly, and bear complete liability.

EOR hiring → outsources employment compliance to a third-party legal employer while you retain operational control.

Contractor engagement → treats individuals as independent service providers, not employees. But only when the relationship genuinely reflects independence.

The stakes are higher than they appear. Misclassifying an employee as a contractor triggers back taxes, social security penalties, and reclassification claims. Setting up a local entity in Spain for hiring costs €3,000–€10,000 total, including registration fees, notary services, legal counsel, accounting setup, and regulatory filings with the Commercial Registry and the Tax Agency (AEAT).

Choosing the wrong model doesn't just slow hiring. It creates legal exposure that compounds with every additional hire.

1. Hiring Through a Local Entity

Establishing a Spanish entity gives you direct control over employment, payroll, and benefits administration. You become the legal employer. Full responsibility for Spanish labor law compliance, tax withholding, social security contributions, and statutory filings.

This model makes sense when:

• You're committing to long-term operations in Spain
• Hiring at scale (typically 10+ employees)
• You need to own intellectual property and operational infrastructure locally

The trade-off: entity formation takes 2-4 months, requires ongoing legal and accounting support, and locks you into administrative obligations even if hiring slows.

2. Hiring Through an Employer of Record (EOR)

An EOR becomes the legal employer in Spain while you direct the employee's day-to-day work. The EOR handles employment contracts, payroll processing, tax compliance, social security administration, and statutory filings.

You maintain operational control. They absorb legal liability.

EOR hiring suits:

• Companies testing the Spanish market
• Scaling quickly (hires live in days, not months)
• Expanding into multiple countries without establishing entities everywhere

It's not a workaround. It's a legitimate employment model under Spanish law, ideal when speed, compliance assurance, and low upfront cost matter more than direct entity ownership.

3. Hiring Independent Contractors

Contractors are appropriate for project-based work, specialized services, or genuinely independent engagements. Spanish law distinguishes employees from contractors based on dependence, subordination, exclusivity, and the reality of the working relationship. Not what the contract says.

Misclassification happens when companies treat contractors like employees:

• Setting their hours and work schedules
• Providing equipment and workspace
• Directing how work is done
• Maintaining exclusive relationships

Local Entity Vs EOR Vs Independent Contractor: Side-by-Side Comparison

What Are The Legal Requirements for Hiring in Spain?

Spanish employment law is governed by the Workers' Statute, labor reforms, and extensive collective bargaining agreements. Spain's regulatory framework emphasizes worker protection, collective negotiation, and detailed procedural requirements enforced by the Labor Inspectorate (ITSS).

Key employer obligations:

• Provide written employment contracts documenting essential terms
• Register employees with Social Security before the first working day
• Register the company as an employer with the Social Security General Treasury (TGSS)
• Make monthly contributions to social security (pension, health, unemployment, training, FOGASA)
• Withhold personal income tax (IRPF) according to progressive rates
• Maintain accurate payroll records and employee files
• Comply with applicable collective bargaining agreements (convenios colectivos)
• Provide mandatory occupational risk prevention measures
• Report employment contracts to the Public Employment Service (SEPE)
• Pay bonuses (pagas extraordinarias) twice annually

Employment relationships are presumed indefinite unless a fixed-term contract meets specific legal criteria. Probationary periods cannot exceed six months for qualified technicians, two months for other employees, or three months for companies with fewer than 25 employees.

Spain's enforcement environment is not theoretical. The Labor Inspectorate (ITSS) conducts regular workplace inspections. Employees can file claims through labor courts. Non-compliance with payroll or contract standards results in financial penalties, back-payment orders, and reputational damage.

The presumption favors employee protection, not employer flexibility.

What Are the Employment Contract Rules in Spain?

Written, locally compliant employment contracts are not optional. They're legally required.

While oral agreements are technically valid for indefinite full-time contracts, written documentation is mandatory for fixed-term, part-time, training, and distance work contracts. The contract must be in Spanish (or regional co-official language where applicable), signed by both parties, and registered with employment authorities.

Types of Employment Contracts

• Indefinite contracts are the default and strongly encouraged through labor reforms, providing incentives for permanent hiring. They continue until lawfully terminated by either party with proper notice and include full entitlements under Spanish law.
• Fixed-term contracts are strictly limited following the 2021-2022 labor reforms. Only two circumstances permit fixed-term hiring: 
  
  • Circumstances of production (temporary increase in activity, maximum 6 months extendable to 12 months)
  • Substitution of workers (covering absent employees). Improper use or exceeding duration limits converts contracts to indefinite status.
• Part-time contracts specify regular working hours less than comparable full-time work (less than the workday, week, month, or year), with pro-rata entitlements to benefits and leave. Part-time arrangements must specify the daily distribution of hours.
• Training and apprenticeship contracts combine work and education for young workers (typically ages 16-25, extendable to 30), with reduced social security contributions and specific training obligations.

