Spain is an attractive destination for hiring international talent. With a highly educated workforce, growing tech hubs in cities like Madrid and Barcelona, and strong legal protections for workers, it offers a compelling environment for companies looking to expand in Europe.

Whether you’re hiring one remote employee or building a local team, it’s important to understand Spanish employment laws, contract rules, and payroll expectations. 

This guide covers the key requirements for hiring in Spain, including your options as an employer and how to stay compliant every step of the way.

Let’s dive in!

How to Hire Employees in Spain

Before hiring in Spain, it’s important to choose the right employment structure for your business goals. The method you choose will affect your legal responsibilities, setup time, ongoing costs, and the level of control you have over your team.

Companies can hire workers in Spain through one of the following three employment methods:

Setting Up a Local Entity

Registering a company in Spain allows for direct employment and full operational control. This option can make sense for businesses with long-term plans in the country, but it also involves a considerable investment of time, resources, and administrative effort.

This is a good option to consider when hiring and starting business in Spain, however it does come with more complexities and difficulties when compared to the following methods.

Working with an Employer of Record (EOR)

An Employer of Record (EOR) is a third-party service that legally hires and manages employees on behalf of another company. By partnering with an EOR in Spain, the provider becomes the legal employer for your local team, while you retain control over day-to-day work and performance.

This setup allows you to hire quickly without the need to establish a local entity or open a physical office. It saves time, simplifies compliance, and eliminates the complexities of setting up a business under Spanish law.

And most conveniently, the Employer Of Record is responsible for handling the employment contracts, employee payroll, tax filings, and finally, the most difficult part – staying compliant with Spanish labor laws. This option is especially useful for testing a new market, scaling gradually, or managing a distributed team without building internal infrastructure.

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Hiring Independent Contractors

Hiring contractors in Spain can offer a lot of flexibility for project-based work. However, the Spanish government closely monitors misclassification. If a contractor is working under conditions similar to a full-time employee, such as fixed working hours, continuous supervision, or long-term assignments, penalties may apply. These can include back payments for taxes, social security, and employee benefits.

That said, we’re not here to discourage this approach. The RemotePeople team can support you in staying fully compliant when working with contractors, and we offer a detailed guide on how to legally hire and pay contractors. If you have any questions, we’re always here to help.

Hire in Spain

Ongoing labor reforms, convenios colectivos, Seguridad Social contributions, and some of Europe’s strictest dismissal indemnity requirements.

We handle employment contracts, payroll, social contributions, and full Spanish compliance.

No local entity needed. Your team can start in days.

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What is a Spain Employer of Record?

We’ve just touched on how an EOR can simplify hiring, but let’s take a closer look at the full scope of what it offers.

An Employer of Record allows you to hire employees in Spain without setting up a local company. It takes on the legal and administrative responsibilities of employment so that you can focus on growing your team and running your business.

Key services include:

  • Payroll and Tax Management: The EOR ensures employees are paid correctly and on time, with all local taxes, social security contributions, and deductions handled in compliance with Spanish regulations.
  • Employment Contracts: The Employer of Record helps keep you legally compliant by drafting employment contracts in accordance with Spanish labor laws, protecting both your business and your employees.
  • Onboarding and Offboarding: From offer letters to exit paperwork, the EOR manages the documentation and processes needed to bring employees on board or transition them out smoothly.
  • Benefits Administration: The EOR provides statutory benefits such as healthcare, paid leave, and pension contributions, and can assist in designing additional perks to stay competitive in the local market.
  • Work Permits and Visas: For foreign hires, many EORs offer visa sponsorship and immigration support to streamline international hiring.
  • HR and Compliance Support: A good EOR keeps your business up to date with changing employment laws in Spain, reducing the risk of compliance issues.
  • Employee Support: EORs often act as your employees’ local Human Resources contact, handling questions about contracts, benefits, and policies, providing you with peace of mind from day one.

In summary, an EOR typically handles legally compliant employment contracts, payroll processing (including taxes and social contributions), tax filings for both the employer and the employee, onboarding documentation for new hires, and statutory benefits administration.

At Remote People, we often recommend the EOR model to help companies stay compliant while scaling internationally. While the EOR acts as the legal employer, you retain full control over your team’s daily tasks, performance, and goals.

