Employer of Record (EOR) in Andorra

Employment Laws and Regulations in Andorra

Employment Contracts

All employment contracts in Andorra must be in writing and composed in Catalan, the official language of the Principality. An employer of record ensures these requirements are met from the outset.

The Llei 31/2018 de relacions laborals (BOPA) specifies mandatory contract elements: job role and responsibilities, location of work, working hours, salary amount in euros, start date, duration of the engagement (indefinite or fixed-term with maximum duration), probation period terms if applicable, and leave entitlements.

Contracts must also reference statutory benefits, including CASS social security coverage and any employer-provided health or pension top-ups.

For fixed-term contracts, the law permits durations of up to two years; upon expiration, these automatically convert to indefinite employment unless both parties agree otherwise or the contract explicitly states termination on the agreed end date.

An EOR ensures every contract meets these statutory requirements and is prepared in proper legal Catalan, reducing the risk of disputes or regulatory challenge. The EOR also maintains archives of signed contracts and amendments, critical during labor inspections or tax audits.

Working Hours and Overtime

The standard working week in Andorra is 40 hours across five days, averaging eight hours per day. Employees are entitled to a 30-minute break for every six consecutive hours worked. The law requires a minimum 12-hour rest period between the end of one working day and the start of the next, and a continuous 48-hour rest period each week, typically encompassing the weekend.

These provisions protect employee health and prevent burnout while giving employers clarity on scheduling obligations.

Overtime is permitted but capped at 15 hours per week, 60 hours per month, and 350 hours per year. Compensation increases with each tier of weekly overtime hours.

This tiered structure encourages reasonable overtime use while protecting employees from excessive hours. The EOR tracks all overtime to keep the company compliant with weekly, monthly, and annual limits.

Minimum Wage

Andorra’s minimum wage for 2026 is $1,785 per month, equivalent to $10 per hour, according to Decree 8/2026 effective January 1, 2026. That is a 5.4 percent increase from the prior year, driven by cost-of-living pressures and the Principality’s wage indexation policy.

All employees, regardless of role or tenure, must earn at least this amount unless they are genuine apprentices or trainees under specific statutory apprenticeship programs.

The government indexes minimum wage annually to inflation and economic indicators, so employers should monitor government announcements each January for updates.

For part-time or hourly employees, the minimum wage is calculated pro-rata based on hours worked. An employee contracted for 20 hours per week must earn at least $5 per hour in 2026. The EOR ensures all payroll calculations meet or exceed the minimum wage, preventing unintentional violations that carry penalties and back-pay obligations.

Probation Period

The probation period in Andorra varies based on the employee’s salary level, so higher-earning roles undergo longer evaluation periods.

Probation period length depends on salary level relative to the minimum wage ($1,785/month in 2026).

Probation periods in Andorra are capped by statute based on the employee’s compensation relative to the minimum wage. For employees earning below three times the national minimum wage, probation is limited to one month. For employees earning three times the minimum wage or above, probation can extend to a maximum of three months. These limits apply to indefinite contracts and are set out in Llei 31/2018 de relacions laborals, published in BOPA. During probation, either party may terminate the contract at any time with written notice and without severance.

During probation, either party can terminate the employment relationship with no notice period and no severance obligation, provided the probation clause is in the contract. This gives employers a realistic window to assess job fit while protecting employees from indefinite uncertainty.

Once probation concludes, termination requires formal notice or severance, and grounds for dismissal are more heavily scrutinized by authorities.

Leave Entitlements

Annual Leave

Employees in Andorra are entitled to a minimum of 30 calendar days of paid annual leave per year, calculated after completing the first 12 months of employment. For new employees in their first year, leave accrues at 2.5 days per month (30 divided by 12). This pro-rata approach means fair allocation even if the employee starts mid-year or departs before the anniversary date.

