Spain is one of Europe’s largest economies and a major hub for technology, tourism, financial services, and renewable energy. It has a growing startup ecosystem, a large pool of multilingual talent, and a quality of life that makes it a genuinely attractive destination for remote workers and international teams. At the same time, Spain has some of the most complex employment law in Europe, with strong worker protections, active trade unions, and a Social Security system that imposes real costs on employers.
For foreign companies that want to hire in Spain without going through the time and cost of setting up a Spanish subsidiary, an Employer of Record is the practical route. This guide explains Spanish labor law, the compliance requirements foreign employers face, and how the EOR model works in the Spanish context.
Why Hire in Spain?
Spain has a well-educated, multilingual workforce, particularly strong in areas such as software development, digital marketing, customer success, and engineering. The country has four official languages (Spanish, Catalan, Basque, and Galician), and English proficiency is strong in major cities. Time zone alignment with the rest of Europe makes Spain practical for companies operating across EU markets.
Salary levels are competitive by Western European standards, particularly outside Madrid and Barcelona. Spain’s inclusion in the European Union means that employees have the right to work across EU member states, which can be an asset for companies building cross-border teams. The country also has a specific visa program (the Digital Nomad Visa) that has brought additional international talent to the Spanish labor market.
The Legal Framework for Employment in Spain
The Workers’ Statute (Estatuto de los Trabajadores)
The primary piece of legislation governing employment in Spain is the Workers’ Statute, which sets out minimum standards for employment contracts, working hours, leave, salary, and dismissal. On top of the Workers’ Statute, many sectors are covered by collective bargaining agreements (convenios colectivos) that impose additional requirements, often more generous than the legal minimums. Understanding which collective agreement applies to a given role is essential and is something a good EOR handles as a matter of course.
Employment Contracts
Since the 2022 labor reform, Spain has moved strongly toward permanent (indefinite) contracts as the default. Temporary contracts are now restricted to specific circumstances: replacing an absent employee, or covering a specific short-term project need. Fixed-term contracts that don’t meet these criteria are treated as permanent from the start. When using an EOR, the provider ensures the contract type is correctly selected for the situation.
Working Hours
The standard working week in Spain is 40 hours. Overtime is capped at 80 hours per year and must be compensated, either financially or through time off in lieu. A significant change introduced in recent years is the requirement for all employers to maintain a daily record of hours worked for each employee. Failure to maintain this record is a regulatory infringement.
Statutory Leave
Employees in Spain are entitled to a minimum of 30 calendar days of paid vacation per year (equivalent to about 22 working days). There are also 14 public holidays per year, though the exact days vary by region. Maternity leave is 16 weeks, and parental leave for the non-birthing parent has been increased to 16 weeks as well, one of the more generous arrangements in Europe.
Social Security Contributions
Spain’s Social Security system imposes significant employer contributions. Total employer contributions run at around 30% to 32% of gross salary, covering healthcare, pension, unemployment, professional risk, and other programs. These contributions are mandatory and non-negotiable, and they represent the most significant employment cost beyond salary itself.
Dismissal and Severance
Spanish employment law makes dismissal a formal and legally controlled process. Objective dismissal (for economic, technical, organizational, or production reasons) requires written notice and a severance payment of 20 days’ salary per year of service. Disciplinary dismissal requires specific documented grounds. Wrongful dismissal entitles the employee to reinstatement or enhanced severance. Handling terminations incorrectly in Spain is expensive and time-consuming.
How the EOR Works in Spain
An EOR provides your company with a compliant employment structure in Spain without requiring you to set up a Spanish Sociedad Limitada (SL) or other entity. The EOR signs a Spanish-law employment contract with your hire, registers them with Spain’s Social Security system (Seguridad Social), processes payroll in euros, withholds the correct income tax (IRPF), and makes the required employer and employee Social Security contributions.
The EOR also handles the collective bargaining agreement research for your role, annual salary reviews, and any updates driven by regulatory changes or collective agreement revisions.
Frequently Asked Questions
Is Spain a difficult country to hire in? The legal framework is complex, but it’s well-established and predictable. The main risks come from misclassifying employees as contractors, using incorrect contract types, or not understanding which collective agreement applies. An experienced EOR removes all of these risks.
How long does it take to onboard an employee through an EOR in Spain? Typically two to three weeks from agreement to start date, assuming the employee’s documentation is in order. Spanish Social Security registration has a specific process that takes a few days.
Can I hire someone as a freelancer in Spain instead? Spain has strict rules on false self-employment. If the working relationship looks like employment (regular hours, single client, direction and control), it will be treated as employment regardless of what the contract says. The consequences include back-payment of Social Security contributions and potential fines.
To hire in Spain compliantly without setting up a local entity, explore the Employer of Record Spain service and get a tailored proposal for your hiring needs.
Collective Bargaining Agreements in Spain: What Foreign Employers Need to Know
One of the most surprising aspects of Spanish employment law for foreign employers is the extent to which collective bargaining agreements (convenios colectivos) override or supplement statutory minimums. Spain has hundreds of sectoral and company-level collective agreements, and determining which one applies to a given role requires knowledge of the sector, the company size, and sometimes the specific activity being performed.
Convenios colectivos can set higher minimum salaries than the national minimum wage, define specific working hours, establish additional leave entitlements, and regulate working conditions in ways that go well beyond the Workers Statute. Failing to apply the correct convenio is a compliance risk. An experienced EOR identifies the applicable agreement before the employment contract is issued.
Spain as a Tech Hub
Madrid and Barcelona have developed strong technology ecosystems, with a growing number of startups, scale-ups, and the European offices of major US and Asian tech companies. The Spanish government has actively promoted the Digital Nomad Visa program, introduced in 2023, which has brought additional international technology talent into the country and raised awareness of Spain as a place to build a team.
For companies hiring in Spanish tech, salaries have been rising, particularly in software engineering, data science, and product management. Remote and hybrid work is now a standard expectation rather than a perk. The working time recording requirement introduced in recent years means that even fully remote companies need to have a compliant system for tracking employee hours, which an EOR manages as part of their standard service.