Full-time employment typically follows a 40-hour workweek as established by statute, though many collective agreements set 35-38-hour workweeks.

Probationary periods allow employers to assess new hires with simplified termination rules during this window: a maximum of 6 months for qualified technicians, 2-3 months for others, depending on company size.

What to Include in an Offer Letter?

Employment offers must specify the job title, duties, reporting structure, and work location.

Essential contract elements:

• Employer and employee identification details
• Contract type (indefinite, fixed-term with specific justification, part-time, training)
• Start date and duration (if fixed-term)
• Job category and description per applicable collective agreement
• Work location and mobility clauses
• Gross annual salary (broken into 12 or 14 payments)
• Working hours and schedule
• Holiday entitlement (minimum 30 calendar days annually)
• Notice period requirements
• Applicable collective bargaining agreement
• Probation period (if applicable)

Clarity matters. Ambiguous job descriptions or vague compensation terms create disputes during performance reviews or terminations. Spanish labor courts interpret contract ambiguities in favor of employees.

NDAs and Confidentiality Agreements

Confidentiality clauses are enforceable under Spanish law, particularly when protecting trade secrets, client information, or proprietary processes. Intellectual property (IP) created during employment typically belongs to the employer for work-related inventions unless otherwise specified.

Post-employment non-compete clauses are valid but must meet strict requirements: maximum 2 years duration for technicians and 6 months for others, adequate financial compensation (typically 25-50% of prior salary), reasonable scope, and must protect legitimate business interests. Non-competes must be individually negotiated and agreed in writing.

Overly broad non-competes risk being struck down as unenforceable.

How Payroll Costs and Taxes Work in Spain?

Spain's labor costs are moderate within Western Europe. But only if you understand the full employer burden.

As of 2026, Spain's SMI (minimum wage) is €1,134 gross monthly across 14 payments (expected 3-5% rise post-January adjustment), mandating €15,876 gross annually for full-time workers. Typical total employer costs for mid-level hires range from €3,000 to €6,000 per month, including gross salary and mandatory contributions.

1. Payroll and Salary Structure in Spain

Salaries are quoted and paid in euros (€). Compensation typically includes base salary paid over 12 or 14 monthly payments (14 is standard, including two annual bonuses - pagas extraordinarias in summer and December), performance bonuses, and mandatory benefits.

Employers must meet SMI minimum wage and applicable collective agreement minimums, which often significantly exceed statutory minimums by job category.

2. Employer Payroll Obligations

Employers face mandatory social security contributions totaling 29.9-31.4% of the contribution base:

• Contingencias comunes (common contingencies): 23.60% for pension, health, and other benefits
• Unemployment (Desempleo): 5.50% general rate (temporary contracts 6.70%)
• FOGASA (Wage Guarantee Fund): 0.20%
• Professional training: 0.60%
• Occupational accidents and diseases: 1.00-8.50% depending on industry risk classification

Total employer burden typically ranges 29.9-31.4% above contribution base (capped at maximum contribution bases per category).

These contributions sit on top of the employee's gross salary. Not embedded within it.

3. Employee Tax Contributions

Employees face significant deductions withheld at source:

• Social security contributions: ~6.35% of contribution base (4.70% common contingencies, 1.55% unemployment, 0.10% training)
• Personal income tax (IRPF): Progressive rates varying by region (19-47% national scale plus regional adjustments)

Income tax brackets (national scale) (2026):

• €0 – €12,450: 19%
• €12,451 – €20,200: 24%
• €20,201 – €35,200: 30%
• €35,201 – €60,000: 37%
• €60,001 – €300,000: 45%
• Above €300,000: 47%

Regional governments add surcharges, making effective rates vary by autonomous community. Deductions available for personal/family situations, pension contributions, and other circumstances.

Total employee deductions range from 25-45% of gross salary, depending on income level and region.

4. Social Security Contributions

Both employer and employee contribute to Spain's social security system, funding pensions, healthcare, unemployment benefits, and training programs. Contributions are calculated on a contribution basis (bases de cotización) with minimum and maximum thresholds by professional category.

5. Minimum Wage and Statutory Pay Requirements

SMI minimum wage of €1,134 gross monthly (14 payments, €15,876 annually) applies nationwide for full-time work. Many collective agreements set significantly higher minimums by professional category and seniority.

