Can you hire employees in Spain without a legal entity?

Yes, you can hire employees in Spain without setting up a local legal entity by using an Employer of Record (EOR). The EOR acts as the legal employer in Spain, while your company manages the employee’s day‑to‑day work. This allows you to hire compliantly without incorporating a Spanish subsidiary.

How long does it take to hire employees in Spain?

Hiring through an Employer of Record is significantly faster than setting up a legal entity. In most cases, employees can be onboarded within a few weeks, depending on the role, contract terms, and completion of required documentation.

What employment contracts are required in Spain?

Employment contracts in Spain must be in writing if they last longer than four weeks. Contracts are generally presumed to be indefinite unless clearly defined as fixed‑term. When hiring through an EOR, the provider prepares a locally compliant contract that reflects Spanish labor law and applicable collective agreements.

Can a PEO help hire contractors in Spain?

A PEO or EOR can support contractor engagement, but Spain has strict rules around worker classification. If a contractor operates under conditions similar to an employee, there is a risk of misclassification. Many companies choose an EOR employment model instead to reduce legal and financial risk.

How does payroll work in Spain?

Payroll in Spain is typically processed monthly. It includes gross salary calculation, income tax withholding, employee social security contributions, and employer contributions. When hiring through an EOR, the provider runs payroll on your behalf and ensures all statutory payments are made correctly.

How often are employees paid in Spain?

Employees in Spain are usually paid on a monthly basis. Some collective agreements require additional payments, such as 13th or 14th-month salaries, which are common in Spain. An EOR ensures the payroll structure aligns with local requirements.

Does a PEO manage taxes and social contributions in Spain?

Yes, a PEO or EOR manages income tax withholdings and both employee and employer social security contributions. This includes calculating amounts owed, submitting filings, and making payments to the relevant authorities.

Can payroll be run in local currency?

Yes, payroll in Spain is run in euros (EUR). Employees are paid locally in EUR, while the EOR can invoice your company in an agreed currency, depending on your commercial arrangement.

Is using an Employer of Record legal in Spain?

Yes, using an Employer of Record is legal in Spain when structured correctly. The EOR must act as the formal employer, comply with labor law, and meet all registration and reporting obligations. Reputable EOR providers operate fully within Spanish legal frameworks.

What labor laws apply to foreign companies hiring in Spain?

All Spanish labor laws apply, regardless of whether the hiring company is foreign or local. This includes rules on contracts, working hours, termination, severance, paid leave, and social security. An EOR ensures these laws are applied correctly from day one.

What are the risks of employee misclassification in Spain?

Misclassification can lead to back payments of social security contributions, fines, penalties, and potential claims from workers. Spain is particularly strict on employment status. Using an EOR reduces this risk by placing the employee in a compliant employment structure.

How does a PEO or EOR ensure compliance in Spain?

A PEO or EOR ensures compliance by: Issuing legally compliant employment contracts Registering employees with social security and employment authorities Applying correct tax and contribution rates Monitoring labor law changes and collective agreements Managing termination and severance processes correctly This significantly reduces legal and operational risk for foreign employers.

Hire Employees in Spain with an Employer of Record

Hiring employees in Spain does not require setting up a local legal entity.

With EuroDev’s Employer of Record (EOR) and PEO services in Spain, you can legally employ staff, run payroll, and stay fully compliant with Spanish labor law, while EuroDev acts as the local employer.

We manage:

Spanish employment contracts
Payroll and tax administration
Social security contributions
Ongoing HR and labor law compliance

Talk to our EOR experts today

Hiring Employees in Spain with an Employer of Record

An Employer of Record (EOR) allows your company to hire employees in Spain without establishing your own Spanish subsidiary or branch. EuroDev becomes the legal employer, while your company retains full operational control over the employee’s day‑to‑day work.

How hiring in Spain through EuroDev works

1. Employee selection

You select the candidate you want to hire in Spain.

2. Employment contract setup

EuroDev drafts and issues a locally compliant Spanish employment contract that complies with labor law and applicable collective bargaining agreements (CBAs).

3. Payroll & tax administration

We run monthly payroll, calculate income tax and social security contributions, and ensure accurate reporting to Spanish authorities.

4. Ongoing compliance & HR support

EuroDev manages employment administration, statutory benefits, paid leave, and compliance throughout the employment lifecycle.

Employer of Record vs Setting Up a Legal Entity in Spain

When an EOR is the right choice:

You want to hire quickly without long setup times
You are testing the Spanish market
You plan to hire a small or distributed team
You want to minimize legal and compliance risk

When a local entity makes sense:

You are building a large, long-term workforce in Spain
You require a permanent commercial presence
You want full internal control over payroll and HR administration

Key differences at a glance

	Employer of Record	Local Entity
Setup time	Weeks	Several months
Legal responsibility	EuroDev	Your Company
Payroll & Compliances	Managed by EuroDev	In-house
Upfront costs	Low	High
Risk exposure	Reduced	Full exposure

Employment Contracts Through a Spanish EOR

When hiring employees in Spain through an Employer of Record (EOR), all employment contracts must comply with Spanish labor law.

