Labor and Employment Law in Spain

Employment Contracts in Spain

In general, Spanish employment law allows for employment contracts to be either written or verbal, however, this does not prevent either party from requesting that the employment relationship be established in writing. In some cases, this freedom of form does not apply as certain types of employment contracts must be in writing, such as temporary employment contracts, part-time contracts, and those relating to special labor relations like lawyers and executives.

Regardless of whether the employment contract is verbal or in writing, if the duration of employment is greater than four weeks, the employer must provide the employee with certain information in writing within two months of their start date. This includes the following:

• Identity of the parties to the employment
• Date of commencement and for temporary contracts, an estimation of the duration
• Job group or category
• Work location
• Base salary and any other compensation or benefits
• Working hours and schedule
• Total number of holidays
• Notice period upon termination of employment contract
• Applicable collective bargaining agreement

If there are any changes to the above conditions the employee must also be informed in writing. 

Employment contracts in Spain are presumed to be for an indefinite time period and are, therefore, open-ended in term unless there is sufficient cause to justify a  fixed or definite term contract. Such causes are prescribed by law and must be real, otherwise, they will be considered fraudulent. Fixed or definite term contracts may only be entered into in certain situations, such as when an employee is temporarily covering for an absent employee, when the job or service is by its nature limited in duration or involves a special labor contract, for example in the case of artists or sportsmen.

Minimum Wage in Spain

A minimum wage is prescribed by law in Spain and applies to all workers equally. The minimum wage is set by the Ministry of Employment and Social Security and is adjusted each year based on a number of factors including employment figures, inflation, and national productivity. 

In 2022, the minimum wage in Spain for a full-time job is €7.82 per hour. This equates to €1,166.7 gross per month. This is the case if the employer pays its employees in 12 installments over the year, however, they typically pay in 14 installments with extra or special payments in July and December known as the “pagas extraordinarias”.  This means each installment amounts to a minimum of €1,000. 

Employees must be paid the minimum wage at least once a month and this must be paid in currency and not in kind.

Minimum Employee Benefits In Spain

Employee benefits in Spain include a variety of mandatory entitlements which are prescribed by law. These basic rights may be modified in favor of the employee through employment contracts or collective bargaining agreements. Some of the minimum employee benefits are discussed below.

Holidays in Spain

Employees in Spain are entitled to a minimum of 30 days per year paid vacation which amounts to 22 working days per year.  Employees may divide these up throughout the year or take them all at once as long as one period is at least two weeks long.

Paid vacation entitlements may be carried forward and recent case law also states that employees who are unable to take their paid vacation either in full or in part during the relevant year due to sick leave can still use their vacation entitlement after their sick leave has ended. They will have a maximum of 18 months to do so from the end of the year when their entitlement accrued.

In addition to paid vacation entitlement, under Spanish employment regulations employees are granted paid time off for local, regional, and national public holidays. Spain has 14 bank holidays each year, which are made up of 10 national holidays, two regional holidays, and two local municipal holidays.

Parental Leave in Spain

Both men and women are guaranteed 16 weeks of parental leave immediately after the birth of a child. This paid leave also extends to adoptive and foster parents. Parental leave increases by one week for each additional child delivered, multiple births, or when the child has a disability.

Sick Leave in Spain

Spanish employees are entitled to sickness benefits for a maximum of 365 days, although this can be extended by a further 180 days in certain situations. Employees are not entitled to any payment for the first three days of diagnosis with a common illness, however, from the fourth to the 15th day, the employer must provide sickness benefits to the employee. After this period, any payments made by the employer are covered by the social security scheme, provided the employee is registered.

Health Insurance in Spain

Spanish law requires employers to provide medical insurance for their employees and enrollment with the General Social Security Fund (Tesorería General de la Seguridad Social – TGSS) is mandatory. 

Employee Termination in Spain

In Spain, an employment contract that exceeds one year can be terminated by either party giving the other a minimum of 15 days’ notice in writing. Labor law lists various grounds for termination of the employment relationship which includes mutual agreement of the parties, reasons established in the contract, resignation, retirement, employer or employee death or disability, and disciplinary dismissal.

An employer in Spain can legally dismiss an employee for the following three reasons:

• Objective Dismissal: This includes reasons such as employee incompetence, inability to adapt to reasonable technical changes, and layoffs based on organizational, economic, technical, or productivity grounds. 

• Disciplinary Dismissal: Grounds for disciplinary dismissal include repeated and unjustified absence or tardiness at work, disobedience and lack of discipline, and harassment or verbal and physical aggression towards the employer or other employees. 

• Collective Dismissal: This is termination based on economic, technical, organizational, or productivity grounds. Collective dismissal occurs when in any 90-day period: 10 employees in a company with less than 100 employees are dismissed; at least 10% of the workforce in a company with 100 to 300 workers; 30 employees in a company with at least 300 workers, or all employees in companies with more than five workers. 

If any employee disputes their dismissal, they can challenge their employer before a Labor Court. 

Conclusion

If you are looking to expand your business operations in Spain, our Spain PEO & Employer of Record can provide everything you require when hiring employees without the need for a formal entity or Spanish subsidiary.

From recruitment and payroll to HR, we will also ensure you are compliant with local employment laws helping you to fast-track your international expansion and save you tens of thousands in potential set-up and hiring costs. Contact us today for a free consultation.