Employers must also pay:

• Overtime premiums (typically compensated with time off or paid at premium rates per collective agreement)
• Two annual bonuses (pagas extraordinarias) - typically one month's salary each in summer and December (often prorated into 14 monthly payments)
• Night shift differentials as per the collective agreement
• Holiday premium or days as per the collective agreement
• Transport allowances are specified in the collective agreement
• Meal vouchers (common benefit, often tax-advantaged)

In practical terms, employers should budget 30-35% above gross salary for statutory obligations. For professional roles, this puts the true monthly cost of hiring in Spain between €3,000 and €6,000, depending on seniority, role, and applicable collective agreement.

How Employers Pay Employees in Spain?

1. Payment Methods

Salaries are paid via bank transfer to the employee's Spanish bank account. Cash payments are restricted and create compliance risks.

Payslips must contain:

• Pay period
• Gross salary and all components (base, bonuses, allowances)
• All deductions (social security, IRPF income tax)
• Employer social security contributions
• Net salary
• Accumulated year-to-date figures

Payslips must be provided monthly, typically electronically or in print.

2. Salary Payment Frequency

Payroll runs monthly, with salaries typically paid at the end of the month or beginning of the following month for work performed.

Payment delays beyond agreed dates breach labor law and give employees grounds for lodging complaints with the Labor Inspectorate or claiming contract breach.

How To Onboard Employees in Spain?

1. New Hire Onboarding Checklist

Register the employee with Seguridad Social before their first working day. Provide signed employment contracts, company policies, role-specific training materials, and access to payroll/benefits systems.

Onboarding essentials:

• Register the company as an employer with Social Security (TGSS) if the first hire
• Register the employee with the social security system (high registration before start date)
• Report the contract to the Public Employment Service (SEPE) within 10 days
• Sign and provide an employment contract
• Complete occupational risk prevention assessment and training
• Provide the company handbook and workplace policies
• Set up payroll system access
• Assign a direct manager and clarify expectations
• Conduct workplace safety and health training (mandatory)

Schedule orientation sessions covering workplace health and safety (mandatory under Occupational Risk Prevention Law), data privacy policies under GDPR, and reporting structures. Ensure the employee understands holiday policies, bonus payment schedules, and collective agreement terms.

2. Required Employee Documentation

Spanish employment and tax regulations require employers to collect specific employee documents at the time of onboarding. These records support payroll processing, social security registration, and statutory compliance.

Documents you need from new hires:

• National ID (DNI/NIE) or passport
• Social Security number (NASS)
• Tax identification number (NIF)
• Bank account details (IBAN)
• Educational certificates and professional qualifications relevant to the role
• Work permit and residence authorization (for non-EU nationals)
• Proof of address
• Prior employment documentation (Vida laboral - employment history certificate)

Maintain signed copies of the employment contract, occupational risk assessment, training records, data protection acknowledgments, and company policy acknowledgments in the employee's personnel file. These documents become critical during labor inspections or disputes.

What Are The Best Practices Of Interviewing and Hiring in Spain?

Spanish employment law prohibits discrimination based on sex, origin (racial or ethnic), marital status, age, disability, sexual orientation, religious beliefs, political opinions, union membership, or language. Interview questions must focus strictly on job-related qualifications and competencies.

• Avoid questions about family planning, marital status, religious beliefs, political affiliations, pregnancy intentions, or health conditions unless directly relevant to essential job requirements and legally justified.
• Data privacy matters. Under GDPR (RGPD), candidate information must be collected with consent, stored securely, and used only for recruitment purposes. Candidates have extensive rights to access, correct, and request deletion of their information.
• Document retention and processing justifications carefully.
• Spanish candidates value work-life balance, job security, and comprehensive benefits packages.
• Communicate hiring timelines, provide prompt feedback, and set realistic expectations about compensation and role responsibilities.

A sluggish or opaque hiring process signals organizational dysfunction.

Work Permits and Right to Work in Spain

1. Spanish, EU/EEA, and Swiss nationals have unrestricted work rights in Spain and require no permits.

2. Non-EU/EEA nationals require valid work and residence permits issued by Spanish immigration authorities before starting employment. Common work authorization types include:

• Initial work and residence permit: For employed workers, requires an employer-backed job offer and labor market test (unless exempted)
• Intra-corporate transfer permit: For transfers within multinational companies
• Highly qualified professionals (EU Blue Card equivalent): For highly skilled workers with recognized qualifications
• Self-employment permit: For entrepreneurs and independent professionals
• Residence for family reunification with work authorization: For family members of legal residents

Key considerations for non-EU/EEA hires:

• Processing times: expect 2 to 6 months, depending on permit type and regional office
• Labor market test required for most employee permits (employer must prove no suitable EU candidates)
• The quota system limits certain permit categories (annual quotas set by the government)
• Work authorizationis  tied to specific employers and geographic areas initially
• Residence and work authorization combined in a single permit
• After the initial period, renewals progressively become easier (ultimately leading to long-term residence)

Hiring non-EU/EEA nationals without valid work authorization exposes employers to fines from €10,001-€100,000 per violation (serious infractions), potential criminal liability, and prohibition from public contracts.

