Spain's dynamic and diverse workforce presents an enticing opportunity for businesses in search of skilled professionals across a range of industries. Renowned for its proficiency in sectors such as tourism, renewable energy, and technology, Spain boasts a wealth of talented individuals ready to drive organizational excellence.

The Spanish labor market combines expertise with cost-effectiveness, making it an appealing destination for businesses aiming to optimize expenditure while accessing high-quality talent. Spain's dedication to education and skill enhancement ensures a consistent influx of capable professionals, particularly in emerging fields crucial for innovation and advancement.

With a favorable business climate and a diverse talent pool, Spain offers a promising landscape for businesses seeking sustainable growth and prosperity.

What you need to know before hiring employees in Spain 

Job market in Spain 

• Spain’s job market is on a positive trajectory, with GDP forecasted to reach new heights by 2028, indicative of a growing economy. Employment levels are projected to reach about 20.39 million by 2024, reflecting a robust and expanding labor pool.
• Post-2007 economic crisis, Spain has shown remarkable recovery, with GDP growth gradually stabilizing despite the past downturns. Spain boasts a GDP that surpasses other significantly affected European nations, showcasing its resilient economic environment.
• The Spanish government's "Spain 2050" initiative outlines ambitious goals to enhance competitiveness and employment, aiming for an 80% employment rate by 2050. Plans include substantial reductions in unemployment and youth unemployment rates, alongside progressive increases in employment rates for women and older individuals.
• With 28% of jobs at high risk of automation, Spain is investing in a comprehensive skills strategy to prepare the workforce for technological advancements. This strategy emphasizes not just digital skills, but also cognitive and transversal skills essential for navigating future job markets influenced by AI and other technologies.
• Recent labor reforms aim to create more job opportunities, especially for the youth, amidst ongoing challenges like high unemployment rates among younger demographics. Government policies are also geared towards narrowing the gender pay gap and enhancing the work conditions, aligning with the top European standards.
• Gradual increments in employment rates are planned, with targets set for 2030, 2040, and 2050, demonstrating a long-term commitment to labor market improvement. These targets are aligned with broader European economic goals, positioning Spain as a desirable location for business expansion and talent acquisition.

For international businesses considering expansion or talent acquisition, Spain presents a compelling market with a forward-looking employment landscape, skilled workforce, and supportive government policies aimed at fostering a dynamic economic environment.

Spain  Hiring Trends

• In the evolving landscape of Spain's hiring trends, understanding how to effectively navigate practices is crucial for businesses aiming to establish or expand their presence. As of 2023, Spain's economic recovery signals a robust environment for recruitment, with GDP growth stabilizing above pre-pandemic levels, offering a solid platform for employment growth.
• The implementation of the labor market reforms, which significantly reduced temporary contracts in favor of open-ended agreements, presents a key consideration for businesses. This shift towards more stable employment agreements enhances job security, making Spain an attractive market for long-term human resource investments.
• Despite a relatively high unemployment rate of 12.7%, with youth unemployment also remaining a significant issue, there is ample opportunity for firms to harness a young, eager workforce. Businesses that invest in training and integrating younger workers can tap into this underutilized demographic, potentially turning the challenge into a competitive advantage.
• Additionally, the sustained high job vacancy rates across various sectors indicate that Spain has a pool of skilled workers awaiting opportunities. Companies can capitalize on this by filling gaps in their operations with talented individuals who are keen to contribute to growth and innovation.
• Employers should consider these dynamics and prepare to engage with Spain's hiring trends through a lens that values long-term relationships and strategic growth. Understanding local employment regulations and cultural nuances will also enhance the hiring process, ensuring compliance and fostering a more integrated and productive workforce.

How to hire employees from Spain

1. Set up an entity in the country

Setting up a business entity in Spain involves choosing the right type, such as a Branch (Sucursal), Limited Liability Company (Sociedad Limitada), or Joint-Stock Company (Sociedad Anónima). Register your business with the Mercantile Registry, obtain a tax identification number from the Spanish Tax Agency, and notarize company statutes. Open a business bank account, deposit required capital, and comply with necessary licensing and regulatory requirements. Appoint directors and ensure ongoing compliance with Spanish corporate governance and labor laws. Regular consultations with legal and financial experts are recommended to navigate the setup process effectively.

