Hiring skilled employees in Spain may seem like a lengthy, complicated and headache-inducing process. Working with an Employer of Record (EOR) platform, like Borderless, makes hiring abroad an efficient and compliant process so you can skip the stress when recruiting Spanish employees.
This article will guide you through the reasons and benefits of using an EOR to hire employees in Spain.
Why Hire Talent in Spain?
For companies looking to recruit new employees on their globally distributed team, look no further than Spain. While central and northern European countries have high costs of living, Spain’s is relatively low in comparison.
The Spanish workforce is highly educated and skilled in software engineering, customer service, finance, information technology, among others. Despite the country having highly skilled workers, the unemployment rate is high, so many of these workers are seeking job opportunities, especially with international, remote companies.
The high unemployment rate, low cost of living, and pool of talented workers gives employers the opportunity to recruit top talent while reducing overhead costs.
How to Legally Hire Employees from Spain
There are a few choices employers have when looking to hire talent from Spain. Employers could draft independent contractor agreements; however, these come with risks of misclassification and don’t grant employee status to the new hire.
A longer route involves setting up a physical business entity. Doing this is costly, time-consuming, and complex, especially when it comes down to complying with local labor laws and regulations.
The third — and simplest — route involves using an Employer of Record (EOR) platform. An EOR is a third-party organization that acts as a broker for hiring talent outside the country where the employers operate.
Using an EOR to hire employees in Spain makes the process seamless and compliant.
What Does an Employer of Record Do?
An EOR provides employers with an efficient and compliant way to recruit and hire talent from abroad. EORs take care of tedious administrative tasks associated with employment contracts, onboarding, tax documentation and filing, payroll processing, intellectual property protection, and termination.
With labor laws constantly changing across the world, using an EOR guarantees that you maintain strict compliance, no matter where you hire talent from.
Contracts and Documentation
Each country has specific requirements for what must be included in an employment contract, and Spain is no different. While fixed-term contracts are allowed, the Spanish government recently implemented new legislation which significantly limits the use of fixed term-contracts. Fixed-term contracts are only allowed in specific roles and for a maximum of six months. The majority of employment contracts in Spain are indefinite.
Contracts must also include specific information, such as the salary, bonuses, payroll cycle, and probation period.
Working with an EOR will ensure that the right contract is in place with all the correct information. An EOR will also make sure that all the necessary documentation is collected, such as work permits, banking information, and more.
Insurance and Benefits
Using an EOR to hire employees in Spain will guarantee that employees have proper insurance coverage and the necessary benefits required by local laws and regulations. This includes healthcare and unemployment benefits.
An EOR will also take care of supplemental benefits for employees, like dental, vision, life insurance, and retirement savings plans. With global hiring becoming more and more competitive, it pays to offer employees attractive additional benefits.
Paid Time Off, Leave, and Public Holidays
Employees in Spain are entitled to 30 days off each year. While the time can be taken during different parts of the year, one of the vacation absences has to include at least two consecutive weeks.
Spain also has sick leave. The maximum amount of sick leave is 18 months.
There’s also parental leave to consider. New mothers and fathers are entitled to 16 weeks of fully paid maternity leave. These are both covered by Social Security.
Spain also has 14 national public holidays. However, depending on the region your employee resides, there may be additional holidays to account for. As of 2023, public holidays celebrated across the country are as follows:
- January 1: New Year’s Day
- January 6: Epiphany
- April 7: Good Friday
- May 1: Labor Day
- August 15: Assumption of Mary
- October 12: Spain’s National Day
- November 1: All Saints’ Day
- December 6: Spanish Constitution Day
- December 8: Immaculate Conception
- December 25: Christmas
Navigating paid time off, leave, and holidays in Spain can be complicated, especially with different regional holidays. While there are guides and practices for employers to manage PTO on a global team, an EOR will ensure everything is properly tracked and calculated.
Tax Obligations
Employer taxes in Spain are 31.42% of an employee’s salary. This includes social security, unemployment, salary guarantee fund, remote working allowance, professional training, and accident insurance.
Despite this sounding relatively straightforward, it can be a lot to keep up with. For instance, Social Security in Spain has a maximum employer contribution of EUR 1,434.06 for each employee per month.
This may impact the total employer cost. To avoid complexities like this, work with an EOR. An EOR will handle all the logistics and ensure that all taxes are filed compliantly.
Employer Responsibilities
While the EOR takes care of all legal and HR procedures, like contracts, payroll, and taxes, the employer also has some responsibilities. The employer needs to take on responsibilities as if they were hiring a local candidate; this includes recruitment, interviewing, and onboarding. Once the employee is onboarded, it’s the employer’s responsibility to maintain the subordinate working relationship.
It’s also up to the employer to be aware of the working culture in Spain and connect with employees. This will create a positive and welcoming work environment that encourages communication and inclusivity, ultimately helping with employee performance and retention.
Advantages of Using an Employer of Record
Using an EOR in Spain will save time, reduce costs, and mitigate risks. Setting up an entity in a foreign country comes with a lot of stress. An EOR is already set up to hire employees abroad, making it a seamless and efficient process.
EORs have local knowledge and extensive experience in maneuvering through intricate HR processes, so employers won’t need to worry about any potential compliance or legal issues.
Other than minimizing the stress of hiring globally, working with an EOR is cost-saving and ensures a positive employee experience with streamlined HR support.
Choosing the Right Employer of Record
When it comes to choosing the right EOR, employers must do their due diligence in order to find the right partner. Employers should take various factors into consideration.
- Experience and expertise: When working with an EOR in Spain, you want to make sure they have local knowledge of employment laws and experience in the country. Working with an EOR with a positive reputation in Spain ensures compliance.
- Range of services: Keep in mind the range of services offered by EORs and see if they are right for you. Look for different services related to hiring staff, like administering benefits, filing taxes, compliance and governance, and legal support.
- Data security: In a remote work environment, protecting intellectual property is vital. When choosing an EOR vendor, make sure it has a specific agreement which outlines the ways it aims to keep sensitive information secure.
Borderless — The EOR For You
If you’re looking to hire an employee in Spain, an EOR is the right solution. With Borderless, we make the hiring process a breeze. While you connect with your employees, we’ll do the heavy lifting to guarantee compliance and make hiring a seamless, stress-free process.
Book a demo to see how we can streamline hiring employees from Spain.
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.