Employment and Labor Laws in Spain

Contracts and Requirements

All employees in Spain must have a written contract. It must include:

  • Full legal names and addresses of both parties
  • Start date and, if applicable, end date
  • Salary, benefits, and working hours
  • Job role and category
  • Probation period (if applicable)
  • Holiday allowance and termination notice

Fixed-term, part-time, and full-time contracts are all common. Collective bargaining agreements often influence the terms of employment, particularly in regulated industries such as finance, healthcare, and construction.

Working Hours and Overtime

Overtime is limited to 80 hours per year and must be compensated, either through additional pay or equivalent time off. The specific rates and conditions are typically outlined in collective bargaining agreements and may vary depending on the region or industry.

Employees are entitled to a daily rest period of at least 12 consecutive hours between workdays and must receive at least one full day off per week. In many workplaces, especially in certain regions or traditional industries, the working day still includes a midday break of 1 to 2 hours, an arrangement often associated with Spain’s historical “siesta” culture. This split-shift schedule remains common in sectors like retail, hospitality, and public services.

Probation Periods

While probation periods are not mandatory in Spain, they are commonly included in employment contracts. The standard maximum length is six months, although collective bargaining agreements may establish different limits. 

During this period, either party can terminate the contract with minimal notice. However, employers are still expected to follow fair procedures and provide a valid justification for dismissal.

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Payroll and Taxes in Spain

Payroll Cycle

Employees in Spain are typically paid monthly, with salaries processed on the last working day of the month. Many companies also pay holiday bonuses in June and December, depending on the employment contract or industry agreement. These are known as pagas extraordinarias and are either paid as two additional full months’ salary or prorated across the year. 

Payroll must include deductions for income tax (IRPF), social security, and other applicable withholdings. Employers are also responsible for making social security contributions on top of gross salary, typically amounting to around 30% of the employee’s salary cost.

Time Off and Leave in Spain

Maternity and Paternity Leave

Both parents are entitled to 16 weeks of paid leave following childbirth or adoption. This is funded by the Spanish Social Security System. The first six weeks are mandatory and must be taken immediately after childbirth or adoption. The remaining 10 weeks can be used flexibly, either consecutively or in separate blocks, within the child’s first 12 months. This leave is non-transferable, meaning each parent must take their own entitlement.

Employees may also request:

  • Two one-hour breaks per day for breastfeeding or childcare until the child is 9 months old
  • A reduced work schedule (with adjusted pay) for up to 12 months after maternity or paternity leave
  • Extended unpaid parental leave for child care or personal reasons

Additional options include part-time returns to work, leave for premature births, and job protection during parental absences.

Sick Leave

Employees are eligible for sick pay if they’ve contributed to Social Security for at least 180 days in the past five years. Employers pay for the first 15 days, after which Social Security takes over. Sick leave due to workplace accidents or occupational illness may be covered from the first day and typically results in higher compensation.

Leave TypeDuration
Marriage15 days
Bereavement2 days
Unpaid Family Care LeaveUp to 2 years (for serious illness of a relative)

Medical certification is required, and ongoing leave must be reviewed periodically by a public health service doctor.

Employee Benefits in Spain

Employers must provide statutory benefits such as social security contributions, paid holidays, parental leave, and minimum wage compliance. Many companies go further by offering perks like private health insurance, supplemental pensions, flexible hours, and remote work options.

Additional Employee Benefits to Consider

To attract and retain top talent, many employers also offer:

  • Private health insurance for employees and their families
  • Supplemental pension plans
  • Meal vouchers, commuting allowances, or home office stipends
  • Training and professional development budgets
  • Flexible working hours or remote-first policies

An EOR can assist in helping companies to deliver both mandatory and additional employee benefits, ensuring everything is properly set up and aligned with Spanish labor law.

Terminations and Severance in Spain

Legal Grounds for Termination

In Spain, employment contracts cannot be terminated without legal cause. The country’s labor laws offer strong protections for employees, so dismissals must always be clearly justified and follow proper procedures. 

Valid reasons for termination include:

  • Disciplinary dismissal – due to misconduct, repeated absenteeism, insubordination, or breach of contract.
  • Objective dismissal – such as redundancy, role elimination, business restructuring, or the employee’s unsuitability for the role.
  • Business closure or downsizing – including financial hardship or complete shutdown of operations.
  • End of a fixed-term contract – when the agreed-upon employment period concludes.