2. Hire independent contractors

Hiring independent contractors in Spain involves engaging with individuals or businesses through contractual agreements tailored for specific tasks or project-based work. This approach provides flexibility, especially beneficial for short-term needs or specialized project demands. It is crucial to classify workers correctly to avoid legal complications and potential penalties. 

Independent contractors in Spain may not exhibit the same level of commitment or loyalty as full-time, in-house employees, which necessitates careful planning and consideration. Companies must adhere to relevant labor laws, tax regulations, and any industry-specific guidelines when hiring independent contractors to minimize risks and foster productive working relationships.

3. Partner with an EOR in the country

Partnering with an Employer of Record service such as Gloroots offers a streamlined approach to entering the Spanish market, bypassing the intricacies of setting up a legal entity. This strategy significantly reduces liabilities and is cost-effective. Working with an EOR ensures stringent compliance with Spanish labor laws, tax obligations, and regulations, thereby minimizing legal risks and facilitating smooth business operations. It is essential to assess the expertise, reputation, and customized services of potential EOR partners to ensure a seamless and compliant market entry in Spain.

Compliance risk while hiring in Spain

When hiring in Spain, compliance risks include misclassification of employees as independent contractors, leading to legal penalties. Adhering to strict labor laws, tax regulations, and mandatory social security contributions is crucial. Businesses must also comply with extensive contract documentation and termination rules. Failure to adhere to the General Data Protection Regulation (GDPR) and local employment laws can result in hefty fines. Ensuring accurate classification and understanding of local employment regulations is vital to mitigate potential legal issues and maintain a compliant hiring process in Spain.

Key Aspects of Spain Labor Law

Employment Contract:

In Spain, employment contracts can be verbal or written, with general freedom of form. However, specific contracts such as temporary, part-time, and those involving special labor relations must be in writing. 

If an employment contract exceeds four weeks, employers must provide written details within two months:

• Party identification
• Job duration
• Work location
• Role category
• Compensation
• Working hours
• Holidays
• Notice periods
• Collective agreement

While contracts are generally presumed to be open-ended, definite-term contracts that extend beyond their initial term automatically convert to indefinite contracts, entitling employees to standard severance upon termination.

Working Hours:

In Spain, the standard workweek is capped at 40 hours, typically divided into 8-hour days. The common workday starts between 8:30 and 9:00 AM, pausing at about 2:00 PM for a siesta, and then resumes from around 4:00 to 5:00 PM, continuing until approximately 8:00 PM. According to the Spanish Worker’s Statute Royal Decree-Law 8/2019, it's mandatory for all employees to track their actual daily work hours by clocking in and out during breaks and at the day’s end.

Overtime: 

Overtime rules can differ by sector. Generally, white collar employees are restricted to a 40-hour week. Exceeding this limit necessitates mandatory overtime compensation, often at a rate of 175%. An individual employee is allowed a maximum of 80 extra overtime hours annually. The specifics of overtime hours and compensation are rigorously governed by collective agreements, and overtime is optional for employees.

Minimum Wage:

In Spain, minimum wages are determined by industry through collective bargaining agreements, but the general minimum wage across the country is set at 1,080 EUR per month, distributed in 14 payments annually. For temporary and seasonal employees working fewer than 120 days for the same employer, the daily wage cannot fall below 51.15 EUR.

Payroll laws in Spain

In Spain, salaries are generally paid on a monthly basis, typically on the last day of each month.

Employment benefits in Spain

Leave Policies in Spain

1. Paid Time Off:

In Spain, employees have the right to 30 calendar days (22 business days) of paid vacation each year. Collective Bargaining Agreements may provide for additional vacation time. Employees are expected to use all their vacation days within the designated year. However, exceptions for carrying over unused vacation days exist for valid reasons, such as temporary incapacity, allowing these days to be taken at the end of the disability period, even if it extends beyond the calendar year, up to 18 months following the year they were accrued.

2. Public Holidays:

Employees are entitled to 14 paid public holidays each year, which include national, regional, and local holidays. Workers are advised to confirm the specific dates of their local holidays with their local authorities.

