A Detailed Guide on Employer of Record Spain 2025

An Employer of Record (EOR) in Spain acts as a third-party intermediary between the employer and the employee. Through an Employer of Record, firms are now able to hire employees in Spain without needing to establish a legal entity or office. This is particularly effective for businesses that want to quickly expand to new markets and lack the resources required to cope with all the intricacies of local employment regulations. Companies can, in using an EOR, ensure their compliance with the local laws while simplifying HR functions on payroll, taxes, and employee benefits.

The demand for EOR services appears to be on the rise as the business world continues to become more globalized. Companies looking to streamline their operations in Spain and elsewhere can benefit from the speed of market entry, diminished administrative burden, and mitigating legal risks.

Table of Contents

• Overview about Spain
• What is an Employer of Record in Spain?
• Employer of Record vs Legal Entity
• What are the Use Cases for Availing Services Under Employers of Record Spain?
• Laws and Compliance Best Practices to Hire Employees in Spain
• Best EOR Companies in Spain
•  What are EOR Services in Spain?
• How to Hire Employees Through an EOR Spain Partner
• Taxes in Spain
• CTC Calculator for Hiring Employees in Spain
• Key Considerations While Hiring Employees through EOR in Spain
• Employee Benefits in Spain
• Terminations in Spain
• How to Choose the Right EOR Spain Services?
• Benefits of Working with an Employer of Record Service Provider in Spain
• Risks or Drawbacks of EOR Spain
• How Does Employer of Record Spain (EOR) Differ from Usual HR Software?
• How Much Does it Cost to Avail Services Under EOR Spain?
• Conclusion: EOR Spain
• FAQs

Overview about Spain

Spain is a major economic player in the European Union, with a GDP ranking among the top in Europe. The country’s economy has seen steady growth, driven by a diverse set of industries including technology, manufacturing, and tourism. The Spanish government continues to push reforms that enhance its economic competitiveness and foster innovation.

The tech sector in Spain is booming, especially in cities like Madrid and Barcelona, where startups and established companies alike are investing in AI, software development, and biotechnology. Manufacturing is also growing, with a significant focus on renewable energy and automotive industries. Spain’s business environment is highly conducive to foreign investment, offering a range of incentives for both local and international companies. 

Key Business Cities

• Madrid: The capital city and business hub of Spain, Madrid is home to the headquarters of many large multinational companies, offering access to a diverse talent pool and excellent infrastructure.
• Barcelona: Known for its innovation and dynamic startup ecosystem, Barcelona is a tech-driven city that also offers easy access to the Mediterranean market.
• Valencia: A rapidly growing city with a focus on sustainability, healthcare, and technology.
• Bilbao: A major financial and industrial center in the Basque region, with a reputation for high-tech manufacturing and design.

Labor Market

Spain’s labor market is highly competitive and diverse. The country’s education system is producing a growing number of graduates in science, technology, engineering, and mathematics (STEM) fields. Spain is also seeing an increase in remote work, a trend accelerated by the pandemic, with many companies opting to hire talent from both within Spain and internationally.

In terms of employee rights, Spain has a comprehensive labor framework to protect workers, making it crucial for businesses to ensure compliance when hiring locally.

Why Spain for Business Expansion

Spain offers several advantages for international businesses:

• EU Membership: Spain’s position within the European Union simplifies trade, access to markets, and allows businesses to take advantage of the EU’s single market.
• Skilled Workforce: The availability of skilled workers in key industries like tech, healthcare, and manufacturing makes Spain an ideal location for talent acquisition.
• Favorable Tax Incentives: The Spanish government offers various incentives, particularly for technology startups and research and development initiatives.
• Easy Market Entry with EOR: Using an EOR in Spain eliminates the need for a local legal entity, allowing businesses to test the market, hire employees, and scale operations quickly.

What is an Employer of Record in Spain?

One of the service providers that assumes all responsibility for employment-related tasks, including contracts, payroll, taxes, and benefits, and all labor laws in Spain, is an Employer of Record. Though the company controls the employee’s daily work and the eventual outcome of his or her job functions, the EOR is the legal employer.

The company first determines the role, compensation, and job description. The EOR then deals with the employment contract, ensuring it is in compliance with Spanish labor laws. From there, the EOR deals with all aspects of employment administration, such as payroll processing, tax withholdings, and social security contributions. Moreover, the EOR ensures that the company remains compliant with Spain’s strict labor laws, which govern everything from working hours to severance pay.