In all cases, employers must present written notice outlining the reason for dismissal, along with documentation to support it. Dismissals found to be unjustified or procedurally incorrect can lead to court-ordered compensation or reinstatement.

Notice Period

A minimum of 15 calendar days’ notice is standard for most terminations, but longer notice periods may apply based on the employment contract or collective bargaining agreement. Employers who choose not to provide notice must instead offer payment in lieu.

Severance Pay

Severance pay is typically required in cases of redundancy or other objective dismissals. The standard formula is: 20 days’ salary per year of service, capped at 12 months’ pay.

In cases of disciplinary dismissal, no severance is owed – unless the dismissal is later deemed unfair. Employees have the right to challenge terminations through Spain’s labor courts. If the court finds the dismissal invalid, it may order compensation or reinstatement of the employee.

Hiring Independent Contractors in Spain

Hiring independent contractors in Spain offers flexibility, particularly for short-term projects or specialized tasks. Contractors manage their own tax payments and social security contributions, and businesses are not responsible for employee benefits or payroll taxes.

However, as we mentioned earlier, misclassification is a significant risk. If a contractor operates under conditions typical of an employee, such as working fixed hours, reporting to a manager, or using company-provided equipment. They may be reclassified as an employee by Spanish authorities.

In such cases, your business could face:

  • Back payments for social security contributions
  • Obligations to provide retroactive employee benefits
  • Fines and interest
  • Potential legal disputes

To remain compliant, it’s critical to:

  • Draft clear service agreements that define the contractor’s scope, autonomy, and payment terms
  • Avoid controlling how, when, or where the contractor works
  • Limit long-term or full-time engagements under contractor status

Despite the risks, contracting can still be a useful option, especially when done properly. At RemotePeople, we offer guidance on how to safely hire and pay contractors in Spain. We also have a detailed compliance guide available for those considering this route.

If you’re unsure about whether to hire a contractor or an employee, our team can help you assess the risks and benefits and choose the right setup for your business.

Hire Employees With the Best Spain EOR

Remote People

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At Remote People, we provide full-service EOR solutions in Spain through our own local entity, making it easy to hire even if you haven’t found candidates yet. Our in-house recruiters help you source and vet top talent, offering access to a curated talent pool and support with salary negotiations tailored to the Spanish market.

We handle payroll, social security compliance, PTO, and manage additional benefits like equity plans. When you’re ready to establish a local entity, we also support business incorporation and ensure a seamless transition from EOR to direct employment.

Deel

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Deel provides EOR and contractor management services in Spain through its robust, all-in-one HR platform. It includes time and attendance tools, automated payroll, and support for both mandatory and supplementary benefits like healthcare, life insurance, and pensions.

While Deel doesn’t assist with talent sourcing, its cloud-based system streamlines employee management and ensures accurate, compliant operations across the full employment lifecycle.

Remote

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Remote.com is a global EOR provider offering services in Spain with a full-featured HR platform that includes time tracking, payroll, and benefits management. While it doesn’t offer hands-on recruitment, it gives clients access to talent pools and an AI-driven matching tool to support hiring efforts.

Remote handles all mandatory employee benefits in Spain and also offers supplementary options like health insurance and private pensions, making it a solid choice for companies focused on streamlined HR and competitive talent packages.

Expand into Spain Easily with Remote People’s Employer of Record in Spain

Spain offers a strong labor market, clear employment protections, and access to top-tier talent. With its strategic location in Europe and growing reputation as a tech hub, it’s an ideal location for companies looking to expand internationally.

However, hiring in Spain also comes with a detailed regulatory framework and strict compliance obligations. From employment contracts and payroll rules to leave entitlements and termination processes, there are many layers to consider.

Using an Employer of Record (EOR) is often the simplest and most cost-effective way to hire in Spain without setting up a local company. The EOR acts as the legal employer, handling all administrative and legal responsibilities, while you continue to manage your team’s day-to-day work, culture, and performance.

If you’re ready to hire in Spain, get in touch with our team at Remote People. We’ll help you build your team, stay compliant, and focus on what matters most: growing your business.