In Spain, indefinite employment contracts may be verbal or in writing. Employment contracts that must be in writing include those for:

• discontinuous fixed services,

• training,

• part-time work,

• fixed term of more than four weeks,

• remote working, and

• employment outside Spain.

A fixed-term employment contract has a fixed or specific duration. Employers can use a fixed-term contract to substitute employees or production needs. A fixed-term contract for a substitute employee must include the name of the replaced employee, and the reason for the temporary replacement.

In Spain, minimum wages are fixed per industry sector in the collective bargaining agreements; however, in general, the minimum wage used in Spain is 1,080 EUR per month in 14 payments.

The minimum wage of temporary employees, as well as seasonal workers who work for the same company for less than 120 days, cannot be less than 51.15 EUR per day.

Common Benefits

Food allowance/vouchers

Health insurance/allowance, between 50-150 EUR per month

Home working allowance – 55 to 100 EUR per month.

The standard working week in Spain can be no longer than 40 hours a week (8 hours per day). The typical Spanish working day is from around 8.:30-9:00am until approximately 2:00pm followed by a closing for siesta. Operating hours resume from 4:00-5:00pm until around 8:00 pm.

The Spanish Worker’s Statute Royal Decree-Law 8/2019 requires all employees to record their effective daily working hours by clocking in and out when they have a break or at the end of the working day.

Overtime

Overtime regulations may vary according to industry.

White collar workers are typically limited to a 40-hour working week. If this is surpassed, compensation of overtime is compulsory (usually at a rate of 175%). The maximum number of overtime hours a single employee can work is 80 additional hours per year. Overtime work hours and payments are strictly regulated following collective agreements. Overtime is voluntary for the worker.

Remote Work

Remote working set ups have become very common in Spain in recent years. It is recommended to give all homebased employees a Home Working allowance of at least €50 (and up to €100 per month is common depending on the job requirements) Euros per month. This applies when home working 30% or more of the time. Certain Sectors and Collective Bargaining Agreements make this allowance a mandatory requirement e.g. the banking sector. This allowance is taxable.

In cases of sick leave due to common illness or non-work-related injury, employees must provide a medical certificate and will be entitled to the following salary payments:

• Day 1-3 of incapacity = unpaid (3 days)

• Day 4–20 of incapacity = 60% of the salary calculation base* (12 days)

• Day 21 & over of incapacity = paid at a rate of 75% of the salary calculation base* (up to a period of 18 months depending on INSS approval).

*Calculation base is the result of dividing the amount of the worker’s contribution basis (the monthly gross salary but capped at an annual maximum amount on which the Social Security rates are levied; for 2023 the cap is 4,495.50 EUR per month) corresponding to the month before the illness by the number of days to which this contribution applies (this divider will actually be 30 days, if the employee receives a fixed monthly salary).

The Employer covers the cost of sick leave until day 15, from the 16th day the employer continues to make the salary payment but can reclaim it from the Social Security Administration (INSS).

A Collective Bargaining Agreement might provide enhanced terms to the above sickness entitlements. With effect from 1st April 2023, the National Social Security Institute (INSS) will send medical sick leave reports for temporary incapacity directly electronically to companies, via the “INSS EMPRESAS” filing mechanism on the RED system.

Maternity Leave

A pregnant employee is entitled to 16 weeks of maternity leave, with the potential to increase to 18 weeks in the event of a complicated delivery or for multiple births.

The 16 weeks of maternity leave consist of of two periods:

• Compulsory leave for the first six weeks after the birth

• Remaining leave for the additional 10 weeks of a full absence, or 20 weeks of half-day absences, which may be taken any time up to one year later (with 15 days’ notice)

It is also common to take two weeks of breastfeeding leave after the end of the maternity leave

The maternity pay is managed and paid by the Social Security System Health Insurance Fund. The Social Security benefits are paid to employees on maternity leave calculated as a monthly benefit equal to 100% of the salary, up to the maximum base of 4,495.50 EUR per month.