Andorran law does not require accrual in a formal “leave bank” but does allow employers and employees to agree on leave scheduling. Typically, managers and staff coordinate time off in advance, and an EOR maintains records of accrued and taken leave to ensure compliance during payroll audits.

Unused leave at year-end does not roll forward unless the contract permits; in most cases, leave is “use it or lose it,” though some employers provide carryover windows. Leave taken during statutory holidays does not reduce the employee’s annual leave entitlement; holidays are separate.

Sick Leave

Employees can take paid sick leave for up to 12 months, extendable in six-month increments up to a maximum of three years in total. The CASS social security system pays a portion of the salary during sick leave: 53 percent of salary for the first 30 days, 66 percent for days 31 through 540, and 60 percent thereafter.

An employer cannot require the employee to use annual leave concurrently with sick leave; they are independent entitlements.

An employee must provide a medical certificate to the employer within 48 hours of the first day of absence due to illness. For absences extending beyond three consecutive days, a doctor’s letter is mandatory. An EOR collects these certificates, verifies their validity, and coordinates with CASS to ensure the employee receives the correct benefit amount.

Short-term illnesses of one to two days may not require documentation in some cases, but employers should establish a clear sickness reporting policy.

Maternity Leave

Pregnant employees receive 16 weeks of paid maternity leave at 100 percent of salary, funded by CASS. In cases of complications during pregnancy or childbirth, or for multiple births, the entitlement extends to 18 weeks. For multiple births (twins, triplets, etc.), the employee receives an additional two weeks for each child beyond the first.

An employee carrying twins, for instance, qualifies for 18 plus two weeks, totaling 20 weeks. The employee must notify the employer with medical evidence at least 30 days before the anticipated leave start date, though earlier notice is encouraged to allow for transition planning.

During maternity leave, the employee remains employed and covered by CASS. Upon return, she resumes her previous role or an equivalent position. Termination during pregnancy or up to 30 days after return from maternity leave is prohibited except in cases of gross misconduct or company closure.

Paternity Leave

Paternity leave in Andorra expanded significantly in 2026 and will continue expanding through 2030. In 2026, employees are entitled to six weeks of paid paternity leave at 100 percent of salary, funded by CASS. This entitlement is expanding incrementally: to 10 weeks in 2027, 14 weeks in 2028, 17 weeks in 2029, and 20 weeks in 2030, aligning with the maternity leave period by the end of the decade.

The father must provide a birth certificate or equivalent proof of paternity to the employer and notify management at least 15 days before the intended leave start date.

Other Statutory Leave

Beyond annual, sick, maternity, and paternity leave, Andorran law provides entitlements for specific life events. Bereavement leave is typically one to three days, depending on the relationship to the deceased (spouse, parent, child, sibling). Marriage leave is one day.

Personal leave for administrative matters may be available by agreement. The exact terms often depend on individual contracts and employer policies. An EOR incorporates these allowances into contracts and tracks usage to maintain compliance.

Statutory Employee Benefits

Andorran law mandates several employee benefits that employers must provide. Health insurance through the CASS social security system is the primary benefit; the employer and employee contributions together ensure access to medical care, hospitalization, and preventive services.

The CASS retirement branch provides old-age pension income, with both employer and employee contributing portions of salary. Sick leave benefits are partially funded through CASS, replacing 53 to 66 percent of salary during medical absences.

Maternity and paternity benefits are likewise funded through CASS, covering 100 percent of salary during leave. The employer is not required to add supplemental health insurance, meal allowances, or transport subsidies beyond the statutory minimum, though some employers do provide these as competitive differentiators.

Pension benefits are defined-contribution rather than defined-benefit, meaning the employee’s retirement income depends on the accumulated balance in their CASS retirement account. The CASS pension system provides flexibility for early withdrawal or conversion to an annuity at retirement age, currently set at 65 for most workers, though this may adjust based on longevity and fiscal policy changes.

Recent Regulatory Updates (2026)

Andorra’s employment regulations underwent several notable shifts in 2025 and early 2026. The changes below affect payroll, leave, immigration, and wage indexation.