How Does Employment Termination Work in Spain?

1. Lawful Grounds for Termination

• Employers can terminate for disciplinary reasons (serious misconduct), objective reasons (economic, technical, organizational, or production causes - ETOP), or by mutual agreement.
• Termination requires documented justification and adherence to strict procedures. Disciplinary dismissals require written notification with specific grounds. Objective dismissals require 15 days' advance notice and severance payment. Collective dismissals (affecting thresholds of workers) require administrative procedures (ERE/ERTE).
• Employees enjoy extremely strong protections against unfair dismissal. Spanish labor courts scrutinize termination justifications closely and frequently declare dismissals unfair (improcedente) or null (nulo), requiring reinstatement or substantial compensation.

2. Notice Periods

Notice requirements depend on termination type:

Objective dismissals:

• 15 days' advance notice required
• Notice period must be provided in writing with specific legal grounds

Mutual agreement terminations:

• No statutory notice requirement (negotiated between parties)

Employee resignation:

• Notice period specified in collective agreement or contract (commonly 15-30 days)

During probation:

• No notice required from either party

Disciplinary dismissal:

• No advance notice required if proper cause and procedure are followed

Both parties must provide written notice. Verbal notice has no legal effect.

3. Severance Requirements

Severance requirements depend on termination classification:

Objective dismissal (ETOP causes):

• 20 days' salary per year of service
• Maximum 12 months salary
• Plus pending accrued vacation, prorated bonuses

Unfair dismissal (improcedente):

• Employee may choose: Reinstatement OR compensation
• Compensation: 33 days' salary per year of service, maximum 24 months
• Plus wage arrears from the dismissal date to the judgment

Null dismissal (nulo - discriminatory or violating fundamental rights):

• Immediate reinstatement mandatory
• Wage arrears from dismissal to reinstatement
• No option for compensation in lieu

Disciplinary dismissal (fair - procedente):

• No severance if proper grounds and procedure are proven
• Burden of proof on the employer
• Courts rarely uphold disciplinary dismissals without overwhelming evidence

Mutual agreement:

• Negotiated severance (commonly 20-33 days per year to avoid litigation risk)

Collective redundancy (ERE):

• Typically 20 days per year, maximum 12 months (negotiated with worker representatives)

Typical negotiated severance for mutual agreements:

• 20-25 days per year: Standard settlement
• 25-33 days per year: Long tenure or stronger employee position

All terminations trigger payment of pending vacation days, prorated annual bonuses, and any outstanding compensation.

Employee vs Contractor Classification in Spain

Spanish authorities assess classification based on dependence, subordination, integration into the company organization, and lack of business infrastructure. Social Security Inspectorate and labor courts presume employment relationships when individuals work under employer direction without entrepreneurial autonomy. Contracts labeled "independent contractor" mean nothing if the working relationship resembles employment.

Misclassification consequences include:

• Retroactive reclassification as an employee from day one
• Back payment of all social security contributions (employer share 29.9-31.4%)
• Back payment of all employee benefits (vacation, bonuses, severance rights)
• Income tax adjustments and penalties
• Fines from Labor Inspectorate up to €10,000 per violation (can reach €225,000 for very serious infractions)
• Automatic indefinite employment contract status from the start date
• Criminal prosecution for fraudulent labor relationships

The "one contractor won't attract attention" myth dies fast when Social Security Inspectorate audits begin. Spanish authorities aggressively pursue misclassification, particularly in sectors with high false self-employment rates.

What Compliance Risks Should Employers Know When Hiring in Spain?

