Employment Law in Andorra

Contracts

There are numerous types of contracts in Andorra, as spelled out in Law 31/2018. They include: 

• Contract for an indefinite period: This contract has no time limit. Employees with indefinite contracts must also receive certain statutory benefits, such as paid annual leave, sick leave, and maternity leave.
• Fixed term contract: This contract has a maximum duration of two years. If the two-year period is exceeded, the contract must legally convert to an indefinite contract.
• Fixed-term contract of a discontinuous nature: This contract is for a salaried person who is hired on a fixed basis to provide services intermittently or cyclically within what is considered a normal activity of the company, without these services being repeated on certain dates.
• Seasonal contract: Seasonal contracts are non-permanent contracts applicable when a company has a non-permanent increase in activity.
• Contract for a specific duration or for a specific work or service: This contract must set a precise date or a specific situation that terminates the employment relationship. If the contract does not set a specific date for the termination of the employment relationship, the employee must be notified in writing of the end of the relationship at least fifteen calendar days in advance, stating the specific cause or situation for which it is ending. 

Andorra has numerous other contract frameworks, including interim or temporary replacement contracts, part-time contracts, contracts for short-term work, apprenticeship contracts, minors’ contracts, and contracts by sessions, which are used for particular labor sectors. Make sure to consult Law 31/2018 for the legally required terms of any employment contract in Andorra.

Termination and notice periods

In Andorra, labor laws generally require a written notice for termination, with periods varying based on the type of contract and length of service: 15 days for employees with up to six months of service, one month for those with six months to one year, and two months for employees with more than one year of service. In most cases, terminated employees are entitled to a warning and a fair hearing.

Employees with at least six months of service are entitled to severance pay, calculated as one and a half days’ salary per month worked, up to a maximum of 270 days. Employees who resign after six months of service may receive a prorated portion of the severance, depending on their total years of service. As your Employer of Record (EOR) in Andorra, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with labor laws and minimize legal risks.

Probation periods

In Andorra, probation periods must be stated in contracts. If the agreed-upon wage is equal to or greater than three times the current minimum wage, the probation period may not exceed three months. If the agreed-upon wage is equal to or greater than five times the current minimum wage, the probation period may not exceed six months. Otherwise, probation periods must not exceed two months. During the trial period, both the employee and the employer may freely terminate the established contract at any time, as long as written notice is given.

Working hours and overtime

In Andorra, the standard working week generally consists of 40 hours, spread across five days, with a legal maximum of eight hours per day and 40 hours per week. Employees are entitled to a rest period of not less than 30 minutes after six consecutive hours of work and at least one full day off per week, typically Sunday.

Any work beyond the standard working time is considered overtime. Andorran labor law mandates that overtime must be compensated at rates specified in employment contracts or collective agreements. Overtime is applicable for hours worked beyond eight per day or 40 per week, and for work performed on rest days and public holidays.

Taxes

In Andorra, withholding tax is known as Impost sobre la Renda de les Persones Físiques (IRPF) and is deducted by employers before paying salaries to employees. Employers must deduct IRPF from employee salaries based on applicable income tax brackets and submit it to the tax authorities.

Employer payroll contributions

Andorra’s social security system requires employer contributions that are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers’ compensation is financed by contributions from state governments, employers, and employees.