Operating in Spain requires a thorough understanding of local employment legislation. Labour laws in Spain are employee-centric and governed primarily by the Workers’ Statute (Estatuto de los Trabajadores), along with applicable collective bargaining agreements (CBAs). These laws regulate contracts, working conditions, termination practices, and employee benefits. For foreign companies hiring employees in Spain, complying with these rules is crucial to avoid penalties and foster a compliant and ethical workforce. These regulations reflect Spain’s commitment to protecting workers’ rights and ensuring stable employment relationships. For businesses, this means staying informed and proactive in compliance.
Table of Contents
- Overview of Labour Laws in Spain
- Employment Contracts in Spain
- Wages, Working Hours, and Leave
- Social Insurance, Benefits, and Termination
- Labor Disputes and Legal Risk
- Hiring Through an Employer of Record (EOR) in Spain
- Conclusion
- FAQs
Overview of Labour Laws in Spain
Spain’s labor law framework ensures a high level of worker protection while allowing flexibility for employers. The system emphasizes written contracts, wage fairness, proper termination procedures, and employee participation. Government oversight and union negotiations play a critical role in maintaining a balanced labor environment.
- Primary legislation: The Workers’ Statute governs most employment matters, including contract types, leave policies, and dismissal protocols.
- CBAs (Collective Bargaining Agreements): These sector-specific agreements are legally binding and often more generous than national statutory provisions.
- Labor inspections: The Labour and Social Security Inspectorate actively monitors and enforces labor compliance, often performing surprise audits.
- Employee protections: Include anti-discrimination clauses, minimum wage laws, working condition standards, and mandatory rest and leave periods.
- Work councils and unions: Employees have a legal right to collective representation. Work councils must be formed in companies with 50 or more employees.
Understanding the interplay between the national labor law and sector-based CBAs is essential for ensuring compliance and operational harmony in Spain.
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Employment Contracts in Spain
Spanish labor contract law requires a written employment agreement for most contract types, especially fixed-term roles. Employers use written agreements for permanent contracts to prevent future disputes and clarify mutual expectations, even though the law allows verbal contracts.
Common Contract Types:
- Indefinite (Permanent) Contract: This is the default form of employment in Spain. This contract provides the most stability and both employees and authorities favor it.
- Fixed-Term Contract: Must include a justified cause, such as a temporary project or seasonal role. Cannot be renewed indefinitely.
- Training & Apprenticeship Contracts: Used to provide on-the-job learning to young or inexperienced individuals, often with subsidized social contributions.
- Internship Contracts: Designed for students and recent graduates, with specific rules on compensation, duration, and learning objectives.
Required Clauses in Employment Contracts:
- Identification of both parties, including NIE or CIF numbers
- Detailed job description and responsibilities
- Duration and type of contract (indefinite or fixed)
- Work schedule, daily and weekly working hours
- Compensation: base salary, bonuses, and allowances
- Leave entitlements, including holidays and paid time off
- Applicable probation period and its terms
- Disciplinary procedures, termination notice, and severance terms
Probationary periods typically range from 2 months (for regular employees) to 6 months (for technicians or skilled workers), during which termination can occur with fewer formalities.
Wages, Working Hours, and Leave
Spain mandates fair wages, reasonable work hours, and paid leave to promote a balanced and humane work environment. These standards are consistently enhanced through CBAs.
Wages:
- In 2025, the Spanish government sets the minimum wage (SMI) at €1,134 gross per month across 14 payments, totaling €15,876 per year.
- Employers provide two additional salary payments in July and December, unless they prorate them across 12 monthly payments.
- The law enforces wage transparency and requires employers to ensure equal pay regardless of gender or contract type.
Working Hours:
- Standard Workweek: Legally capped at 40 hours, often distributed over 5 days.
- Daily Limits: Cannot exceed 9 hours unless modified by a collective agreement.
- Rest Periods: Minimum of 12 hours between workdays and at least 1.5 days of uninterrupted rest per week.
Leave:
- Annual Leave: A minimum of 30 calendar days (equivalent to 22 working days), which cannot be replaced by financial compensation.
- Public Holidays: Employees benefit from up to 14 paid holidays annually (9 national, 2 regional, 3 local).
- Sick Leave: Initially covered by the employer and then social security. Requires a medical certificate.
- Parental Leave: 16 weeks fully paid for both mothers and fathers. Additional leave is available for breastfeeding or caring for a sick child.
Employers are required to track hours worked and maintain attendance logs for inspection.