3. Sick Days:

In Spain, for sick leave due to common illness or non-work-related injury, employees must submit a medical certificate. The compensation structure is as follows: the first three days are unpaid, days four to twenty are paid at 60% of their regular earnings, and from day twenty-one onwards, the rate is 75%, potentially continuing up to 18 months with INSS approval. Employers cover sick pay costs up to day fifteen; afterward, they can reclaim these payments from Social Security. Enhanced terms may be available under a Collective Bargaining Agreement.

4. Maternity Leave:

In Spain, pregnant employees are entitled to 16 weeks of maternity leave, which can extend to 18 weeks for complicated deliveries or multiple births. This leave is split into a mandatory six weeks post-birth and an optional 10 weeks thereafter, or 20 weeks at half-days, usable within a year with 15 days’ notice. 

Additionally, a common practice includes two weeks of breastfeeding leave following maternity leave. Maternity pay, covering 100% of salary up to 4,495.50 EUR per month, is provided by the Social Security System Health Insurance Fund. If the child is disabled, adopted, or fostered, an extra two weeks of leave is granted. Pregnant women are also entitled to comprehensive healthcare services through the National Health Service.

5. Paternity Leave:

In Spain, fathers qualify for 16 weeks of paid paternity leave, extending to 18 weeks for multiple births, provided they have contributed to Social Security for at least 180 days within the last seven years or 360 days throughout their career. The initial six weeks post-birth are mandatory, while the remaining 10 weeks (or 20 half-day periods) can be used up until the child’s first birthday. Social Security handles paternity pay, offering 100% of salary up to 4,495.50 EUR monthly.

Employers must continue paying certain taxes during this period. For same-sex couples, both partners can claim leave, provided they meet legal requirements concerning their relationship with the child.

Public Health Insurance 

Spain's public healthcare system, the Spanish National Health System (SNS), is universally accessible and highly regarded globally. Healthcare administration is decentralized, with each of the 17 autonomous regions responsible for local healthcare services, causing some variability in care quality and specialist availability. Residents, including expatriates who work and pay social security, and retirees are entitled to SNS services. 

Emergency services are available to all, irrespective of residency status. While most medical procedures are covered by the SNS, certain services like surgeries requiring hospital stays or extensive prescriptions may incur additional fees. EU retirees gain automatic SNS coverage upon becoming permanent residents.

Filing tax in Spain

Income Tax:

In Spain, employee income tax rates are structured progressively to ensure fairness based on annual earnings. The tax rates begin at 19% for the lowest income bracket and gradually increase through several thresholds, peaking at 47% for the highest earners. This progressive tax system starts with a modest rate for low-income individuals, with increments applied as income levels rise, ensuring higher earners contribute a larger percentage. This approach aims to distribute tax burdens equitably across different income levels, aligning with broader fiscal policies aimed at social equity. please refer to our comprehensive guide.

Other Tax and Social Security Contributions:

In Spain, both employers and employees contribute to payroll taxes that fund social security and developmental programs. Employers' contributions include social security, unemployment, a salary guarantee fund, professional training, work accident insurance, and a remote working allowance for eligible employees. Together, these contributions significantly increase total employment costs. Employees also contribute to social security, unemployment, and professional training, ensuring a comprehensive support system. This structure supports pensions, job training, and unemployment insurance, forming an essential part of employment costs. For a detailed breakdown, refer to our guide on employment costs in Spain.

Business culture in Spain

• Spanish business culture maintains a formal tone in communication, especially in initial meetings. Titles and surnames are commonly used until a personal relationship develops.
• Importance of Personal Relationships: Building strong personal relationships is crucial in the Spanish business environment. Trust and personal connections often influence business decisions more than in more transactional cultures.
• Spanish businesses tend to be hierarchical. Showing respect to senior figures and acknowledging their positions in communications and decision-making processes is important.
• Spaniards prefer face-to-face meetings over virtual communications for negotiating deals and making significant business decisions. These meetings are often lengthy, as relationship building is as important as the business at hand.
• While more relaxed than in some Northern European countries, punctuality is still appreciated, especially by the business elite in major cities like Madrid and Barcelona.
• The traditional 'siesta' has mostly faded in professional environments, but long lunch breaks, often lasting up to two hours, are common and are used for both eating and social interactions.
• Decision-making can be slow, as it often involves seeking consensus among various stakeholders, reflecting a preference for collaborative approaches.
• Business attire in Spain is typically formal, with suits for men and appropriate business wear for women, particularly in finance and law sectors.
• While many businesspeople in Spain speak English, especially in larger companies and multinational corporations, conducting business in Spanish or showing an effort to use the language can be advantageous and is often appreciated.