Employer of Record vs Legal Entity

Criteria	Legal Entity (Spain)	Employer of Record (EOR) in Spain
Definition	A legal entity is a business registered in Spain, with the ability to hire employees directly.	An Employer of Record (EOR) is a third-party provider that hires employees on behalf of a company, ensuring compliance with Spanish labor laws and regulations.
Ownership	Owned by the company setting it up or its shareholders.	The EOR is the official employer, but the client company retains operational control.
Employment Contracts	Employees are directly hired by the legal entity, with terms and conditions set by the company.	The EOR signs employment contracts with workers, ensuring compliance with Spanish labor laws.
Compliance Responsibility	The legal entity must ensure compliance with local labor laws, tax regulations, benefits, and other statutory requirements.	The EOR assumes responsibility for compliance with all Spanish labor laws, taxes, employee benefits, and local regulations.
Payroll & Benefits Management	Managed directly by the legal entity, including payroll, taxes, and employee benefits.	The EOR manages payroll, taxes, benefits, and other HR-related aspects on behalf of the client company.
Tax Liabilities	The legal entity assumes all tax liabilities, including income tax, social security, VAT, and other local taxes.	The EOR assumes tax liabilities for employees, ensuring compliance with Spain’s tax filing and payment requirements.
Time to Set Up	Setting up a legal entity in Spain can take several months due to registration, compliance checks, and operational setup.	The EOR setup is quicker, typically taking a few days to weeks to integrate employees, as the infrastructure is already in place.
Employee Onboarding	Managed by the legal entity, including HR processes, compliance checks, and system setup.	The EOR handles the complete onboarding process, including employment contracts, compliance with Spanish regulations, and all HR activities.
Employment Law Expertise	The company must either hire in-house legal experts or rely on external consultants to navigate Spain’s labor laws and tax codes.	The EOR provides expert knowledge of Spanish employment laws, mitigating the risk of non-compliance.
Risk & Liability	The legal entity assumes all risks related to employment matters, including compliance failures.	The EOR assumes legal risks and liabilities, protecting the client company from potential employment-related legal issues in Spain.
Control Over Workforce	The legal entity has full control over recruitment, hiring, firing, and day-to-day management of employees.	The client company maintains operational control, but the EOR manages all compliance, payroll, and HR functions.
Flexibility	Less flexible as the company is responsible for local entity setup, recruitment, and management of employees.	Highly flexible, allowing the client company to quickly scale and hire employees in Spain without establishing a local entity.
Cost & Investment	Requires a significant investment for company registration, legal compliance, HR setup, and ongoing operational costs.	Generally lower cost for the client company, as the EOR handles all compliance, payroll, and legal matters without the need for local entities or HR teams.
Global Expansion	Requires establishing a local entity in each country where employees are hired, which can be costly and time-consuming.	The EOR allows for rapid global expansion, providing a seamless solution to hire employees in Spain without needing to set up a local entity.

What are the Use Cases for Availing Services Under Employers of Record Spain?

1. Market Entry/Expansion: For companies that wish to enter the Spanish market without having a local entity, hiring through an EOR can offer flexibility in hiring workers, managing payroll, and compliance with local laws on short notice and expedient ways.
2. Companies engaging off-site employees in Spain tend to enjoy hiring by using an EOR as it simplifies compliance with local labor regulations and tax laws.
3. Hire Full-Time Employee Onboarding: If the client hires freelancers and contractors in Spain but then requires turning the same into full-time employees, an EOR can get the process done while keeping them in line with the law.
4. Global Recruitment: An EOR may facilitate the ways for companies who intend to recruit international talent by simplifying their approach towards compliance, employee benefits, and taxation.