Several regulatory changes took effect in Andorra during 2025 and 2026 that affect employers of record and foreign hires. The national minimum wage was raised in January 2026 under Decree 8/2026 (see Llei 31/2018 de relacions laborals for the underlying framework). Paternity leave is being phased up and will ultimately match maternity leave by 2030, per BOPA. Separately, the Government of Andorra allocates annual immigration quotas for skilled foreign workers and entrepreneurs under the initial residence and work authorization framework, and employers must index pay above the minimum wage in line with the consumer price index.

These updates reflect Andorra’s push to modernize its employment framework and attract global talent. For a broader overview of the business environment, see our guide to doing business in Andorra.

Work Permits and Visas in Andorra

Work Permit Requirements

Who Needs a Work Permit

Citizens of European Union and European Economic Area (EEA) countries, including Switzerland, do not require a separate work permit to be employed in Andorra. Their national identity cards or passports provide automatic work authorization.

Third-country nationals, including citizens of the United States, Canada, Australia, and most other non-EEA countries, require an explicit work permit issued by Andorran authorities.

Eligibility and Required Documents

To obtain a work permit in Andorra, the employer (or the EOR acting on the employer’s behalf) must demonstrate a genuine job offer and justify why a local candidate cannot fill the role.

The application typically includes a job description, evidence of the employee’s qualifications, educational credentials, a criminal background check (often from the employee’s country of origin), a valid passport, and proof of medical fitness.

Some positions require additional documents, such as professional licenses or certifications.

The Andorran government publishes annual immigration quotas. In 2025, Andorra allocated 100 work permits for skilled foreign workers seeking to reside in the country and 50 permits for self-employed entrepreneurs. These quotas are competitive; applications are reviewed on a first-come, first-served basis, and approvals are not guaranteed, particularly late in the calendar year when allocations are exhausted.

An EOR monitors quota availability and advises clients on realistic timelines and approval likelihood.

Processing Time and Validity

Work permit applications typically require four to six weeks for government processing, though timelines vary based on administrative load, completeness of documentation, and government decision volume. Once approved, a work permit is valid for one year and must be renewed annually or upon contract renewal.

The permit is employer-specific; if the employee changes jobs, a new permit application is required. Processing is handled by the Andorran government’s immigration office in coordination with labor authorities, and the EOR manages document preparation and submission.

Renewal Process

Work permits are renewed through the same application process as the initial permit. The renewal must be submitted before the current permit expires; applications filed after expiration may result in a gap in authorization and potential fines. An EOR manages renewal tracking and prepares the renewal application with updated employment contracts, medical certificates, and any other required documentation.

Most renewal applications are approved more quickly than initial applications, typically within two to four weeks, as the government already has the employee’s background information on file.

Common Visa Types for Foreign Workers

Several visa pathways are available for foreign workers seeking to live and work in Andorra. The table below summarises the most common options and who qualifies for each.

How an EOR Handles Work Permits

An EOR manages the end-to-end work permit process, from initial assessment through renewal. Upon hiring a non-EEA citizen, the EOR reviews the quota situation, assesses documentation requirements, and advises on timelines and likelihood of approval. The EOR collects documents from the employee, including educational credentials, background checks, and medical reports, and prepares the full application package for submission to Andorran authorities.

Once submitted, the EOR tracks the application status and communicates updates to the employer and employee. Upon approval, the EOR retrieves the permit and arranges delivery or collection. The EOR also reminds employers of renewal deadlines and initiates the renewal process well in advance of expiration to avoid employment gaps. This end-to-end management reduces employer burden and minimizes the risk of permit lapses or compliance violations.

Payroll, Taxes, and Social Security in Andorra

Managing payroll and taxes in Andorra requires navigating the CASS social security system, progressive income taxation, and statutory benefit requirements. Unlike many jurisdictions, Andorra’s tax system features a zero-rate bracket for lower earners, making it relatively tax-efficient for employees earning under $28,080 per year.

