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WORKING IN SPAIN

EXPLAINED: What you need to know before hiring a worker in Spain

If you’re setting up a business in Spain and need to hire staff, you’ll need to know all the legalities involved. Here’s what you need to know when you employ someone in Spain.

Published: 21 September 2021 16:55 CEST
Updated: 11 March 2022 10:56 CET
EXPLAINED: What you need to know before hiring a worker in Spain
Illustration Photo by Annie Spratt on Unsplash

Employment is regulated in Spain by the convenio colectivo, a set of rules which regulate things such as working hours, number of vacation days, and salary.

Here’s what you need to know about each of these, as well as sick pay, maternity and paternity leave, and how to terminate a contract. 

Working hours

The general number of working hours per week in Spain is 40 hours, however you can also choose to hire someone for slightly less. If you choose to shorten the working week, you could distribute the extra hours how you see fit, with some longer weeks for example.

Employees can choose to do overtime if you offer it to them. You can compensate this either as extra pay or as additional holiday days within four months. Usually, paid overtime cannot exceed 80 hours annually.

You will also need to work out what type of contract to offer them, you can find out about the different types of contracts available in Spain below. 

READ ALSO: What are the types of work contracts in Spain and which one is the best?

Salary and payroll

You can choose to pay your employee 14 payments per year or 16 1/2 payments per year. If you choose 14 payments, you must pay the monthly salary plus two extra payments due by July 10th and December 15th. In early February 2022, the Spanish government raised the minimum wage to €1,000 gross per month.

Make sure that you specify that the salary is gross in the contract with your employee, as certain taxes and social security contributions will have to be deducted from this.

You must also pay a social security tax for each of your workers. This equals 29.9 percent of the employee’s salary up until a certain amount 

READ ALSO: Spain posts record drop in summer unemployment as tourists return

Holidays

Besides public holidays (usually 10 national holidays and four regional public holidays), employees are allowed 23 vacation days for a full year worked.

Employees also have the right to take extra days for exceptional circumstances. These include two days for the death of a family member, one day for moving house, up to 15 days if they get married, and three to four days for the illness of a family member.

Spanish law also allows for 16 weeks of paid maternity leave. After the maternity period is up, employees may take a further additional year of unpaid leave. In January 2021, Spain also changed the law so that new fathers can also benefit from 16-week paternity leave.  

READ ALSO: New fathers in Spain can now enjoy 16 weeks paternity leave

Sick days

Spanish employment law doesn’t provide separate days for sick leave, instead, if an employee is sick, they must get a note from a doctor so they can go on ‘baja’.

During this time, you will be reimbursed by the social security system for payments. Employees typically receive at least 60 percent of their usual wages while they are out sick, but it will depend on your industry.

Firing

Generally, there is a two-month probationary period, so you can decide if your employee is a good fit for your company and works well.

After this time, you can only fire an employee if you have justified grounds for dismissal, for example, if they are not performing their role correctly. However, if you don’t have grounds for dismissal then you will have to pay for wrongful termination of the contract. This is usually from 20 to 33 days salary per year that the employee has worked for you.

You must also pay finiquito, which covers any vacation that the employee has not yet benefitted from.

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PENSIONS

Spain needs 25 million foreign workers to keep its pensions afloat

As the retirement of baby boomers looms, Spain's ageing population and declining birth rate mean the country will need millions of foreign workers to maintain its public pension pot and reinforce the labour market, the Bank of Spain has warned.

Published: 2 May 2024 09:46 CEST
Spain needs 25 million foreign workers to keep its pensions afloat

A recent study by the Bank of Spain estimates that the country will need up to 25 million more immigrant workers by 2053 in order to combat demographic ageing and maintain the ratio of workers to pensioners in order to support the pension system.

Without an influx of more foreign workers or sudden increase in the birth rate in Spain, something that seems very unlikely, experts fear that the growing disparity between working age people and pensioners could put the public pensions system in danger in the medium to long-term.

Like in many countries in the western world, the Spanish population is ageing, with the percentage of the population over 65 years of age predicted to peak in 2050, when almost one in three will be 65 years old or older.

READ ALSO: Spain’s over 65s exceed 20 percent of the population for the first time

By 2035 around one in four (26.0 percent) of Spaniards are expected to be 65 or older. That figure is currently around one fifth of the population.

Furthermore, this is compounded by falling birth rates. Spain’s birth rate hit a record low in 2023, falling to its lowest level since records began, according to INE data. Spain’s fertility rate is the second lowest in the European Union, with Eurostat figures showing there were just 1.19 births per woman in Spain in 2021, compared with 1.13 in Malta and 1.25 in Italy.

If nothing changes, the current ratio of 3.8 people of working age for every pensioner is predicted to plummet to just 2.1 by 2053, according to INE projections.

Maintaining this ratio seems unlikely moving forward, according to the report’s conclusions, something that would put pressure on pensions without significantly increasing social security contributions among working age people.

READ ALSO: Older and more diverse: What Spain’s population will be like in 50 years

The Bank of Spain report noted that “immigrants have high labour participation rates, generally above those of natives – in 2022, 70 percent and 56.5 percent, respectively.”

In three decades’ time, the INE expects Spain to have 14.8 million pensioners, 18 million Spanish nationals of working age and 12 million foreigners. To maintain the ratio, the Bank of Spain forecasts that the working immigrant population would have to rise by more than 25 million to a total of 37 million overall.

Of course, the arrival of 25 million working-age foreigners seems unlikely, if not impossible. To achieve this, around 1 million net migrants would have to enter Spain each year (discounting departures), a figure unprecedented in recent history. To put the figure in context, between 2002 and 2022 net arrivals in Spain reached five million, roughly five times less than what would be necessary to maintain the balance between workers and pensioners.

READ ALSO: ‘Homologación’ – How Spain is ruining the careers of thousands of qualified foreigners

Putting the economics aside, even if such an increase were statistically plausible, such a surge in net migration would be contentious both politically and socially. And it’s not even certain that increased migrant flows would be able to fill the gap in working age people and bolster public pensions: “The capacity of migratory flows to significantly mitigate the process of population ageing is limited,” the Bank of Spain warned in its report. 

What these projections suggest is that Spain’s public pension system will, in coming decades, likely have to be sustained by the contribution of fewer workers overall. This likely means higher social security payments. “Migratory flows have been very dynamic in recent years, but it does not seem likely that they can avoid the process of population ageing… nor completely resolve the imbalances that could arise in the Spanish labour market in the future,” the report stated.

The problem of ageing will also be transferred to the labour market and the types of jobs filled in the future. Increased migratory flows will soften the effect, but the labour characteristics of migrants coming to Spain may not match the job market in the coming decades. The jobs of the future, increasingly digital, will likely require qualifications that many of the migrants expected to arrive in the coming years do not have.

Consequently, the Bank of Spain suggests that “without significant changes in the nature of migratory flows, it does not seem likely that… [they] can completely resolve the mismatches between labour supply and demand that could occur in the coming years in the Spanish labour market.”

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