Suggested Read: Global EOR Services

Laws and Compliance Best Practices to Hire Employees in Spain

Spain has a well-established labor law framework designed to protect employee rights and ensure fair working conditions. Some key regulations include:

• Employment contracts: All employees in Spain must have a written contract that defines the terms on which they are hired. The contract defines essential factors such as their job description, salary, period of employment, or other considerations and terms of employment. Both parties will understand each other clearly, and this avoids disputes.
• Social Security Payments: In Spain, employers have to pay social security and into the Spanish Social Security regime that covers different types of employment benefits, such as health, old-age pension, disability, and unemployment. Payment between the employer and the employee is shared for such benefits with the cost determined and applied according to the amount the latter draws. In this manner, there is an insurance given in case the employee incurs illness, old-age pension, or any sort of disability.
• Working Hours and Overtime: The standard working week in Spain is 40 hours, usually spread over five days. Labor laws in Spain are extremely strict regarding overtime. They prescribe specific limits to the amount of work an individual employee can undertake as overtime as well as stipulate payment for extra hours done as overtime. Overtime is paid at an increased rate from regular hours, usually 75% more in regular overtime and 150% more in overtime during holidays or on weekends.
• Employee Rights: Employees in Spain have certain rights meant to safeguard the welfare and employment security of its workers. These rights include paid vacation, sick leave, maternity and paternity leave, as well as protection against unfair dismissal. Every employee has a minimum of 30 calendar days of annual paid leave, and specific provision exists for workers on maternity or paternity leave so they can be off without risking losing their job.
• Collective bargaining: it is a fundamental instrument through which the landscape of labour is structured in Spain. In very many cases, the unions establish wages, working conditions, and benefits as well as sectoral specific agreements. This agreement probably touches on entire industries, a particular company, scale of pay, holiday entitlement and several other aspects of employment conditions.

Best EOR Companies in Spain

1. Asanify

Asanify is one of the leading EOR service providers in Spain. It offers a wide set of services that deal with payroll management and tax compliance, employee benefits, and also hiring employees in a rather straightforward and automated manner. Asanify specializes in the payroll process, as well as work permits and employee benefits, which is flexible and scalable for international companies to easily onboard and manage talent in Spain without establishing a local entity.

2. Papaya Global

Papaya Global offers an all-in-one platform for payroll management, compliance, and employee benefits. The company is known for its global payroll and HR technology solutions, making it easier for businesses to onboard and manage employees in Spain. They specialize in automating HR and payroll processes, ensuring full compliance with Spanish labor laws and tax regulations. Papaya Global also offers global mobility management and workforce analytics.

3. Deel

 Deel provides EOR services for businesses looking to hire globally without establishing a local entity. They handle payroll, compliance, and tax filing for companies hiring in Spain. Deel offers flexibility in managing both contractors and employees, ensuring that clients can expand quickly while staying compliant. They also support cross-border payments and offer various payment options for employees in Spain.

4. Safeguard Global

Safeguard Global provides tailored EOR services in Spain, managing the entire employee lifecycle, from recruitment to termination, with full compliance. Their services include payroll processing, tax filing, and employment contracts, and they focus on offering localized expertise for businesses expanding into international markets like Spain.

5. Remote

Remote is a popular EOR provider that allows companies to hire and pay employees in Spain without the need for a local entity. They provide payroll, compliance, benefits, and tax services. Remote is known for its user-friendly platform, offering seamless integration of payroll management, as well as benefit solutions and employment contract creation for global teams.

What are EOR Services in Spain?

An EOR provider in Spain offers a comprehensive range of services to ensure that businesses can operate smoothly while remaining fully compliant with local labor laws. These services include:

• Payroll Management: An EOR provider ensures that employees are paid on time and accurately, handling all aspects of payroll processing. This includes calculating salaries, withholding taxes, and making required social security contributions. The provider also takes care of tax filings, ensuring that businesses remain compliant with Spanish tax regulations. This eliminates the administrative burden for employers and reduces the risk of costly errors or penalties related to payroll management. 
• Employee Onboarding: The EOR handles all the necessary documentation and registration requirements when hiring employees in Spain. This includes drafting compliant employment contracts, registering employees with social security and tax authorities, and ensuring that all legal requirements are met.
• HR Administration: The EOR manages ongoing HR functions such as performance evaluations, employee records, and regulatory compliance. This includes overseeing the administration of employee performance reviews, managing workplace policies, and ensuring that businesses comply with labor regulations, such as those governing working hours, leave entitlements, and workplace safety.
• Employee Benefits Administration: An EOR ensures that employees receive all statutory and supplementary benefits they are entitled to under Spanish law. This includes managing health insurance, paid annual leave, maternity and paternity leave, and retirement plans. The EOR also helps businesses offer competitive employee benefits packages, ensuring that employees have access to both mandatory and additional benefits.
• Tax and Statutory Compliance: Ensuring tax and statutory compliance is one of the most critical roles of an EOR provider. They handle all tax filings, ensuring that employees’ tax deductions are made correctly and on time. The EOR also ensures that the business meets all statutory obligations, such as contributions to Spain’s Social Security system, and adheres to regulations governing overtime, working hours, and leave entitlements.