However, employers face significant social security contributions that must be calculated, withheld, and remitted monthly. Understanding these obligations is central to compliance and accurate cost projection. An employer of record in Andorra handles all payroll calculations, tax withholdings, and CASS filings on behalf of the client company.

Employer Contributions

The employer’s social security contribution in Andorra totals 15.5 percent of gross salary, split between two branches of the CASS system. The general branch, covering medical care and family benefits, claims 7 percent of gross salary.

The retirement branch, funding old-age pensions and disability insurance, claims 8.5 percent. These contributions are mandatory for all employees earning the minimum wage or above and are calculated on the gross salary before income tax deduction.

For an employee earning $3,510 per month, the employer’s CASS contribution is $544 per month (15.5 percent of $3,510). This cost is borne entirely by the employer and must be budgeted separately from salary. An EOR includes these contributions in cost projections and payroll processing, so billing and compliance stay accurate.

Employee Contributions

Employees contribute 6.5 percent of gross salary to CASS, also split between the general branch (3 percent) and the retirement branch (3.5 percent). These contributions are deducted from the employee’s paycheck and remitted by the employer to CASS on the employee’s behalf.

The employee contribution is separate from income tax (IRPF), which is calculated after the CASS deduction in many payroll systems, though the order can vary depending on the EOR’s or employer’s accounting method.

Using the same $3,510 monthly example, the employee’s CASS contribution is $228 per month (6.5 percent of $3,510). The combined employer and employee CASS contributions total 22 percent of gross salary, a significant payroll cost that affects both take-home pay and employer budgeting.

Income Tax

Andorra applies a progressive income tax (IRPF, Impuesto sobre la Renta de las Personas Físicas) to resident employees, with rates tied to annual salary brackets. The tax is remarkably favorable compared to other European jurisdictions. Employees earning up to $28,080 per year pay zero income tax, a significant benefit for lower-wage earners and entry-level positions.

Income between $28,081 and $46,800 ($28,081 to $46,800) is taxed at 5 percent. Income above $46,800 is taxed at 10 percent. These rates apply to Andorran tax residents; non-residents are subject to a flat 10 percent rate on Andorran-source income.

An employee earning $42,120 annually would calculate income tax as follows: the first $28,080 is taxed at 0 percent ($0.00), and the remaining $14,040 is taxed at 5 percent ($702 annual, or $59 monthly).

Combined with CASS contributions, the total deduction from gross pay is 9.5 percent, significantly lower than most EU jurisdictions. This favorable tax treatment is one reason Andorra attracts talent and why companies find it competitive to hire there.

Payroll Cycle

Payroll in Andorra is processed monthly, with salaries typically paid on or before the last working day of each month via bank transfer. The employer calculates gross salary, deducts employee CASS contributions and income tax, and remits the net amount to the employee’s bank account.

Simultaneously, the employer remits employer CASS contributions to the government on a separate schedule, typically by the 10th of the following month. An EOR coordinates these payments, maintains payroll records, and files monthly or quarterly tax returns depending on local requirements.

Some employers process payroll bi-weekly or mid-month advances, particularly for hourly workers or those with varying hours. However, the statutory requirement is monthly payment, and any additional payments must be clearly documented to avoid disputes over whether they constitute part of the regular wage or bonuses.

13th Month Salary and Bonus Pay

Andorra does not legally mandate a 13th month salary or obligatory year-end bonus. However, collective labor agreements in some sectors and individual contracts may include bonus provisions or 13th month payments as part of compensation negotiation. If a bonus or 13th month payment is contractually promised, it must be paid in full and is subject to CASS contributions and income tax.

Bonuses are typically calculated and paid in November or December and are treated as regular income for tax purposes. If an employee earns a $3,510 annual bonus in December, that month’s gross salary includes the bonus amount, and all applicable taxes and contributions are calculated on that total.

