Spanish Employment Contracts

Employment Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over 100 countries with creating compliant and balanced labor contracts.

Our team keeps track of the Spanish laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR services, we can provide compliant labor contracts for employees in Spain, including local benefits.

To support your plans, we made this guide including the basics of employment contracts in Spain. After reading this guide you will know everything about social security, notice periods, and the average working hours.

How do you hire Spain Employees?

Companies hiring staff for their international expansion into Spain face extensive tax, employment, and social insurance regulations. Failure to comply with Spanish regulations and European Union (EU) mandates risks fines and sanctions.

Spain’s employer-employee relationship is governed mainly by the Workers’ Statute (Estatuto de los Trabajadores), the Spanish Labor Law and a host of mandates and decrees that provide significant benefits and guarantees for employees.

This framework covers payroll and tax law, social security, termination and severance rights, vacations, sick leave, minimum wages, and other areas. These factors apply particularly when a foreign company wants to hire local employees in Spain, as they must comply with all obligations on behalf of the employees.

In drawing up their agreement, parties cannot ‘opt out’ of statutory or mandatory regulations and some specific requirements should be considered:

• Contracts can be verbal, which is rare, or in writing, but must be transferred to written form at either party’s request during the contract’s term.
• Certain contracts must be in writing, such as short-term and temporary agreements and contracts for lawyers and executives.
• Contracts must be lodged with the Public State Employment Service within 10 days of coming into force.
• Contracts must stipulate salary, any supplementary payments and frequency of remuneration.
• Any probationary period, up to a maximum of six months but more usually for two months, must be included.
• When employment exceeds four weeks, within two months of starting the employee must be given written details of: estimate of employment duration for temporary arrangements, place and category of work, base salary and any benefits, total working hours, holiday allowance, notice periods, any applicable collective agreements.
• Fixed-term or temporary contracts – if employees are asked to work beyond the fixed term, the contract becomes ‘indefinite’, and the employee becomes entitled to the standard severance on termination.
• The Labor Law decrees that the party terminating the contract must provide a minimum 15 days’ notice.
• Substantial changes to a contract affecting an employee’s working hours, remuneration or method of work may entitle them to terminate the contract with compensation of 20 days’ pay for each year of service up to a maximum of nine monthly payments.

Employment Contracts in Spain

Employment contracts (copia basica) in Spain must be lodged with the Public Employment Office. Seasonal contracts must be drawn up on a template provided by the employment office. Royal Decree 28/2020 defined remote working as comprising 30% of regular working hours undertaken from home or any remote location. Working from home cannot be unilaterally applied by either the employer or employee.

Here are some common contract types:

1. Indefinite Employment Contracts (Contrato indefinido): These are identified from the start of the relationship by having no end date or time limit. In the absence of any other formal contract, an employee is deemed to be on an open-ended, indefinite contract.
2. Fixed term or Temporary Employment Contracts (Contrato temporal): These apply to certain circumstances, such as:
   – Specific task, project or service that takes an indefinite time. If the project lasts more than 12 months, 15 days’ notice must be given
   – To deal with a short-term employment market or seasonal work
   – To temporarily replace a full-time employee, whose role must be specified in the contract
3. Probationary Contracts: If no limits apply from a collective agreement, the terms are normally six months for qualified employees, two months for unqualified and three months for companies with fewer than 25 staff.
4. Work Experience Contracts: For between six months and two years for university or college graduates
5. Trainee or Apprenticeship Contracts: For workers between ages of 16 and 21, usually between six months and two years but can be extended to a third year. Under-18s are prohibited from working between 10pm and 6am or for more than eight hours per day; they must have a minimum 12 hours’ rest between shifts and a 30-minute break after four-and-a-half hours’ work.
6. Collective Bargaining Agreements: Spanish law defines these as written agreements between an employer and employees’ representations, or between employers’ associations and trade unions. Negotiations take place at national, industry and company level. National agreements provide the framework for lower-level bargaining. It is estimated that collective agreements cover around 80% of Spain’s workforce.

What Employment Laws exist in Spain?

Spanish labor law is primarily national in scope, however some aspects such as public holidays and social security regulations may be devolved to Spain’s 17 autonomous regions.

The most important element in employment law is the Workers’ Statute (Estatuto de los Trabajadores) with its various laws and decrees covering employment relations collated in the Labor and Social Security Code (Codigo Laboral y de la Seguridad Social). Other laws and decrees deal with related matters, such as health and safety, trade unions, strikes, special types of employment contracts and relationships, social security, training, and temporary agency work.

Pay and conditions for around 80% of Spanish employees are set by collective agreements, mainly at industry level. Company-level agreements take precedence over industry-level agreements.

Bradford Jacobs’ complete knowledge of Spanish employment laws makes us the essential partner for expansion into Spain. The global reach of our Professional Employer Organization (PEO) networks allied to the expertise of in-country Employer of Record (EOR) teams guarantees a smooth entry into your new territory – and compliance with all regulations, which include:

• National Minimum Wage: The national minimum as set by the Ministry of Employment and Social Security for 2021 in Spain remained fixed 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: Regulated by Spanish law. Full-timers over 18 must not work more than nine hours daily up to a maximum of 40 hours a week, averaged over a year.
  
  One-and-a-half days’ consecutive rest per week is allowed with a 12-hour break between daily shifts. Working days exceeding six hours have a break of 15 mins.
  
  
• Overtime: Overtime is not obligatory unless stipulated in a collective bargaining agreement or contract. Any work over the maximum allowed normal working hours is considered overtime and cannot exceed 80 hours annually.
  
  Compensation for extra hours can be paid for 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) per year paid leave with one holiday period a minimum of two weeks. Employers cannot replace holidays with paid compensation.
  
  The holiday calendar is set by each company and agreed upon by workers and employers. Additionally, there are public, regional, and local paid holidays.
  
  
• Sick Pay: There is no payment for the first three days, with 60% of salary 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 benefit is for a minimum statutory 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 (Instituto Nacional de Seguridad Social, INSS).
  
  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: All types of discrimination are prohibited, either directly or indirectly, on grounds of 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 for reasons of language inside the Spanish state.
  
  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 are paid 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.