In the case of disability of a child, an adopted child, or a foster care child, employees on maternity leave are entitled to have two additional weeks of leave.

All pregnant women are entitled to healthcare before, during and after the birth, and must visit the healthcare center with their Sistema Nacional de Salud (National Health Service) user’s card to receive them.

Paternity Leave

Fathers who have paid Social Security contributions for a minimum of 180 working days within the past 7 years or 360 total days in his entire professional life, is entitled to 16 weeks of paid paternity leave (extended to 18 weeks for multiple births). The first 6 weeks leave after the birth are compulsory and must be taken as time off. The remaining 10 weeks (or 20 weeks of half-day absences) can be taken from the end of the 6 weeks until the child turns one years old.

The Paternity pay is managed and paid by the Social Security System, calculated as a monthly benefit equal to 100% of the salary, up to the maximum base of 4,495.50 EUR per month. During this period, the employer is still liable to contribute to certain taxes that pertain to the salary payments.

For same-sex couples, both parents are entitled to paid leave. One applies for paternity leave benefits and the other for maternity leave benefits. However, in order to qualify for paid benefits, it is essential that each parent has the correct legal association with the child.

Parental Leave

Employees are entitled to take unpaid parental leave (providing at least 10 days notice), up until the minor child reaches eight years of age and for up to eight weeks continuously or over several blocks.

Employees in Spain are entitled to 30 calendar days (22 business days) of paid annual leave in any given year. A Collective Bargaining Agreement may grant additional vacation entitlements.

Workers should use their full vacation balance within the allotted year. Exceptions allowing carryover are in place where leave could not be used due to justifiable reasons such as temporary incapacity to work which permits these vacation days to be used at the end of the period of disability, even if the calendar year has ended, for up to 18 months after the end of the year in which they originated.

Workers are entitled to additional special leave (unless the Collective Bargaining Agreement outlines a different policy) for the following:

Care Leave: Employees are entitled to up to two years of unpaid leave to assist a seriously ill household or family member.

Family Nursing & Hospitalisation Leave: Employees are entitled to 5 days of paid leave to care for family members and second degree relatives with a serious illness, hospitalisation or surgery.

Bereavement Leave: Employees are entitled to 2 days of paid leave (4 days if travel is required) for the death of a family member.

House Moving Leave: If an employee is moving to a new home, they are entitled to 1 day’s leave.

Marriage Leave: Employees are entitled to up to 15 days’ leave in case of marriage.

Judicial Leave: Employees are entitled to paid leave to perform their public or personal obligations (in court) if necessary. A written notice is required.

Union Leave: When performing trade union or workers’ representative activities, employees can be granted additional leave, as established by law or collective agreement.

Workers are entitled to 14 paid public holidays per year including national, regional and local holidays.

National Holidays falling on the weekend are lost. Some regions and municipalities might declare giving the next working day off in lieu; workers should verify Reginal and Municipal holiday dates with their local authority.

Date Day Holiday Notes

1 Jan 2024 - Monday - New Year’s Day

6 Jan 2024 - Saturday - Epiphany

13 Feb 2024 - Tuesday - Shrove Tuesday - Extremadura

28 Feb 2024 - Wednesday - Andalusia Regional Holiday - Andalusia

1 Mar 2024 - Friday - Balearic Islands Regional Holiday - Balearic Islands

19 Mar 2024 - Tuesday - St Joseph’s Day - Castile-La Mancha, Murcia & Valencia

28 Mar 2024 - Thursday - Maundy Thursday - Andalucía, Aragón, Asturias, Balearic Islands, Canarias, Cantabria, Castilla-La Mancha, Castilla y León, Extremadura, Galicia, Madrid, Murcia, Navarra, País Vasco, La Rioja.