An EOR clarifies bonus and 13th month arrangements during contract negotiation and makes sure these are properly calculated and documented in payroll records.

Cost of Hiring Through an EOR in Andorra

EOR Service Fees

An EOR’s service fee in Andorra typically ranges from $300 to $600 USD per employee per month, depending on the scope of services, complexity of the role, and contract volume with the EOR.

This flat fee is distinct from salary and social security contributions; it covers administrative services including payroll processing, tax compliance, contract management, statutory leave administration, and ongoing HR support. Unlike percentage-based models that scale with salary, a flat fee keeps costs predictable and lets employers budget accurately regardless of pay level.

For companies hiring multiple employees, some EORs offer volume discounts or negotiate tiered pricing. A startup with five employees might achieve an average cost of $400 per employee monthly through volume discounts, while a company hiring a single employee might pay the full $600 per month. Most EORs charge the fee only during active employment; once an employee is terminated and offboarded, fees cease.

The EOR fee does not include certain specialized services such as relocation assistance, visa sponsorship beyond standard work permit filing, or supplemental benefits like insurance or wellness programs.

These may be available as add-ons or negotiated as part of a larger service package. An EOR typically quotes the base service fee upfront during contract negotiation, and you should clarify what is included (payroll, tax filings, leave management) and what is not before engaging.

Total Employment Cost Breakdown

Understanding the complete cost of an employee in Andorra requires summing gross salary, employer CASS contributions, and the EOR service fee. The following example illustrates the full cost structure for a typical hire.

In this example, an employee with a gross salary of $1,400 per month costs the employer $2,017 monthly, accounting for social security and EOR fees. That is a 44 percent markup on base salary, a real factor in budgeting.

For higher salaries, the percentage impact of the EOR fee decreases. An employee earning $3,500 monthly would incur $542.50 in employer CASS contributions plus a $400 to $600 EOR fee, bringing total cost to approximately $4,442 to $4,642, or roughly 27-33 percent above gross salary.

When planning headcount and budgets, employers should assume that the total cost per employee is between 40 and 50 percent above the salary amount you offer. This allows for accurate financial forecasting and pricing decisions. For detailed cost estimates tailored to your team size and salary ranges, contact Remote People.

Ready to hire in Andorra? Get started with Remote People as your employer of record. We handle employment contracts, payroll, tax withholding, and full Andorra compliance, with no local entity needed. Request a free consultation to discuss your hiring plans.

Benefits of Using an EOR in Andorra

An employer of record delivers substantial strategic and operational advantages for companies hiring in Andorra. The most immediate benefit is speed to hire. Establishing a legal entity in Andorra typically takes three to six months and involves substantial upfront costs, legal fees, and ongoing compliance obligations.

An EOR shortens this to one to two weeks, allowing you to offer positions, conduct interviews, and onboard talent while the EOR handles registration, contracts, and government filings in parallel. For startups testing market fit or scaling teams rapidly, this acceleration matters.

Compliance risk mitigation is equally important. An employer of record in Andorra absorbs this risk entirely. Andorran labor law, codified in the Labour Relations Law 31/2018, imposes detailed requirements around contract language, working hours, leave entitlements, and termination procedures. Non-compliance can result in fines, back-pay liability, and reputational damage.

An EOR assumes full compliance responsibility, ensuring that every contract meets legal requirements, that payroll calculations are correct, and that leave administration follows statutory guidelines. The EOR’s local expertise and ongoing monitoring of regulatory changes means your employment practices remain current without requiring you to hire a compliance officer or dedicate internal resources to regulatory tracking.

Cost efficiency extends beyond the EOR fee itself. By consolidating payroll, social security filings, and tax returns across multiple employees, an EOR achieves economies of scale that reduce per-employee overhead compared to building an internal payroll and compliance function.

An EOR also eliminates the expense of setting up a local office, hiring HR staff, and maintaining relationships with accounting firms and labor lawyers. For companies with small teams in Andorra (one to five employees), the all-in cost via EOR is typically lower than building internal capacity.