How to Hire Employees Through an EOR Spain Partner

Hiring employees in Spain through an EOR (Employer of Record) partner simplifies the process and ensures compliance with local labor laws. Here is a step-by-step guide to help you hire employees in Spain through an EOR Spain partner:

Step 1: Select an EOR Partner with Expertise in Spain and Your Industry

The first step is to choose an EOR Spain partner that has experience in the Spanish market and understands the specific needs of your industry. Look for a partner with a proven track record of handling employment-related services in Spain. This will ensure that the EOR partner is familiar with local labor laws, tax regulations, and industry-specific compliance requirements.

Step 2: Define the Role, Compensation, and Job Responsibilities

Next, you will need to define the role, compensation, and job responsibilities for the employee you wish to hire in Spain. Clearly outline the position’s duties, salary, benefits, working hours, and any other relevant details. This ensures that the job expectations are clear and aligns with both the company’s goals and the employee’s needs.

Step 3: The EOR Drafts the Employment Contract

Once the role and compensation package are defined, the EOR Spain partner will draft an employment contract in compliance with Spanish labor laws. The contract will cover key aspects such as job responsibilities, salary, working hours, vacation entitlements, and termination clauses. Ensuring compliance with local regulations is crucial to avoid any potential legal issues down the road.

Step 4: The EOR Manages the Onboarding Process

After the contract is signed, the EOR will manage the onboarding process for the employee. This includes registering the employee with the Spanish Social Security system, setting up tax filings, and enrolling them in the necessary employee benefits, such as health insurance, pension plans, and paid leave. The EOR takes care of all the administrative tasks to ensure the employee is legally compliant and ready to start their role.

Step 5: The EOR Handles Ongoing HR Duties

Finally, the EOR Spain partner will manage ongoing HR duties, such as payroll processing, tax withholding, and ensuring compliance with Spain’s labor laws. The EOR will also monitor any changes in labor regulations to ensure continued compliance. Additionally, the EOR will handle any other HR-related tasks, such as employee performance management, benefits administration, and handling disputes or grievances. 

Remote EOR Employee Onboarding Checklist for India

Onboarding Step	Responsibility	Details
Before Offer Letter
Collect Employee Details	Company	Gather necessary details like name, DOB, contact info, address, previous employment docs, etc.
After Offer Letter
Draft Employment Contract	EOR	Create localized employment agreements compliant with Indian labor laws.
Background Verification	EOR	Conduct background checks with informed consent from the new hire.
Welcome Email	Company & EOR	Company sends welcome email; EOR conducts local onboarding process.
On Joining Day
Employment Documentation	EOR	Ensure all paperwork like contracts, NDAs, tax forms, etc., are completed and filed.
Payroll Setup	EOR	Collect required docs, set up payroll systems and tax calculations.
Policy Briefing	Company	Explain leave policies, code of conduct, company procedures to the new hire.
Account Setup	EOR	Assist with bank account setup for salary deposits.
Introduction to Systems	EOR	Provide a walkthrough of payroll and HRIS systems.
IT Setup	Company/EOR	Provide necessary equipment, software, IT training, and communication channels.
Mentor Assignment	Company	Assign a buddy/mentor to help the new hire acclimate to company culture.
Post-Onboarding
Payroll Explanation (First Paycheck)	EOR	Explain payslip components like deductions, contributions, and net pay.
Ongoing Support	Company	Schedule regular check-ins and 1:1 meetings to provide ongoing support and feedback.
HR Operations	EOR	Manage payroll processing, compliance, benefits administration, and other HR operations.