29 Mar 2024 - Friday - Good Friday

1 Apr 2024 - Monday - Easter Monday - Balearic Islands, Basque Country, Cantabria, Catalonia, La Rioja, Navarre & Valencia

10 Apr 2024 - Wednesday - Eid al-Fitr - Melilla

23 Apr 2024 - Tuesday - Aragon, Castile and Leon Regional Holiday - Aragon, Castile and Leon

1 May 2024 - Wednesday - Labour Day

2 May 2024 - Thursday - Madrid Regional Holiday - Madrid

15 May 2024 - Wednesday - San Isidro - Madrid

17 May 2024 - Friday - Galician Literature Day - Galicia

30 May 2024 - Thursday - Canary Islands Regional Holiday - Canary Islands

30 May 2024 - Thursday - Corpus Christi - Castile-La Mancha

31 May 2023 - Friday - Castile- La Mancha Regional Holiday - Castile-La Mancha

9 Jun 2024 - Sunday - La Rioja Regional Holiday - La Rioja

9 Jun 2024 - Sunday - Murcia regional Holiday - Murcia

13 Jun 2024 - Thursday - San Antonio - Ceuta

17 Jun 2024 - Monday - Eid al-Adha - Ceuta & Melilla

24 Jun 2024 - Monday - St John’s Day - Catalonia & Valencia

25 Jul 2024 - Thursday - National Day of Galicia - Galicia

25 Jul 2024 - Thursday - Saint James’ Day - Basque Country, Cantabria, Madrid & Navarre

5 Aug 2024 - Monday - Our Lady of Africa - Ceuta

15 Aug 2024 - Thursday - Assumption of Mary

2 Sep 2024 - Monday - Day of Ceuta - Ceuta

8 Sep 2024 - Sunday - Asturias Regional Holiday - Asturias

8 Sep 2024 - Sunday - Extremadura Regional Holiday - Extremadura

11 Sep 2024 - Wednesday - National day of Catalonia - Catalonia

17 Sep 2024 - Tuesday - Day of Melilla - Melilla

9 Oct 2024 - Wednesday - Valencia Regional Holiday - Valencia

12 Oct 2024 - Saturday - Fiesta Nacional de Espana

1 Nov 2024 - Friday - All Saints’ Day

9 Nov 2024 - Saturday - Virgin of Almudena - Madrid

3 Dec 2024 - Tuesday - San Francisco Javier - Navarre

6 Dec 2024 - Friday - Constitution Day

8 Dec 2024 - Sunday - Immaculate Conception - Andalusia, Aragon, Asturias, Castile and Leon, Extremadura, Melilla & Murcia

9 Dec 2024 - Monday - Immaculate Conception - Day Off in Lieu – Andalusia, Aragon, Asturias, Castile and Leon, Extremadura, Melilla & Murcia

25 Dec 2024 - Wednesday - Christmas Day

26 Dec 2024 - Thursday - St Stephen’s Day - Balearic Islands & Catalonia

Spain provides public health care to eligible individuals. Social security payments fund the system. Employers may choose to offer private health insurance to their employees.

The termination process varies according to the employment agreement and collective agreement in place and is based on the type of contract and reason for termination.

Notice Period

Notice periods in Spain are generally set at a minimum of 15 calendar days. Alternatively, employers can utilize payment in lieu of notice.

During the probation period no notice needs to be given.

Severance Pay

Fair individual redundancy: 20 days or 33 days of salary pay per year of service, up to 12 months. For collective layoffs, this is usually increased through collective consultations. Fair disciplinary dismissal: no severance.

Probation Period

Probation or trial periods are generally set within the Collective Bargaining Agreement; with the common minimum of 2 or 3 months for non-high qualified workers and a maximum of 6 months for high categorized workers.