Flexibility and scalability are core strengths. An EOR allows you to hire one employee or twenty with the same ease; there is no minimum team size and no long-term entity commitment.

If business conditions change and you need to reduce headcount, you can terminate the employment relationship with statutory notice, offboard the employee through the EOR, and walk away without needing to dissolve a legal entity or manage residual compliance obligations. This flexibility works well for companies piloting new markets, testing product-market fit in a region, or operating with volatile demand.

Local expertise and cultural knowledge are less tangible but important. An EOR embedded in Andorra understands local labor norms, government agency relationships, and employment expectations.

They can advise on market salary ranges, help navigate visa requirements, and field questions about statutory leave, termination procedures, and contract modifications. This reduces the risk of cultural missteps or operational surprises that could affect team morale or legal standing.

Employee experience also improves through an EOR. Employees benefit from clear, legally sound contracts, predictable payroll, and access to benefits administration.

Many EORs provide employees with portals or support channels to access payslips, leave balances, and tax documents. This transparency and professionalism strengthen retention and satisfaction, particularly for international hires who may be unfamiliar with Andorran systems.

Termination and Offboarding in Andorra

Notice Periods

When terminating an employee through an employer of record in Andorra, the EOR manages the entire offboarding process in compliance with local law. Andorran labor law specifies notice periods based on tenure, protecting both employers and employees through clarity and fairness.

Notice must be provided in writing and includes the effective date of termination, allowing the employee time to plan their departure or seek alternative employment.

For employees with up to six months of service, the notice period is 15 days. This shorter window matches the probationary or early-stage nature of the employment relationship. For employees with six months to one year of service, the notice period extends to one month.

Once an employee reaches one year of tenure, the notice period is two months. This scaled approach balances employer flexibility for newer hires with employee security for longer-tenured staff.

During the notice period, the employment relationship continues. The employee remains entitled to salary, benefits, and statutory leave accrual. The employee must continue performing work duties unless the employer places the employee on “garden leave” (a common practice where the employee is paid but not required to work, used to protect confidential information or transition responsibilities).

Upon the effective termination date, the employment relationship ends, and the employee must be provided final wages, accrued and unused annual leave payout, and severance if applicable.

Andorra’s notice periods for termination are set out in Llei 31/2018, which scales the notice obligation to the employee’s length of service. Written notice is required in every case, and the required tier depends on how long the employee has been with the company.

Severance Pay

Andorran severance pay under Llei 31/2018 compensates employees dismissed from indefinite-term contracts. The statutory formula pays 25 days of salary per year of service, capped at 365 days, which is roughly one year of pay. Employees with at least six months of service qualify, and the base is the last gross monthly salary.

Calculation Method

Severance in Andorra is calculated based on tenure and the statutory formula of 25 days of salary per year of service. For an employee earning $2,340 per month and having worked three years, the calculation is:

($2,340 / 30 days) × 25 days × 3 years = $5,850

The severance formula applies to terminations without cause. The calculation uses the daily salary at the time of termination, ensuring that employees who received raises during their tenure are not penalized.

Caps and Exceptions

The maximum severance cap is 365 days of salary, ensuring that very long-tenured employees do not receive disproportionately large payouts. An employee with 15 years of service who earned $2,925 monthly would typically qualify for ($2,925 / 30) × 25 × 15 = $36,563 but this exceeds the 365-day cap of ($2,925 / 30) × 365 = $35,588 so they would receive the cap amount.

Severance is not owed in several circumstances. Employees dismissed during probation are not entitled to severance. Employees terminated for gross misconduct (theft, violence, willful breach of duty, etc.) are not entitled to severance.

Employees who resign voluntarily are not entitled to severance unless the contract or a collective agreement specifies otherwise. Employees with tenure shorter than six months are also not entitled to severance; the notice period alone is the employer’s obligation.

