Payroll and Benefits Guide Spain

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee Income Tax

General

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.

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.

It is common practice for the annual salary to be split into 14 instalments to account for the double salary payment, which the employer will pay in July and December; this is stipulated in the employee’s employment contract and collective agreements.

General

The standard working week in Spain can be no longer than 40 hours a week. The typical Spanish working day is from around 8.30-9.00 am until approximately 2.00 pm and then closes for siesta, the operating hours will resume from 4.00-5.00 pm 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

If work time limits of 40 hours a week are surpassed, compensation of overtime is compulsory. 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.

Working Week

Monday–Friday

Paid Time Off

Employees in Spain are entitled to 30 calendar days (22 business days) of paid annual leave in a given year. (Some collective agreements may grant other specific entitlements)

Public Holidays

There are 10 public/national holidays and others vary between regions.

Sick Days

In case of illness or personal accident, the employee is entitled to temporary disability benefit for sick pay, receiving at least 60% of their regular salary.

In the case of a common disease or non-work-related injury, employees in Spain are entitled to the following:

• 1-3 days (3 days) = 0% (No obligation to pay unless the employer agrees to make the payment, or it is stated in the CBA.)
• 4 – 15 days (12 days) = 60% (60% of the employee contributions base paid by the employer.)
• 16 –20 days (5 days) = 60% paid by Social Security (60% of the employee contributions base paid by social security even if the employer makes the payment on behalf of the social security.)
• 21 days + = 75% paid by Social Security (75% of the employee contributions base paid by social security even if the employer makes the payment on behalf of the social security.)

The above is applicable unless the specific CBA states another option or a different company policy.

Maternity Leave

A pregnant employee is entitled to 16 weeks of unpaid 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 consists of two periods:

• Compulsory leave for the first 6 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).

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 mother’s base rate ( NIable base from the previous month to the leave start).

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

Paternity Leave

The father is entitled to 16 days of paid paternity leave (extended to 18 weeks for multiple births). In same-sex couples, both parents are entitled to paid leave. One needs to apply for paternity leave and benefits, and the other for maternity leave and benefits, however, in order to qualify for paid benefits, it is essential that each parent has the correct legal association with the child.

100% of the paternity pay will be paid by the Spanish Government, as long as the father has correctly 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. The employer is still liable for certain taxes that pertain to the salary payments.

Other Leave

Depending on the Collective Agreement in place, employees may be allowed additional leave types, once approved between the employer and employee, for the following:

• Employees are entitled to up to two years of unpaid leave to assist a seriously ill household or family member.
• Employees are entitled to 2 days of leave (4 days if travel is required) to care for a family member with a serious illness or injury.
• 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.
• Employees are entitled to 2 days paid leave (4 days if travel is required) for the death of a family member.
• If an employee is moving to a new home, they are entitled to 1 day’s leave.
• Employees are entitled to up to 15 days’ leave in case of marriage.
• Employees are entitled to paid leave to perform their public or personal obligations (in court) if necessary. A written notice is required.
• When performing trade union or workers’ representative activities, employees can be granted additional leave, as established by law or collective agreement.

Termination Process

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 15 days notice, if notice isn’t given, employers can give payment in lieu.

Severance Pay

Severance pay is only applicable when an employer terminated an employment agreement without notice (in this case, the severance pay would be for the same amount the employee would earn if they had been given notice).

An employer can choose either to terminate an employment contract with the granting of a notice period or to terminate the employment contract immediately with the payment of an indemnity in lieu of notice. A combination of both, where the serving of a notice period is followed by the payment of an indemnity for the remainder of the notice period is also possible.

The indemnity in lieu of notice is calculated based on the employee’s annual salary at the time of termination, including statutory and contractual fringe benefits. In addition, the following legal requirements must be complied with if an employer is terminating a contract:

1. The employer must provide written notice to the employee stating the reasons for the dismissal.
2. The employer must provide compensation of 20 days salary, per year of service, payable upon delivery of the written notice, up to a maximum of 12 months’ salary.
3. The employee must receive thirty days’ notice of the termination of the contract, to commence from the moment of the official notification to the employee.

If the dismissal is declared unfair, the employer must pay compensation equivalent to 45 days’ pay per year of service (if employed before 12th February 2012 and then 33 days after this date), up to a maximum of 42 months’ salary.

Probation Period

Probation or trial periods are generally set within the collective agreements. However, a common practice in Spain is two months, extending to 6 months for graduate technicians/seniority employees.

General

• Food allowance/vouchers
• Health insurance allowance

VISA

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 Labour prior to appointment.  The Embassy or Consulate will then issue the work and residence visa after the Ministry of Labour 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.

General

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 upto €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 Secotors and Collective Bargaining Agreements make this allowance a mandatory requirement e.g. the banking sector. This allowance is taxable.

General

The standard VAT rate in Spain is 21%.

If you are looking into hiring in Spain without a local entity, see our Spanish PEO service.