With modern tech tools and software making it easier than ever to collaborate remotely across time zones, companies around the world have a global market of talent to explore. For HR leaders and hiring managers considering hiring abroad, Spain is a top hiring destination. In addition to a rich culture, Spain boasts a thriving startup scene, a booming tech sector, and a broad pool of skilled workers, including native Spaniards as well as expats.
However, employers need to ensure compliance with local labor laws when hiring abroad, considering everything from minimum holiday requirements to parental leave and pensions. Managing payroll can also be complicated since it has to comply with local regulations.
A professional employer organization (PEO) in Spain can help simplify these legal and practical matters. A type of HR outsourcing company, a PEO partners with businesses that want to hire in the country by co-employing staff. The PEO and the company it's partnered with then share the liability for the employee. This differentiates a PEO from an employer of record (EOR) in Spain that would act as the sole employer on another company's behalf and assume full liability for employees.
If you've never worked with a PEO before, you may be wondering where to start. Below, we outline what hiring managers and HR leaders should know about using a professional employer organization in Spain.
Things to know about hiring in Spain
Labor laws vary widely across countries, so if you're going to hire in Spain, it's critical that you familiarize yourself with the relevant regulations. There are financial, legal, and practical repercussions to keep in mind. Below are some essential workplace benefits in Spain.
Overtime and bonus pay
In addition to their regular salary, due to the applicable collective bargaining agreements, employees in Spain are entitled to a 13th and 14th month pay, known as pagas extraordinarias. Each payment is equal to one-fourth of the employee's annual salary. If you're wondering how much it costs to hire in Spain, you can get a detailed breakdown using Oyster’s employment cost calculator.
Spain also allows for overtime benefits. Overtime pay is equal to at least 50% more than an employee's regular rate. Alternatively, the employee can receive compensatory paid time off at the same increased rate.
Holidays and leave
There are also practical issues like holiday and annual leave entitlements to consider. In Spain, employees get a minimum of 22 days of paid vacation per year. One holiday period must last at least two weeks. The country also has 14 public holidays per year, although this number may vary according to the geographic region.
Maternity and partner leave (formerly referred to as “paternity leave”) are also well-regulated in Spain. Expecting and new moms are entitled to sixteen weeks of paid maternity leave, which can be taken starting either on the day of the birth or up to 4 weeks before the due date.
Other considerations include sickness and disability leave, unemployment benefits, pension benefits, and termination and severance terms. Health insurance, which all Spanish employers are required to provide, is another point to take into account since it factors into the cost of hiring in Spain.
How to choose a PEO in Spain
Spain has a tightly regulated labor market, governing everything from salaries to working hours. As you start to educate yourself about the ins and outs of the country's employment system, you might feel overwhelmed. But it doesn't have to be that complicated. HR leaders and hiring managers who want to simplify hiring employees in Spain might opt to work with a PEO.
In this arrangement, your company and the PEO partner would become co-employers of your employees in Spain, with shared liability for their employment. You would need to have an entity in Spain, but the local expertise and HR services provided by the PEO can make it easier to employ and manage your Spanish workforce.
The exact services offered by a PEO may vary, but they often cover the following:
- Compliance issues: A PEO can make sure your company isn't running afoul of local labor laws, alleviating stress and reducing the risk of legal complications.
- Taxes: A PEO can help ensure that your company remains compliant with local tax regulations when it comes to payroll deductions, social contributions, employer taxes, and more.
- Payroll: Many PEOs will even manage day-to-day tasks like payroll, including tracking employee hours and processing payments.
- Benefits: Your PEO partner can handle benefits administration, from health insurance to paid time off.
- Human resources: Some PEOs offer start-to-finish talent management, taking on everything from recruiting candidates to handling performance reviews.
There are many reasons to use a PEO, from reducing liability to lowering the administrative burden on your People or HR team. However, keep in mind that not all PEOs are created equal. When selecting a PEO in Spain, the first step is to make sure that they have experience and expertise with Spanish labor laws and employment practices.
Next, check what types of services the PEO offers. While some focus on basics like compensation and benefits management, others offer more comprehensive services, like end-to-end human resources management, including recruitment and hiring.
Finally, you want to consider the PEO's fees. Most PEOs collect their fees by taking a cut of your payroll, but this isn't always the case. Some base their fee structures on the business size or number of employees. Check the fine print and confirm costs before committing.
A PEO alternative: Oyster as your hiring partner in Spain
If you’d rather not open an entity in Spain, which you’d need to partner with a PEO, you might want to consider other options.
As a global employment platform, Oyster offers a streamlined solution for HR leaders and hiring managers looking to hire in Spain, as well as 180+ countries worldwide. Oyster acts as the legal employer of your team members, and ensures end-to-end compliance throughout the employment lifecycle, from hiring to payroll, benefits, and more. The Oyster platform makes it easy to manage your global workforce and provides an exceptional experience for your international team members.
Learn how Oyster can help you hire global talent compliantly and competitively. Or reach out if you’d like a personalized demo.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. We let growing companies give valued international team members the experience they deserve, without the usual headaches and expense of hiring abroad.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll and great local benefits and perks.