Top sectors to hire from in Spain

Service Sector

Dominating the employment landscape, the service sector employed 75.75% of the workforce in 2021. As it also contributes significantly to Spain's GDP (67.74% in 2022), roles in tourism, gastronomy, and healthcare are expected to see a rebound and growth, making this sector ripe for recruitment.

Technology and IT

The demand for tech professionals, such as programmers, blockchain experts, machine learning specialists, and IoT architects, is surging. By 2025, blockchain technology alone is expected to significantly expand, highlighting substantial hiring opportunities in this high-growth area.

Industry Sector

Accounting for 20.19% of employment and 20.76% of the GDP contribution in 2022, the industrial sector remains a stable hiring ground, especially for roles like sales representatives, warehouse assistants, and operators.

Emerging Tech Specialties

As Spain's tech sector evolves, new roles like chatbot designers and data analysts are becoming increasingly crucial, offering new avenues for recruitment.

Logistics and Delivery

The pandemic has dramatically increased the need for delivery personnel and logistics management, a trend that is likely to persist as e-commerce continues to grow.

Top cities to hire from Spain

Madrid

Spain's capital is the premier choice for businesses seeking talent in finance, technology, international business, and healthcare. Its robust infrastructure and concentration of multinational corporations make it an ideal hub for top professionals.

Barcelona

A leading city for technology and creative industries, Barcelona excels in attracting IT professionals and innovative startups. Its cosmopolitan culture and educational institutions also make it a hub for design and arts professionals.

Valencia

Emerging as a significant tech startup hub, Valencia is ideal for companies looking for fresh tech talent. The city's focus on innovation and support for new businesses create a dynamic environment for growth.

Bilbao

Renowned for its industrial base, particularly in manufacturing and engineering, Bilbao is also evolving with investments in technology and services, making it a strategic location for skilled labor in these sectors.

Seville

With its strong sectors in aerospace, agriculture, and education, Seville provides a diverse pool of professionals. The city's historical significance and educational institutions also contribute to a steady stream of skilled graduates.

Hire in Spain compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in Spain, offers a streamlined solution to the complexities of local hiring. Our EOR platform enables quick onboarding of candidates, facilitating a smooth transition into operations while complying with both local and international standards. Designed for businesses of all sizes, it simplifies payroll, benefits administration, and tax compliance, eliminating the need for establishing a local entity. This allows companies to effectively build and manage a remote team in Spain. For more information on how Gloroots can support your Spanish hiring efforts, please contact us.

Frequently Asked Questions 

1. What are the main types of employment contracts in Spain?

In Spain, the primary types of employment contracts are indefinite (permanent), temporary, and training and apprenticeship contracts. Indefinite contracts do not have a specified end date and provide more stability for employees. Temporary contracts are used for specific tasks with a set duration or to replace employees temporarily. Training contracts are aimed at young workers who need professional practice.

2. How does the termination process work in Spain?

Terminating an employment contract in Spain must be done with just cause, which includes both disciplinary and objective reasons (e.g., economic, technical, organizational changes). Employers must provide written notice explaining the reasons for termination. Depending on the contract type and circumstances, the employee may be entitled to severance pay. It’s advisable to consult with legal experts to ensure compliance with labor laws during the termination process.

3. Are there specific guidelines for hiring foreign workers in Spain?

Yes, hiring foreign workers in Spain requires ensuring that the worker has the legal right to work either through citizenship, residency, or a valid work permit. Employers must register these workers with the Spanish Social Security system and ensure compliance with all applicable labor laws. For non-EU workers, a work visa is typically required, and the process involves securing a job offer and applying for a visa at a Spanish consulate or embassy.