Taxes in Spain

Spain has a taxation system that is formalized and structured, and for firms to stay updated, this system should be followed by any enterprise. Taxes are reported quarter of which quarterly targets each the deadlines fall on April 20th, July 20th, October 20th and on January 20th while filing taxes includes income taxes value-added tax, and company level taxes. Spain also has a progressive income tax bracket of 19% to 47% and corporate tax of 25%, unless otherwise stated for small businesses. The employees’ salary is withheld by the IRPF, which is personal income tax-their employer deducts based on the tax brackets.

The employers also pay for social security, health insurance, and pensions, which is a percentage of the salaries of the employees. The contributions go towards the Spanish Social Security system, which finances healthcare, unemployment, and old age. Businesses also pay VAT, which is a consumption tax at a flat rate of 21%. There are other goods and services that have reduced rates of 10% and 4%.

CTC Calculator for Hiring Employees in Spain

Cost to Company in Spain The Cost to Company in Spain will consist of gross salary, employer contributions, statutory deductions, and benefits. Let’s break down each component: 

1. Gross Salary: This is the minimum amount agreed between the employer and employee before any deduction Gross Salary Employer Contributions Social security health insurance pension contributions. Normally it amounts to 30% to 35% of gross salary depending on the region and industry involved.
2. Statutory Deductions: Income tax at source, referred to as IRPF, is deducted from the employee, from 19% up to 47%, depending on the gross salary.
3. Employee Benefits: It can include health insurance, pension contributions, paid leave, among others, provided by the employer.

Here is the breakdown of how to calculate the Cost to Company (CTC) for a mid-level employee with a gross salary of €40,000:

Component	Amount (€)
Gross Salary	40,000	The employee’s base salary before deductions.
Employer Contributions	12,800	Employer’s social security, health insurance, and pension contributions (32% of gross salary).
Employee Tax Deductions (IRPF)	9,600	Employee’s income tax (IRPF) deducted at 24% tax rate.
Employee Benefits	2,000	Additional benefits (health insurance, meal vouchers, transportation).
Total CTC	54,800	Sum of gross salary, employer contributions, and benefits.

Calculation:

• Employer Contributions = 40,000 × 32% = €12,800
• Tax Deduction = 40,000 × 24% = €9,600
• Total CTC = Gross Salary + Employer Contributions + Benefits
  Total CTC = 40,000 + 12,800 + 2,000 = €54,800

Key Considerations While Hiring Employees through EOR in Spain

A Spaniard employee hired through an Employer of Record can take a few necessary steps to help his hiring comply with Spanish labor laws and remain smooth. These are the main points to consider:

1. Employment Agreements: The employment contracts must be in consonance with the Spanish labor laws. The terms of employment, which include termination clauses and compensation, must be clearly stated. By drafting agreements according to the legal framework of Spain, disputes are avoided.
2. Working Hours: Standard work week in Spain is 40 hours. The work schedule must not exceed 9 hours for a day. Any overworking should be compensated and knowledge of overtime rules, plus maximum allowed working hours under the law can help avoid legal disputes.
3. Leave Policies: Familiarize yourself with the statutory leave entitlements in Spain, such as annual leave (at least 30 calendar days per year), sick leave, and public holidays. Understanding these will help ensure compliance with local regulations and prevent issues regarding employee rights.
4. Health Insurance: Public health insurance is usually available to employees of Spain under the Spanish Social Security system. Private health insurance may be an added benefit offered by some employers to their employees. Quality care, either under the public system or supplementally through private insurance, is important.

Suggested Read: Payroll & Taxes in Spain: A Guide for Global Employers

Employee Benefits in Spain

The law provides many benefits to workers in Spain. Statutory benefits include having at least 30 days of paid vacation per year, maternity/paternity leave with up to 16 weeks of paid leave, and public health insurance by Spain’s Social Security system. The other social security contributions are through pension, unemployment, among others.

Many companies also provide additional benefits to enrich their employee package, such as meal vouchers, wellness programs, private healthcare, and pension schemes. The provider hiring through an Employer of Record in Spain ensures that all statutory and supplementary benefits are delivered in full compliance with Spanish labor laws. The EOR ensures all the administrative functions, thus ensuring that it remains legally compliant and that the benefits for employees are properly in place to enhance a good work environment and high employee satisfaction.