Employer Payroll Contributions

24.18% - Social Security (includes pension and Intergenerational Equity Mechanism (MEI), minimum monthly base is 1,260 EUR and the maximum is 4,720.50 EUR)

5.50% - Unemployment

0.20% - Salary Guarantee Fund

0.60% - Professional Training

1.65% - Work Accident Insurance (rates may vary according to the specific insurance policy)

50 EUR per month - Remote Working Allowance (minimum), must be applied when home working 30% or more of the time

32.05%+ 50 EUR/Month Total Employment Cost

Employee Payroll Contributions

4.82% - Social Security (including Intergenerational Equity Mechanism (MEI), minimum monthly base is 1,260 EUR and the maximum is 4,720.50 EUR)

1.55% - Unemployment (minimum monthly base is 1,260 EUR and the maximum is 4,720.50 EUR)

0.10% - Professional Training (minimum monthly base is 1,260 EUR and the maximum is 4,720.50 EUR)

6.45% - Total Employee Cost

Employee Income Tax

19.00% - 0.00 EUR – 12,450.00 EUR Annually

24.00% - 12,450.00 EUR – 20,200 EUR Annually

30.00% - 20,201.00 EUR – 35,200 EUR Annually

37.00% - 35,200.00 EUR – 60,000 EUR Annually

45.00% - 60,000.00 EUR – 300,000.00 EUR Annually

47.00% - 300,000.00 EUR and over Annually

Tax Relief for Expats (Beckham Law)

The Beckham law provides a tax advantage to foreigners in Spain. Expats are eligible to pay a flat fee of 24% on the income they earn within Spain. The law applies to all employees who reside abroad but wish to work in Spain, allowing them to pay taxes as non-residents for the first 6 years of their stay. To qualify for the Beckham law tax relief, the worker should not reside in Spain for 5 years prior to obtaining the tax benefit. The expatriation or relocation for the purpose of obtaining tax benefits under the Beckham Law may occur either in the first year of application or in the previous year.

The application needs to be submitted within 6 months starting from the date of the inscription in the Social Security Administration as an employee for the Spanish company; a late register will result in an automatic denial. To Apply, the worker should submit Model 149 to the Spanish tax agency (“Hacienda”).

Payroll Cycle

In Spain, the payroll frequency is monthly and paid typically on the last day of the month.

13th Salary

13th and 14th month salary payments are mandatory in Spain. This is usually paid within the 12 monthly salary payments.

Authority Payment Paid To Due Date Method

Seguridad Social – Social Security - Social security - Last day of the following month - Direct debit or Payment in electronic bank

Agencia Tributaria_ Tax Authority - Withtholding taxes - 20th Day of the following month - Direct debit or NRC (a code received with the pre-payment)

Nóminas_Salaries - Employee - Last day in the month - Bank transfer

A work visa allows foreigners to enter, stay, and work in Spain. An employee must apply for the work visa in person, and applications must have been submitted at least 90 days before travel.

If the position is to fill a highly skilled role or the candidate is a non-EU citizen, employers need to apply for a work visa from the Ministry of Labor prior to appointment. The embassy or consulate will then issue the work and residence visa after the Ministry of Labor has approved the application.

In Spain, there is a specific work visa for seasonal workers, but obtaining a visa is the same. However, seasonal workers must prove that they have accommodations arranged, travel costs are taken care of, and that they will be returning to their respective country once the job has been completed.

The standard VAT rate in Spain is 21%.

Setting up a legal entity

The following lists the steps for establishing a legal entity in Spain

• Verify the availability of the company name with the Central Register of Companies

• Obtain a tax identification number (NIF) by applying to the main tax authority in Spain, the National Tax Agency.

• Deposit social capital at a bank: The company must have a minimum mandatory social capital deposited.

• Draw up rules (articles of association or by-laws) for governing the company.

• Sign the deed of incorporation before a notary.

• Pay the property transfer tax and duty on documented legal acts at the Tax office in the relevant autonomous community.

• Register the company in the commercial register of the province where it has its registered address to ensure it is published on the Register of Companies. Please visit the RMC website to see the different provincial commercial registers to find the correct one for you.

• Make a declaration of commencement of activity at the National Tax Agency. Also, register here for the tax on economic activities.

• Register the company with the social security authority.