Grounds for Termination

Andorran law distinguishes between termination with cause (just cause) and termination without cause. Termination with cause allows the employer to dismiss an employee immediately, without a notice period, for serious misconduct.

Examples include theft, violence, willful insubordination, gross breach of confidentiality, or repeated violation of workplace rules after warnings. The employer must document the misconduct and communicate the grounds for termination clearly.

Termination without cause requires the employer to provide written notice and the statutory notice period (15 days to two months, depending on tenure). Without cause termination does not require grounds; the employer can terminate for business reasons, role elimination, or downsizing.

However, protected categories of employees cannot be terminated without cause. These include pregnant employees (protected up to 30 days after return from maternity leave), employees on paternity leave, and employees exercising statutory rights such as union representation or CASS-protected leave.

An EOR carefully reviews termination requests to confirm legal grounds and ensure proper notice. The EOR drafts termination letters, calculates severance accurately, and files final tax returns and CASS notifications, ensuring a clean offboarding process that minimizes legal exposure.

EOR vs. Other Hiring Models in Andorra

EOR vs. Setting Up a Local Entity

For companies considering a long-term Andorran presence, establishing your own legal entity may be preferable to relying on an employer of record. The following table compares the two models across key dimensions.

For companies with 15 or fewer employees planning to stay in Andorra for three to five years, an EOR is typically more cost-effective and operationally simpler. Your total cost via EOR is $300-$600 per employee monthly, amounting to $3,600-$7,200 annually for a single hire. Establishing your own entity costs $15,000-$30,000 upfront plus $8,000-$15,000 annually in compliance, accounting, and legal fees.

Over three years, the EOR path costs $10,800-$21,600 for one employee, while the entity path costs $39,000-$75,000. The entity becomes economically attractive only when you exceed roughly 12-15 employees, at which point the per-employee cost of shared compliance infrastructure decreases.

An EOR also allows you to exit the market with no legal or financial obligations beyond final termination payments and fees. Setting up a local entity creates legal liability and requires formal dissolution procedures if you decide to exit, a process that can take months and involve residual compliance obligations.

However, a local entity is necessary if you plan to bid on government contracts or tender for public procurement, as Andorran law often reserves these opportunities for locally registered companies. It is also preferable if you anticipate operations lasting more than five years and expect to grow beyond 15 employees, as the fixed infrastructure costs become negligible at scale.

EOR vs. Hiring Independent Contractors

Another common question is whether to hire through an employer of record or engage independent contractors. Each model carries different legal, financial, and operational implications.

Andorran law permits independent contractor relationships, but the scope is narrower than in some jurisdictions.

The critical distinction is control: if a contractor works under your direction, operates on your schedule, uses your tools, and is integral to your business operations, they may be reclassified as an employee despite a contractor agreement. Misclassification exposes you to back-wage liability, social security contributions, and penalties.

Independent contractors work best for genuinely short-term, specialized tasks: a contractor might audit your Andorran payroll for one month, design a logo for your product launch, or conduct market research for a specific project.

These engagements are time-bounded, outcome-focused, and do not imply ongoing employment. For long-term team members (developers, customer success managers, marketing specialists), an EOR employment relationship is appropriate and compliant.

Financially, independent contractors often quote higher rates than equivalent employee salaries because they shoulder their own tax liabilities and lack benefits. An employee earning $2,340 monthly might require a contractor charging $2,925-$3,510 monthly for the same work, as the contractor must cover their own CASS contributions and income tax.

However, the contractor relationship avoids employer contributions, potentially offsetting the higher rate. If you need specialized talent for a discrete project and the timing is flexible, contractors are viable. For ongoing, core team roles, an EOR employee is more compliant, predictable in cost, and reduces legal risk.

For contractor hiring and management, explore Remote People’s contractor platform or learn more about hiring contractors in Andorra.