Social Insurance, Benefits, and Termination
The Spain social insurance system provides comprehensive coverage for health, maternity, disability, and retirement. Participation in the system is mandatory for all salaried employees.
Social Security Contributions:
- Employer: Typically contributes around 29.9% of an employee’s gross salary.
- Employee: Pays approximately 6.35% of gross salary.
- Covered Programs:
- Public healthcare access
- Unemployment insurance
- State pension and retirement
- Maternity and paternity benefits
- Temporary and permanent disability coverage
Employers must register employees with the Social Security Treasury (Tesorería General de la Seguridad Social) upon hiring.
Employee Termination in Spain:
Employee dismissal must follow formal procedures and be supported by documented reasons. Spain distinguishes between justified and unjustified dismissals.
Types of Termination:
- Disciplinary Dismissal: Due to misconduct or performance issues. Requires evidence and a detailed termination letter.
- Objective Dismissal: Based on economic, technical, or organizational grounds. Requires 15 days’ notice and severance.
- Collective Dismissal: Applicable when multiple employees are terminated for economic reasons; mandates consultation and ERE (Expediente de Regulación de Empleo).
- Voluntary Resignation: Employees may resign with prior notice (typically 15 days) unless waived.
Severance Pay in Spain:
- Unfair Dismissal: 33 days of salary per year of service, up to a maximum of 24 months.
- Objective Dismissal: 20 days of salary per year of service, up to 12 months.
- Disciplinary Dismissal: No severance if valid, though employees often challenge these in court.
All terminations must be documented and communicated in writing. Failure to follow procedure can result in penalties or reinstatement orders.
Labor Disputes and Legal Risk
Labor disputes in Spain often arise from contractual misunderstandings, illegal dismissals, or unpaid wages. To mitigate risk, employers must ensure policy clarity and maintain complete HR records.
Common Triggers:
- Disputed terminations or severance calculations
- Misclassification of employment (freelancer vs. employee)
- Unpaid overtime or bonuses
- Discriminatory practices in promotions or layoffs
Resolution Mechanisms:
- Mediation: Voluntary resolution facilitated by regional labor authorities or unions.
- Conciliation Hearing: Mandatory pre-litigation procedure where parties negotiate a settlement.
- Labor Court (Juzgado de lo Social): If conciliation fails, disputes are heard in a formal labor court.
Employers are advised to proactively address employee grievances and maintain open communication to prevent escalation.
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Hiring Through an Employer of Record (EOR) in Spain
A compliant Employer of Record Spain provides a seamless way for foreign companies to hire and pay Spanish employees without establishing a local entity. This model accelerates market entry while ensuring full legal compliance.
Benefits of Using an EOR:
- Contract Management: Issues local employment contracts aligned with Spanish labor law and CBAs.
- Payroll & Tax: Handles gross-to-net calculations, statutory deductions, and timely salary payments.
- Social Security Registration: Ensures accurate enrollment and contributions.
- Benefits & Bonuses: Manages mandatory benefits, paid leave, and bonus payments.
- Legal Compliance: Oversees onboarding and offboarding in accordance with Spanish HR compliance rules.
This solution is especially valuable for short-term projects, remote hiring, or test expansions.
Conclusion
Spain structures its labour laws to protect employee rights while giving employers operational flexibility. With clear guidelines around contracts, working hours, and severance, businesses must stay vigilant and compliant.
Partnering with an Employer of Record Spain helps companies navigate the intricacies of Spanish employment law, reduce legal risks, and build compliant teams efficiently. For global firms looking to scale quickly in Spain, this model offers the best mix of speed, security, and strategic alignment.
An EOR also ensures seamless onboarding and offboarding processes in line with national regulations. It helps employers manage payroll and social security contributions accurately. By outsourcing compliance, companies can focus on business growth while staying aligned with evolving labor standards.
FAQs
Yes, a written contract is required for fixed-term or specific roles, and recommended for all employment types.
The gross minimum wage is €1,134 per month, paid over 14 payments.
A standard workweek is 40 hours, with a 9-hour daily limit unless modified by agreement.
Employers pay initially, and Social Security covers extended leave with medical certification.
Yes, both parents receive 16 weeks of fully paid leave for childbirth or adoption.
It’s 33 days of salary per year of service, capped at 24 months.
Yes, by partnering with an Employer of Record (EOR), which handles local compliance.
Social insurance, annual leave, holiday bonuses, sick pay, and access to public healthcare.
It typically starts with mediation or conciliation before going to labor court.
An EOR manages contracts, payroll, taxes, benefits, and local registrations on your behalf.
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.