Permanent (Indefinite) Employment Contracts

Indefinite contracts are the standard and most widely used employment arrangement in Spain. They are designed to provide permanent stability for employees and are strongly encouraged by Spanish labor regulations.

Key characteristics of permanent contracts:

No predefined end date
Full statutory employment rights from day one
Strong protection against unfair dismissal
Mandatory notice periods apply upon termination
Employees are entitled to statutory severance in cases of objective or unfair dismissal
Can be full‑time or part‑time
Probation periods are permitted, within legal limits defined by role and applicable collective agreement

Because Spanish law assumes employment to be indefinite by default, incorrectly structured temporary contracts may be automatically reclassified as permanent.

Fixed‑Term Contract Rules (Temporary Contracts)

Fixed‑term contracts may only be used where there is a genuine and justified temporary need, such as project‑based work or employee replacement.

Key limitations include:

A maximum of two consecutive fixed‑term contracts
Maximum total duration of 24 months within a 30‑month period
Continued employment beyond this limit results in automatic conversion to an indefinite contract
Misuse of fixed‑term contracts can lead to legal penalties and mandatory reclassification

Permanent vs Fixed‑Term Employment Contracts in Spain

Aspect	Permanent Contracts	Fixed-Term Contracts
Contract duration	No end date	Limited duration
Standard use in Spain	Most common and preferred	Exception, not the norm
Legal assumption	Default employment model	Must be specifically justified
Allowed purpose	Long‑term, ongoing roles	Temporary or project‑based needs
Maximum duration	Not applicable	24 months within 30 months
Renewals	Not applicable	Max 2 successive contracts
Risk of reclassification	Low	High if rules are not met
Termination protection	Strong employee protection	Reclassified as indefinite if misused
Severance entitlement	Applies upon eligible termination	Applies if converted to indefinite

Termination, Notice Periods & Severance in Spain

Spain has strong employee protection laws. Employment “at will” does not apply when hiring through an EOR in Spain.

Notice periods

Minimum statutory notice period: 15 days
Notice may be extended by contract or collective agreement
Payment instead of notice is permitted
No notice is required in cases of gross misconduct

Severance pay

Standard severance: 20 days’ salary per year of service
Maximum: 12 months’ salary
No severance is owed for valid disciplinary dismissals

EuroDev guides you through termination procedures to ensure compliance and risk mitigation.

Payroll, Employer Costs & Working Hours in Spain

Payroll costs when hiring through an EOR in Spain

When hiring employees in Spain through EuroDev’s Employer of Record service, employer costs are typically around 29.90% on top of gross salary.

This covers all mandatory employer charges and statutory contributions.

Example:

Average annual gross salary: €28,294.56
Estimated total employment cost: €36,782.93

EuroDev fully manages all payroll calculations, filings, and statutory payments.

Social Security & Employer Contributions in Spain

When hiring employees in Spain through an Employer of Record, EuroDev manages all social security registrations, filings, and payments as part of the payroll process.

Employer responsibilities handled by EuroDev

Registering employment contracts with Social Security and the Public Employment Service
Monthly payroll and contribution reporting
Withholding employee contributions
Paying employer social security contributions

Typical employer contribution structure

Social Security: 23.60%
Salary Guarantee Fund (FOGASA): 0.20–0.60% (commonly rounded in estimates)
Professional training: 0.60%

Total estimated employer contribution: ~29.90%

Working Hours & Overtime in Spain

Standard full‑time working schedule: 40 hours per week, typically 8 hours per day
Maximum legal overtime limit: 80 hours per year
Overtime rules and compensation are usually governed by collective bargaining agreements (CBAs)
Overtime may be compensated financially or with equivalent time off
Certain senior or managerial roles may be exempt from overtime provisions

EuroDev ensures working‑time rules are correctly applied based on contract type and applicable agreements.

Paid Vacation Leave & Public Holidays

Employees hired through an EOR in Spain are entitled to statutory paid leave. EuroDev ensures all leave entitlements are tracked and administered correctly.

Annual leave

Minimum: 22 business days (30 calendar days)
Leave can be split, but one period must be at least two consecutive weeks

Public holidays

Maximum: 14 public holidays per year
Includes 10 national holidays, with the remainder set by regions or municipalities

Maternity & Paternity Leave in Spain

Spain applies equal parental leave entitlements, fully funded through social security when handled correctly.

Maternity leave

16 weeks total
First 6 weeks are mandatory immediately after childbirth
Remaining 10 weeks can be taken flexibly
Leave is paid at 100% of the employee’s regulatory base salary, subject to statutory limits
Paid by Spanish Social Security
Employer top‑up is not mandatory

Paternity leave

16 weeks total
First 6 weeks are mandatory immediately after birth
Remaining 10 weeks can be taken flexibly
Fully paid by Spanish Social Security
Extended by 2 weeks per parent in cases of multiple births

EuroDev ensures parental leave is registered, reported, and paid correctly in line with current Spanish regulations.

Why Companies Choose EuroDev for EOR in Spain

No need to establish a Spanish legal entity

Fully compliant employment and payroll execution
Local expertise in Spanish labor law
One point of contact for HR, payroll, and compliance
Scalable hiring as your business grows

Hire Employees in Spain with Confidence