For further information about the regulations on setting up a company, consult the Ministry of Industry, Commerce and Tourism PAE portal.

Registration as an employer

An employer will be registered in the social security system and as such will be assigned a number identifying you as an employer; this number will be linked to the workers you employ within the same province. This number is your contribution account code or CCC (Código de Cuenta de Cotización). For more information, click on the Social Security website.

• Registration as an employer must generally be done online via the Online Data Submission System (RED) or the social security online portal (SEDESS).

• If you are an individual employer (natural person), you must have a Social Security number (NUSS) which identifies you when contacting the Social Security. If you do not have a NUSS, you must apply for it with your online ID through the service ‘apply for a Social Security number’. If you have no online ID, you can ‘ apply for an online ID ’. To do this, you will need your ID document, an email address, an electronic device with a camera, and to attach the form TA.1

• You may then register as an employer through RED or via the SEDESS portal under ‘ Registration and assignment of CCC for individual employers ’.

• If you are a collective employer (company, entity without legal personality, etc.), the only option is to register with your online ID via the SEDESS portal under ‘ Registration and assignment of CCC for collective employers’.The documents to be submitted in each case can be found at the following link .

• Lastly, when you apply for registration, you must state the entity through which you will take out insurance for work-related risks and occupational illnesses, and benefits in the event of temporary disability arising from ordinary circumstances unrelated to work. These risks may be insured through the National Social Security Institute (INSS) or various partner institutions who work with the Social Security. A list of such institutions can be found on the Social Security website.

The Process:

1. Each new worker must be registered with the social security authorities and the national employment service (INEM) in advance of the worker starting to work. The registration is done by the payroll-provider, and requires at least 5 Days before their start date – They cannot be included in payroll until they have been registered

2. The payroll provider needs the employer/worker to provide the relevant information and documents below for all New Hires:Copy of ID Card/Residence Card/EU Passport – Front & Back

   Date of Birth

   Place of birth

   DNI /NIE/NIF (fiscal number)

   Social Security number (NAF Number)

   Marital status

   Number of dependents

   Son and daughter

   Adress+ Province

   Telephone+ Mobile

   Email

   Ending date at the last employer

   Ending reason

   Is the worker registered at INEM ( public administration of unemployment)

   Unemployment period

   Education Level

   Modelo 145 form

   Employment contract

   Bank details of payroll BANK AGENCY DC COUNT

   The worker should inform the payroll provider of the percentage of IRPF (Personal Income Tax) solicited

   The worker should inform the payroll provider if he resided less than 183 days in Spain until they registered with this company.

   Card of unemployment/bonus contract (for disabled person)

   A ‘remote working’ contract if they work from home

3. Papaya’s partner Mazars register the workers with the national employment service INEM and the Tesoreria General De La Seguridad Social, an IDC (the Informe de Datos de Cotización, this document shows that the worker is registered with social security and the details of their affiliation) certificate is issued. One copy should be kept by the employer and one copy kept by the worker

Please Note:

If the worker does not have a NAF number (Número de Afiliación de Seguridad Social or SSN Social Security Number numéro de seguridad social), there are two options:

a. The worker can contact the INSS (Instituto Nacional de la Seguridad Social) and process it on their own they will need to bring:

b. Passport and a NIE Number
Application form TA1 – completed and signed
Any other documents that would support their case (e.g. employment contract, house contract, job offer, etc)
Non-Eu must bring residency papers

c. Papaya’s partner Mazars can process it for them with the TA1 form completed and signed (this will entail additional costs).

d. If the worker does not have a NIE number (the Foreigner’s Identification Number Número de Identificación de Extranjero), they need to do the following:
Bring forms listed below to one of the immigration offices (oficinas de extranjeros); usually can be found in designated police stations (comisaría de policía):

The official NIE application form.

Passport photo.

A document certifying the reason to be applying for a NIE.

Identity document or Passport, the original, and a photocopy of all pages.