Employment Law in Spain

Contracts

In Spain, employment contracts can be fixed-term or permanent, depending on the nature of the job and the agreement between the employer and employee. Permanent employment contracts must include benefits such as paid vacation, social security contributions, severance pay, and unemployment benefits. Fixed-term employees are entitled to the same benefits as permanent employees, and misuse of fixed-term contracts can result in them being deemed permanent.

Spain also has apprenticeship contracts, mainly for training, which are governed by labor laws and regulations. Employers engaging apprentices are required to: 

• Provide structured training aligned with approved curricula 
• Pay apprentices a stipend in line with government regulations 
• Ensure apprentices work in a safe environment 
• Adhere to regular working hours as defined by labor standards 

Termination and notice periods

In Spain, statutory laws generally require a 15-day written notice for termination due to objective causes or salary in place of notice. In most cases, terminated employees are entitled to a warning and a fair hearing. Just cause for a dismissal includes the following: 

• Repeated and unjustified absences 
• Indiscipline or disobedience 
• Verbal or physical offenses 
• Breach of contractual good faith 
• Decrease in work performance 
• Substance abuse 
• Harassment 

Employees terminated for objective reasons are entitled to severance pay of 20 days' wages per year of service, up to a maximum of 12 months. As your Employer of Record (EOR) in Spain, 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 Spain, probation periods are indirectly addressed in local law, generally not exceeding two months in the private sector, and up to six months for technical positions, with comparable durations in government roles, as per the Workers’ Statute. 

Working hours and overtime

The standard working week in Spain typically consists of 40 hours, spread across five days, with a legal maximum of nine hours per day and 40 hours per week on average, calculated over a reference period of one year. Employees are entitled to 12 consecutive hours of rest between working days and one and a half days off per week, typically including Sunday. 

Any work beyond the standard working time is considered overtime. Spanish law limits overtime to 80 hours per year, excluding hours compensated with equivalent rest. While there is no fixed overtime rate under national law, collective agreements often require overtime to be paid at a premium or compensated with time off in lieu.

Taxes

In Spain, withholding tax is known as Impuesto sobre la Renta de las Personas Físicas (IRPF) and is deducted by employers before paying salaries to employees. Employers must deduct IRPF from employee salaries based on applicable income tax rates and submit it to the Spanish Tax Agency (Agencia Tributaria).

Employer payroll contributions

Spain'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.