Employee Benefits in Spain

Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Spain might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Spain including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Spain, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.

Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into Spain.

It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect contract negotiations.

What Compensation Laws exist in Spain?

In Spain, a comprehensive framework of employment laws and regulations guarantees employees enjoy protection in various areas. Legislation covers such as minimum wages, social insurance, redundancy, termination, and severance, working hours, vacation leave, maternity, and paternity issues and more.

Statutory and mandatory minimums cannot be undercut by collective or trade union agreements that are concluded with employer organizations, although they can improve entitlements for employees.

Drawing up contracts is tricky enough, but in Spain it is vital to fulfil responsibilities to your employees over benefits, compensation, and minimum requirements. Do not take the risk of ignoring them. Compensation and benefits include:

• Social Insurance: Anyone working in Spain must register with the Social Security Institute (Instituto Nacional de Seguridad Social, INSS) and pay contributions to the system via their taxes, either as remitted by their employer or directly if they are self-employed (autónomo).
  
  Spain’s social security program reaches around 90% of the population, covering such as sickness, maternity, industrial injuries, pension, invalid and death benefits. Spain has among the highest benefits in the European Union (EU) but also among the highest contributions, the bulk of which is carried by employers.
  
  In 2021 employers pay 29.9% of employees’ salaries, plus a further average 1.5% to cover accidents and illness. Employees contribute 6.35%.
  
  
• National Minimum Wage: The national minimum as set by the Ministry of Employment and Social Security for 2021 in Spain remained at €1,108.30 (US$1,308) per month equating to €13,300 (US$ 15,709) per year, considering 12 equal monthly payments.
  
  
• Working Hours: Full-timers over 18 must not work more than nine hours each day up to a maximum of 40 hours a week, averaged over a year. One-and-a-half days’ consecutive rest per week is statutory with a 12-hour break between daily shifts. Working more than six hours requires a break of 15 mins.
  
  
• Overtime: Overtime applies if stipulated in a collective bargaining agreement or contract and is any work over the maximum permitted normal working hours.
  
  Overtime cannot exceed 80 hours annually. Compensation for extra hours can be paid at a premium or time off given in lieu. Since May 2019 employers must keep records for four years of employees’ daily working hours.
  
  
• Paid Vacation: Employees are entitled to a minimum of 30 calendar days (22 working days) annual paid leave with one holiday period comprising a minimum of two weeks. Employers cannot replace holidays with paid compensation.
  
  The holiday calendar is set by each company and agreed by workers and employers. Additionally, there are public, regional, and local paid holidays.
  
  
• Sick Pay: 60% of salary applies for days four to 20. For longer absences, or injuries suffered at work, employers must pay 75% of salary which is reimbursed by the Institute of Social Security.
  
  
• Maternity/Paternity Allowance and Entitlements: Maternity allowance is a minimum 16 weeks, taken consecutively including weekends and holidays with a minimum six weeks taken after birth. The mother is entitled to full pay from the Spanish Social Security Institute.
  
  Additionally, all pregnant women are entitled to healthcare before, during and following the birth at hospitals belonging to the National Health Service (Sistema Nacional de Salud).
  
  Paternity leave increased to 16 weeks from 2021, the same as for the mother, but the allowance is not transferrable between partners.
  
  
• Discrimination: Gender, marital status, age within limits established by law, racial or ethnic origin, social status, religious beliefs, political ideas, sexual orientation, affiliation or non-affiliation to a union or reasons of language inside the Spanish state are all areas where discrimination is prohibited.
  
  Employees cannot be discriminated against for reasons of disability, provided they are able to perform the role in question.
  
  
• Termination and Severance: Grounds for individual termination include end of contract for a specific job, resignation, and retirement through permanent illness. Objective dismissals can be based on workers’ incompetence, inability to adapt to technical change, poor attendance and redundancies based on economic, technical, or organizational grounds.
  
  In the event of fair dismissal, legislation requires employees receive a minimum legal compensation of 20 days’ pay for each year of service, up to a maximum of 12 months’ pay.
  
  In unfair dismissals, an employee on an open-ended contract is paid a minimum legal compensation of 45 days’ pay for each year of service, up to a maximum of 43 months’ equivalent pay.
  
  In enterprises of fewer than 25 employees, the Public Fund of Wage Warranty (Fondo de Garantía Salarial) pays 40% of the remuneration of employees in collective redundancies.

Social Security in Spain

In 2021 employers must pay 29.9% of employees’ salaries, plus a further average 1.5% to cover accidents and illness. Employees contribute 6.35%. 

Everyone working in Spain must register with the Social Security Institute (Instituto Nacional de Seguridad Social, INSS) and pay contributions to the system via their taxes, either as remitted by their employer or directly if they are self-employed (autónomo).

Spain’s social security program reaches around 90% of the population, covering such as sickness, maternity, industrial injuries, pension, disability, and death benefits. Spain has among the highest benefits in the European Union (EU) but also among the highest contributions, the bulk of which is carried by employers.

Some foreigners can be exempt from social security payments for up to five years in the event of a qualifying agreement between Spain and their home country.