• Payroll non-compliance (incorrect social security contributions, missed IRPF withholding, failure to register employees properly with Seguridad Social before start date) results in financial penalties, back-payments with interest, and potential criminal liability for serious violations. The Labor Inspectorate (ITSS) and Social Security Inspectorate conduct regular audits with particular scrutiny of foreign employers.
• Contract violations (missing written contracts for required situations, failure to report contracts to SEPE, unclear employment conditions, or improper use of fixed-term contracts beyond new legal limits) create unenforceable terms and heavily favor employees in disputes. Courts presume indefinite employment status when documentation is deficient or fixed-term justifications are inadequate.
• Termination disputes arise when employers bypass mandatory procedures, fail to provide adequate written grounds, miscalculate severance, or terminate without following collective dismissal procedures where thresholds are met. Spanish labor courts strongly tilt toward employee protection. Improper terminations result in unfair dismissal declarations with compensation of 33 days per year (maximum 24 months) plus wage arrears.

Compliance failures don't just cost money. They damage the employer brand in a market where labor rights awareness is exceptionally high and legal recourse is readily accessible through unions and labor courts.

How an Employer of Record (EOR) Helps You Hire in Spain?

An Employer Of Record (EOR) eliminates entity formation delays, absorbs compliance risk, and handles payroll, tax, social security, and benefits administration.

What you gain with an EOR:

• Speed: Hires go live in days instead of months
• Certainty: Spanish labor law adherence, collective agreement compliance, accurate Seguridad Social, and tax remittance
• Control: Employee reports to you, performs work under your direction
• Risk mitigation: EOR handles complex collective agreement navigation, bonus calculations, and changing regulations

EORs don't replace strategic workforce planning. They enable it.

• Testing the Spanish market without committing to entity setup costs? An Employer of Record (EOR) model makes sense.
• Scaling from 2 to 20 employees within six months? An EOR enables rapid, compliant growth.
• Hiring across multiple European countries without setting up local subsidiaries? An EOR keeps expansion flexible and manageable.

The model works because it's legally recognized: the EOR is the statutory employer, you're the operational employer, and the employee receives full Spanish labor law protections and collective agreement benefits.

How Gloroots Simplifies Hiring in Spain?

When hiring in Spain through Gloroots, the entire process is managed for you end-to-end. You do not need to coordinate vendors, navigate local regulations, or manage administrative steps.

Gloroots runs the complete hiring workflow:

• Candidate sourcing, shortlisting, and background verification
• Initial screening to assess skills, experience, and role fit
• Interview coordination for final selection
• Offer issuance and compliant employment setup
• Statutory registrations (Seguridad Social, SEPE), payroll setup, and benefits administration
• Employee onboarding aligned with Spanish labor regulations

This model removes operational overhead entirely, allowing you to focus on building and managing your team while Gloroots handles hiring execution, compliance, and onboarding from start to finish.

Gloroots provides end-to-end EOR services in Spain, handling employment contracts, payroll processing, tax compliance, social security administration, and statutory filings. Local compliance expertise ensures your hiring aligns with Spanish labor law requirements and applicable collective agreements, from contract drafting to termination procedures.

The platform combines self-service functionality (contract management, onboarding workflows, payroll visibility) with dedicated customer success support.

With Gloroots, you get:

• Audit-ready reporting
• Transparent cost breakdowns
• Finance-team-friendly invoicing with country-level detail
• GL mapping

Gloroots scales with you: whether hiring your first Spanish employee or expanding a distributed team across 140+ countries, the infrastructure supports growth without the complexity of multi-entity management.

It's not a vendor relationship. It's workforce infrastructure that adapts to your expansion strategy.

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FAQs 

1. Can a foreign company hire employees in Spain without setting up a local entity?

Yes. Foreign companies can hire through an Employer of Record (EOR) without establishing a Spanish entity. The EOR becomes the legal employer, handling compliance, payroll, tax, and social security obligations while you direct the employee's work.

2. What are the legal requirements for hiring employees in Spain?

Employers must provide written contracts for certain employment types, register employees with the Social Security System before the start date, report contracts to SEPE within 10 days, make monthly social contributions (29.9-31.4% of salary), withhold IRPF income tax, comply with applicable collective agreements, provide occupational risk prevention, and maintain accurate employment records according to Spanish labor law.

3. What taxes and social security contributions do employers pay in Spain?

Employers in Spain generally pay about 30–31% of an employee’s salary toward social security, covering pensions, healthcare, unemployment insurance, training, and workplace risk.

4. How long does it take to hire and onboard an employee in Spain?

Through an EOR, hiring and onboarding can occur within 5 to 10 business days. Establishing a local entity first adds 2 to 4 months for registration and regulatory approvals.

5. What is the easiest way to hire employees in Spain compliantly?

Partnering with an EOR is the fastest, lowest-risk path. The EOR handles contracts, payroll, tax, Seguridad Social compliance, collective agreement application, and benefits while you maintain operational control, eliminating entity formation costs and enabling hiring within days.

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