Terminations in Spain

1. Notice Periods

In Spain, the notice period for employee termination varies depending on whether the termination is voluntary or involuntary. If an employee resigns voluntarily, they are generally required to provide a notice period of 15 to 30 days, as specified in their employment contract. Employers can also terminate an employee with a notice period, usually 15 days unless a different term is established by the contract or collective agreements. However, if the dismissal is for a serious cause (e.g., misconduct or gross negligence), the employer can terminate the contract without any notice period, though the burden of proof rests with the employer.

2. Severance Pay in Spain

Severance pay plays a crucial role in cases of involuntary termination in Spain, especially when employers dismiss employees without a valid reason or justification. Employers must provide unfairly dismissed employees with 33 days of salary for each year of service, which is the standard amount. For redundancies, employers calculate severance pay at 20 days per year of service. If the dismissal is justified, such as in cases of gross misconduct, employees typically do not receive severance pay. The calculation of severance is also impacted by collective bargaining agreements and the length of the employee’s service.

3. Employee Termination

Employee termination in Spain can take several forms, depending on the situation. Dismissal for cause occurs when an employee is terminated due to serious misconduct, such as theft, disobedience, or alcohol use at work. In such cases, the employer does not need to provide severance pay. Redundancy dismissals, which happen when a company needs to downsize due to economic or operational reasons, entitle employees to severance pay. Lastly, mutual agreement termination occurs when both parties agree to end the employment contract, typically for personal or business reasons. They may negotiate severance pay as part of the agreement.

4. Required Documentation for Termination

When terminating an employee, Spanish labor law requires specific documentation to be provided. The employer must give a formal notice of termination, outlining the reasons for dismissal and the effective termination date. In addition, the employer must prepare a final settlement, which includes any outstanding wages, unused vacation days, and severance pay. A certificate of employment is also essential, as it details the employee’s tenure and the reasons for termination. This document is necessary for the employee to claim unemployment benefits from the Spanish public employment service, SEPE, ensuring they receive financial support during their transition.

How to Choose the Right EOR Spain Services?

When selecting an Employer of Record (EOR) service provider in Spain, several key considerations must be taken into account to ensure smooth and efficient employee management.

• Experience with Spanish Labor Laws: One of the most critical factors when choosing an EOR in Spain is their expertise in Spanish labor laws. The country has complex employment regulations, including rules about contracts, payroll, benefits, and termination. An EOR with a deep understanding of these laws ensures that your company remains compliant with local regulations and avoids legal issues.
• Service Offerings: It’s essential to ensure that the EOR can offer a comprehensive range of services, including payroll, tax management, employee benefits, compliance with local laws, and other HR-related services. Make sure that the EOR can handle all the administrative tasks, so you can focus on scaling your business without worrying about HR complications.
• Reputation and Reviews: Look for an EOR with a proven track record in Spain, especially from companies in similar industries or with similar needs. Client testimonials and case studies can provide valuable insights into the EOR’s ability to manage employees in Spain efficiently. A positive reputation is a strong indicator of reliability and service quality.
• Pricing Transparency: Ensure the pricing model of the EOR is clear and straightforward. The service provider should outline the costs involved and avoid hidden fees. Transparent pricing ensures that you understand the value you are receiving for your investment and can make informed decisions based on your budget.

Benefits of Working with an Employer of Record Service Provider in Spain

Partnering with an Employer of Record (EOR) service provider in Spain offers several advantages for businesses looking to expand into the country or manage a remote workforce.

1. Compliance Assurance: Navigating Spain’s complex labor laws can be challenging for foreign companies. An EOR ensures complete compliance with local taxes, employment regulations, and labor standards. By handling these aspects, an EOR mitigates the risk of non-compliance and legal penalties, giving businesses peace of mind when operating in Spain.
2. Speed and Flexibility: Using an EOR provider enables businesses to hire employees in Spain quickly without needing to establish a local entity. The EOR Spain partner takes care of the legal paperwork, registration, and contract management, making the setup process faster and more flexible compared to traditional methods.
3. Cost Efficiency: Setting up a legal entity in Spain can be costly and time-consuming, requiring administrative work, office space, legal assistance, and more. By working with an EOR, businesses can avoid these overheads. The EOR manages the operational requirements while helping you hire employees at a lower cost than setting up a local office.
4. Risk Mitigation: EORs assume the responsibility for managing legal risks associated with employment, such as disputes, compliance audits, or employment-related lawsuits. By outsourcing these risks to the EOR, businesses can minimize potential liabilities, ensuring smooth and lawful operations in Spain.

