A Practical Expert Guide to Hiring Through an EOR in Spain
If you’re hiring in Spain for the first time, one thing becomes clear pretty quickly: employment rules are taken seriously here. Not in an aggressive or hostile way, but in a very matter-of-fact way. This is how the system works, and the expectation is that employers respect it.
Spain has a long tradition of employee protection, a fair amount of regional complexity, and more paperwork than most foreign teams expect. None of this is unmanageable, but it does mean that shortcuts tend to backfire.
That’s why many companies turn to an Employer of Record early, not because Spain is impossible to navigate, but because it’s unforgiving if you get the basics wrong.
Even when an EOR is handling contracts, payroll, and filings, it still helps to understand how the system actually functions. Spain has its own rhythm. Working hours look different. Leave rules are structured. Probation and termination are tightly defined.
And there are a few compliance details that catch teams off guard if they assume everything works the same way as elsewhere in Europe.
Let’s walk through what actually matters in real life.
Employment Law in Spain: Strong Protections, Little Flexibility
Spanish employment law is built first and foremost around protecting employees. That’s not a criticism, it’s just the reality. The system is designed to be clear, enforceable, and difficult to bend, especially once someone is officially on payroll.
What often surprises foreign companies is how early the rules apply. You don’t get a grace period to “formalize things later.” From day one, the contract needs to spell out the role, working hours, salary structure, benefits, and applicable terms clearly. Informal arrangements, even if both sides agree, don’t hold much weight if something goes wrong.
Another key difference is that Spanish employment law doesn’t operate in isolation. On top of national rules, many roles are governed by a convenio colectivo, a collective labor agreement tied to an industry, profession, or region.
These agreements can dictate minimum salaries, working hours, bonus structures, and even how dismissals must be handled. Two employees doing similar work can fall under different rules depending on which convenio applies.
This is where things get tricky for companies hiring from abroad. You might think you’ve offered a fair contract, but if it conflicts with the applicable convenio, the agreement doesn’t override the law. The law wins every time.
An Employer of Record helps by aligning contracts and employment terms with both national regulations and the correct collective agreement. But even then, it’s worth knowing that Spain’s system leaves very little room for improvisation.
Precision matters here, and getting it right upfront saves far more trouble than fixing it later.
Contracts, Classification, and the Usual Compliance Traps
Spain doesn’t give employers much flexibility when it comes to how work is classified. If someone looks like an employee in practice, fixed hours, reporting to a manager, using company tools, they will be treated as an employee legally.
Calling them a contractor doesn’t change that, and Spanish authorities are quick to challenge arrangements that blur the line.
Employment contracts themselves are not complicated, but they do need to be specific. Vague job descriptions, loosely defined responsibilities, or unclear salary terms tend to cause problems later.
Spanish contracts are expected to spell out the role, working hours, pay structure, probation terms, notice periods, and applicable collective agreement. Leaving things “understood” rather than written down is rarely a good idea.
One area that often surprises foreign teams is how pay is presented. Spain typically works with a gross annual salary, but employees still expect clarity on how that salary is distributed month to month.
In many industries, salaries are paid in 14 installments rather than 12, with extra payments in summer and December. This isn’t mandatory, but it’s common enough that assumptions can cause confusion if it isn’t discussed upfront.
Where companies usually get caught out:
- Using contractor agreements for full-time roles
- Forgetting to reference the correct convenio colectivo
- Offering a salary that technically meets expectations but conflicts with local agreements
- Misunderstanding the difference between 12- and 14-payment structures
Using an Employer of Record removes most of this risk because the person is hired as a local employee from the start. The contract is built to match Spanish law and the relevant collective agreement, rather than retrofitted after issues appear.
Payroll, Taxes, and Social Security: Where Costs Add Up
Payroll in Spain isn’t chaotic, but it is layered. Once you understand the pieces, it’s predictable. Until then, it’s where most companies underestimate the true cost of hiring.
Income tax (IRPF) is withheld at source, but the rate isn’t flat. It changes based on salary level, contract type, personal circumstances, and region. Employees sometimes see adjustments during the year, which can be confusing if they’re expecting the same net pay every month.
Social Security is the bigger surprise. Employer contributions typically sit around 30 percent of gross salary, while employees contribute roughly 6 to 7 percent. The exact figures vary, but the headline point is simple: Spain’s employer costs are meaningfully higher than what many foreign teams budget for at first.
Beyond taxes and contributions, payroll also has to account for statutory benefits and local expectations. Public healthcare is covered through Social Security, so private insurance isn’t mandatory, but many employers still offer it because it’s affordable and valued.
Meal vouchers, transport allowances, and flexible benefits are common in certain sectors and regions, even when they’re not strictly required.
