As many companies shift gears towards a remote-first work environment, employers are increasingly hiring internationally. Often, this is because countries like Spain offer a talented workforce with a diverse and exceptional skill set.
While figuring out salaries for new hires in Spain are essential, budgeting for your new hire includes numerous other costs. From overtime and severance to social security contributions, hiring overseas employees requires more than calculating your new employee’s wage.
Employers should also consider supplementary benefits like coworking passes or gym memberships. This can help with employee retention and satisfaction.
Overall, it can be challenging to determine total costs on your own. This article will guide you through the costs of hiring employees in Spain.
Mandatory Costs
When hiring employees in Spain, you’ll need to consider numerous mandatory costs. These include wages, mandatory bonuses, contributions, overtime pay, and severance pay. Adherence to these costs will ensure you are compliant with local labor laws and regulations.
Salary
The minimum wage in Spain is €1080 (USD 1156) per month, including all autonomous regions, like the Canary Islands and Balearic Islands. However, the average salary in the country stands at €2170 (USD 2900) per month. Depending on the industry, salaries may be lower or higher.
For instance, the average salary in the finance sector is €2823 (USD 3022). Whereas, the average wage in human resources is approximately €2500 (USD 2676). On the other side of things, the median salary in information technology is €3239 (USD 3467).
So, depending on what role you’re hiring, keep in mind that salaries do vary. It’s also a good idea to offer higher salaries to gain a competitive edge.
The 13th and 14th month bonus is mandatory in Spain. Employers are required to pay their employees an additional two months’ salary in July and December, respectively.
In addition to the salary and mandatory bonus, Spain also has a remote work law. As more people work remotely across the country, the Spanish government aims to give remote workers the same financial benefits of in-office employees.
This law, which came into effect in late 2021, requires employers to compensate their employees for the cost of working from home. This usually covers equipment and tools that are necessary for the role. While there’s no specific cost or way to reimburse employees, this payment is generally provided to employees through a remote work stipend.
Taxes and Benefits
When hiring employees from Spain, it’s essential to be aware of the mandatory taxes and contributions. Employers are required to pay 30.4% of an employee’s salary, as well as a variable rate for occupational accidents.
Paid Leave
Employees in Spain are entitled to take numerous types of paid leave, many of which are paid by the employer.
Annual Time Off and Holidays
When it comes to annual paid time off, employees are entitled to 22 days, fully paid by the employer.
Spain also has 14 public holidays, in which employees are not required to work. These holidays are non-recoverable.
Maternity and Paternity Leave
New mothers are entitled to 16 weeks of fully paid maternity leave. For twins, it increases to 18 weeks and 20 weeks for triplets. Maternity leave is covered by the employer and social security. New fathers are entitled to five weeks of paid paternity leave. This is covered solely by social security.
Sick Leave
Regarding sick leave, employers also need to be aware of additional costs they may face. For the first three days of sick leave, payment is not mandatory unless stipulated in the employment agreement. Up to 15 days, the employee receives 60% of their pay, which is covered by the employer. Day 16 to 20, the employee receives 60% of their salary, paid by social security. From day 21 onwards, they receive 75% of their pay, but this is paid by social security.
Other Types of Paid Leave
There are many other types of paid leave available. Spain has marriage leave, where employees are able to receive 15 paid days off. Emergency leave entitles employees to two to four paid days off.
Spain is also one of the first European countries to offer paid menstrual leave, which can last up to five days. This is only partially paid — employees receive 75% of their salary — and it’s covered by social security.
Overtime Pay
The standard work week in Spain is 40 hours. If an employee works more than 40 hours, they are entitled to overtime pay, which is 175% of their regular hourly rate. An employee must not work more than 80 hours of overtime each year.
Severance Pay
Severance pay is mandatory in Spain. Employees are to receive 12 days of pay for every year of service.
Supplemental Costs of Hiring Employees in Spain
In addition to statutory benefits, employers may also provide supplemental benefits. Offering additional benefits can help attract top talent, motivate staff, and increase retention.
Benefits
Making sure your new employees are happy and healthy is paramount. You can support their health by offering a robust benefits package. While many employers choose to offer private health insurance for their employees, doing so comes at an extra cost.
The price will significantly vary depending on the type of private health insurance and coverage. Common health insurance providers in Spain include AXA and Sanitas.
An EOR like Borderless will typically offer benefits packages. This will usually include medical, dental, vision, and life insurance along with a retirement savings plan.
Bonuses and Extras
While the 13th month bonus is mandatory in Spain, it’s not uncommon for employers to offer signing bonuses and performance-based bonuses. Additionally, employers may want to consider offering employees a lunch or coffee stipend.
Coworking offices have become the go-to for many employers. Not only do coworking spaces provide employees with a designated space to work, but they also encourage collaboration and networking.
The costs of coworking spaces in Spain may vary by region. However, the monthly price for a dedicated desk in a coworking office is approximately €200 (USD 214). For example, The Shed Coworking in Madrid and Betahaus in Barcelona offer dedicated desks for €250 (USD 267) per month. In Valencia’s Vortex Coworking, the price for a dedicated desk is lower, at €210 (USD 224) per month.
In digital nomad hotspots, like Barcelona or the Canary Islands, prices may rise due to increased demand, especially during high seasons.
Another common fringe benefit employers offer is a gym membership. The average price of a gym membership in Spain is relatively low, costing only €38 (USD 41) per month.
Work with Borderless
Hiring employees in Spain may feel overwhelming, especially with so many different costs to consider. Working with an Employer of Record (EOR) can help take the stress out of global hiring and budgeting.
An EOR like Borderless will do the heavy lifting, guaranteeing that you compliantly hire and pay employees in Spain. To get started, book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