Risks or Drawbacks of EOR Spain

While there are many advantages to working with an Employer of Record (EOR) in Spain, there are also potential risks and challenges to consider.

1. Lack of Control: While the company oversees the employee’s daily tasks and work responsibilities, the EOR manages HR and legal functions, including compliance, benefits administration, and employment contracts. This division of responsibilities can sometimes create a perception of reduced control over critical aspects of employee management, particularly in areas like regulatory compliance and contractual matters. Companies must rely on the EOR’s processes, which might not always align with their internal practices.
2. Communication Barriers: Working with an EOR can sometimes create coordination challenges between the company, the EOR, and the employee, especially in multi-national teams. This separation of roles can lead to misunderstandings or delays in resolving HR issues, creating inefficiencies in communication that may affect employee satisfaction or business operations.
3. Hidden Costs: Some EOR services in Spain may have hidden fees that aren’t clearly outlined at the outset. These could include additional charges for administrative services, compliance checks, or employee benefits management. These unexpected costs can increase the overall cost of employment beyond what was initially anticipated, making it crucial to carefully evaluate the pricing structure and ask for transparency.
4. Complex Contracts: The terms of employment contracts facilitated by the EOR may not always align with the company’s desired flexibility. Depending on the EOR provider, the contract terms could be rigid or overly formalized, limiting the company’s ability to make adjustments as needed or to quickly adapt to changes in the business environment. This could be especially challenging for companies seeking more dynamic, adaptable employment terms.

How Does Employer of Record Spain (EOR) Differ from Usual HR Software?

An Employer of Record (EOR) in Spain and typical HR software solutions serve different purposes and functions in managing employees, and they complement each other in many cases.

HR Software: HR software in Spain primarily focuses on internal human resources management functions such as performance tracking, timekeeping, and benefits management. While HR software can assist with organizing and monitoring employee-related tasks, it does not handle legal compliance, payroll processing, or tax filings. These tasks require in-depth knowledge of local labor laws and regulations, which HR software alone cannot manage.

EOR Services: In contrast, an EOR provider assumes full responsibility for all aspects of employment, including legal compliance, payroll, tax filings, and employee benefits. EOR services ensure that companies are compliant with Spain’s labor laws, manage the administrative side of employment, and handle any legal matters tied to employment contracts and terminations. Unlike HR software, which handles internal processes, an EOR takes on the legal obligations and offers a comprehensive solution to managing employees without needing a local entity.

Suggested Read: EOR Vs Payroll Solutions: What’s the Difference?

How Much Does it Cost to Avail Services Under EOR Spain?

The cost of using an Employer of Record (EOR) service in Spain generally involves a combination of fixed and variable fees. These costs include:

• EOR Fees: The primary cost for EOR services is a fixed service fee per employee, which can range between €500 and €1,500 per employee per month, depending on the provider and the level of service. In addition to the fixed fee, there may be payroll processing fees, which can range from €100 to €300 per employee, depending on the complexity and frequency of payroll. Other administrative charges can include costs for handling employee benefits, legal compliance, taxes, and work permits, which are added to the overall service fee.
• Factors Affecting Cost: The total cost of EOR services in Spain is influenced by several factors. These include the number of employees being managed, as most providers offer tiered pricing based on employee volume. Additionally, the level of service chosen (basic vs. premium) can affect pricing; specifically, premium services often provide more personalized support, faster onboarding, and enhanced compliance. Furthermore, the employee’s salary package also plays a crucial role, as higher salary ranges might subsequently lead to increased costs related to benefits, taxes, and payroll processing.

Cost Comparison: EOR Services vs. Establishing a Legal Entity in Spain

Conclusion

EOR services in Spain offer a strategic solution for businesses expanding to a new country, staffing remotely, or testing markets. They eliminate the need for significant investments and administrative costs of setting up a legal entity. By outsourcing legal and HR responsibilities to a third-party EOR, businesses can onboard employees easily and comply with Spain’s labor laws.

The main advantages of using an EOR in Spain include compliance with labor laws, risk management, quick hiring, and cost savings. Choose a reliable EOR provider based on your company’s specific needs and goals. Evaluate their services, reputation, and pricing to ensure smooth and compliant hiring in Spain.

FAQs

 

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.