EOR vs. PEO

A Professional Employer Organization (PEO) is sometimes confused with an EOR, but the models differ significantly. A PEO enters a co-employment arrangement: you and the PEO jointly serve as the legal employer, sharing compliance obligations and liability. This model works best for companies that already have a local entity and want to outsource HR functions while maintaining ownership and control.

In practice, PEOs are most relevant for companies that have already established an Andorran legal entity (through prior business operations or a subsidiary) and want to outsource payroll and HR administration while retaining ownership.

If you do not yet have a local entity, a PEO would require you to set one up first, incurring the three- to six-month timeline and $15,000-$30,000 upfront cost. You would then contract with the PEO for administrative services, sharing compliance risk. In contrast, an EOR consolidates legal employment and administration into one service, faster and with clearer liability allocation.

Andorra does not have a formal PEO regulatory framework, meaning PEO arrangements operate through service agreements between you and the PEO rather than statutory co-employment status. This can create ambiguity around liability if a dispute or audit occurs.

An EOR, by contrast, has a clearer legal relationship: the EOR is the registered employer, and you are the work-directing client. For most companies entering Andorra for the first time, an EOR is the simpler and more cost-effective choice than building an entity and then contracting with a PEO.

For detailed information about PEO services in Andorra, consult our guide.

Public Holidays in Andorra

Andorra observes 14 public holidays per calendar year, most aligned with Christian traditions and national celebrations. On public holidays, employees are not required to work, and employers must provide paid time off. If operational necessity requires an employee to work on a holiday, additional compensation is typically owed, though this is subject to contract and collective agreement provisions.

When planning projects, team calendars, and business milestones, account for these 14 holidays. The distribution is relatively even across the year, with no month having fewer than one holiday except for single-holiday months and a concentration of Christian holidays in late November, December, and early January.

Employees do not accrue additional vacation days in lieu of holidays; the statutory 30 days of annual leave is separate and is calculated based on working days after the first 12 months of tenure. An EOR tracks holiday schedules and reminds employers to apply holidays correctly in payroll processing to ensure employees are paid for holidays rather than charged against their leave balance.

How to Get Started with an EOR in Andorra

The process of engaging an employer of record and hiring your first employees in Andorra involves several straightforward steps.

• First: Evaluate your hiring needs. Determine how many employees you plan to hire in Andorra, which roles you need to fill, and your expected salary ranges. This helps you and the EOR estimate costs and timelines.
• Second: Contact a qualified employer of record such as Remote People and request a consultation. Whether you need help with recruiting in Andorra or executive search, Remote People provides end-to-end support. Discuss your team structure, any visa or work permit requirements for your candidates, and special needs such as relocation support or contract customization. The EOR will provide a service proposal and fee estimate.
• Third: Review and sign the EOR service agreement. This contract outlines the EOR’s responsibilities, your obligations (e.g., providing accurate employee information), the fee structure, and dispute resolution procedures. Ensure you understand what is included in the fee and what services are add-ons.
• Fourth: Identify and qualify your candidates. Once the EOR agreement is in place, you can begin recruiting. When you have identified a candidate you wish to hire, the EOR prepares a contract in Catalan, coordinates with the candidate on terms, and initiates social security and work permit applications (if necessary).
• Fifth: Finalize onboarding and begin payroll. Once contracts are signed and all registrations are complete, the employee begins work on the agreed start date, and payroll processing begins the following month. The EOR continues to support payroll, leave administration, and compliance throughout the employment relationship.

For questions specific to your hiring plans or to explore how Remote People can support your Andorra expansion, get in touch with our team.

Where companies hiring in Andorra expand next

Employers with operations in Andorra often extend across Southern Europe, leveraging EU portability and overlapping business culture. Many companies add hiring in Monaco first, drawing on shared EU compliance frameworks. An EOR partner in Spain follows as overlapping Iberian business culture, while France offers EU-level labor law alignment. A team in Portugal is often the fourth step, valued for shared Iberian hiring dynamics.