Then there’s the question of extra salary payments. Spain’s traditional 14-payment structure still exists, and while most EORs allow you to consolidate into 12 monthly payments, the choice needs to be clear. If it isn’t, someone will assume the traditional model, and fixing that later is awkward.
An Employer of Record handles the calculations, filings, and reporting, but it’s still wise for finance teams to review payroll summaries regularly. Spain rewards accuracy, and small errors tend to show up eventually.
Working Hours, Leave, and Time-Off Culture
Spanish working culture is structured but not rigid. The standard workweek is 40 hours, and unlike some stereotypes, most modern Spanish workplaces don’t stop for long afternoon siestas anymore, except in some smaller towns or very traditional firms.
Where Spain gets serious is time off.
- Paid Annual Leave: The legal minimum is 30 calendar days (22 working days). Most employees take all of it, and there’s zero stigma around using vacation time.
- Public Holidays: Spain has national holidays, regional holidays, and city-specific holidays. Madrid, Barcelona, Valencia, they all have unique days off. Your EOR will track these automatically.
- Sick Leave: The first few days of sick leave are partially covered by the employer and then by Social Security. It’s common for people to take days off for minor illness; culturally, it’s normal and accepted.
- Work-Life Expectation: Spanish employees value personal time. Evening emails might not get responses. August is famously quiet; many companies slow down or even shut down for weeks.
Probation and Termination: Be Careful Here
Probation periods are allowed and often used, usually between 2 and 6 months, depending on the role and the applicable labor agreement (convenio colectivo). Once probation ends, terminating someone becomes much more regulated.
Spain does not allow “at-will termination.” To let someone go, you need:
- A documented cause
- Proper notice
- Exact calculations for severance (which varies by contract type and convenio)
- A paper trail showing fair treatment
If you don’t follow the rules, the termination can be labeled “improcedente” (unfair), which triggers higher severance and potential legal consequences.
EORs handle these situations carefully and will often advise you to adjust performance documentation before taking action.
What Happens If a Company Tries to Do Things Incorrectly
Spain is not the place to “wing it.” Misclassified contractors, late payroll, unclear contract terms, these can all lead to:
- Fines
- Back payments of taxes and social contributions
- Penalties for missing or incorrect contracts
- Hiring freezes during investigations
Labor inspections are normal in Spain, and they’re not always triggered by complaints; sometimes they’re random. An EOR protects you from almost all of this because they stand as the legal employer and follow Spanish processes day-by-day.
Culture and Communication: What Foreign Managers Should Know
Spanish professionals tend to blend warmth with formality. Meetings often start with casual conversation, but work discussions are clear and precise. People appreciate clarity, direct expectations, and respect for work-life balance.
You might notice:
- People value teamwork and collaboration over high-aggression individualism.
- Written communication is polite but straightforward.
- In some regions (Catalonia, Basque Country), bilingualism is common; Spanish is universal for work.
“And don’t be surprised if August feels… empty. It’s normal.”
Onboarding Through an EOR in Spain: What It Looks Like
Onboarding is usually smooth as long as the documents are ready. The EOR will:
- Verify right-to-work status
- Draft the employment contract referencing the correct convenio colectivo
- Register the employee with Social Security
- Set up payroll and benefits
- Guide the employee on local norms
If everything is in order, onboarding takes about a week. Delays usually happen when the new hire doesn’t yet have a Social Security number or NIE (foreigner ID). The EOR can help them navigate that.
When an EOR Makes More Sense In Spain
For most companies, setting up a Spanish entity only starts to make sense once there’s real scale. If you’re hiring one person, or even a small team, incorporation usually creates more work than value. The setup takes time, accounting requirements are ongoing, and local representation isn’t optional.
An Employer of Record is often the more practical option when:
- You need to hire quickly and don’t want entity setup slowing things down
- Spanish payroll, social security, and filings aren’t something your team wants to own yet
- You’d rather not deal directly with labor inspections while you’re still testing the market
- Headcount is small and plans are still evolving
Once teams grow beyond roughly eight to ten people, opening a local entity can become more attractive. Even then, many companies stick with an EOR because the costs stay predictable and the administrative load remains lighter.
Spain itself is a strong hiring market. There’s depth in engineering, product, operations, and customer-facing roles, and many professionals are used to working with international companies. The challenge is rarely talent. It’s navigating the employment framework around it.
Salary structures, collective agreements, social security contributions, and termination rules aren’t things most teams want to learn by trial and error. An EOR reduces that risk by acting as the legal employer, while you stay focused on managing work, priorities, and growth.
This guide is meant to give you enough context to evaluate Spain-focused EOR providers properly, not just on pricing, but on how well they handle the realities of hiring in Spain day to day.
