Employer of Record in Spain

Spain's employer-side cost is dominated by contributions to the Tesorería General de la Seguridad Social, which cover common contingencies, unemployment, vocational training and the wage guarantee fund. Those contributions are calculated on a contribution base that is itself capped, so the effective employer burden as a percentage of total cost falls as salary rises above the ceiling. Any Employer of Record quote that states a single flat uplift for Spain is therefore approximate by construction, and the gap widens for senior hires.

The employment contract type matters more in Spain than in most European markets. Labour reform pushed hiring decisively toward indefinite contracts, and fixed-term contracts now require a justified cause that survives inspection. An EOR that issues a fixed-term contract without that cause exposes the client to reclassification, at which point the worker is treated as indefinite from the start date and the severance clock runs from that earlier date rather than from the date of conversion.

Statutory paid leave is expressed in calendar days rather than working days, which is the single most common budgeting error in Spain. Public holidays sit on top of that entitlement and vary by autonomous community and by municipality, so the effective working year differs between a hire in Madrid and a hire in Catalonia even on identical contracts. Collective bargaining agreements, which apply by sector rather than by company, often improve on the statutory floor and are binding on the EOR as the legal employer.

Extra payments are the field most often missing from a comparison spreadsheet. Spanish employees are entitled to statutory additional payments during the year, and while most contracts prorate them across twelve monthly payslips, the entitlement is fixed by statute and by the applicable collective agreement. When a quote presents a monthly salary without stating whether extra payments are included, the annual cost of the hire is understated by a material margin.

Termination is where Spain's cost profile diverges sharply from the rest of the region. Dismissal on objective grounds carries a defined severance multiplier per year of service; if a labour court rules the dismissal unfair, the multiplier rises and back pay may be owed. An EOR carries that liability as the legal employer, and reputable providers therefore hold a severance accrual or require a deposit before onboarding. A client comparing providers on monthly fee alone will miss that difference entirely.

Probation periods are capped by contract category, and once probation ends the protective regime applies in full. Because the severance clock counts total service, a worker moved between an EOR and a client entity retains accrued seniority in most fact patterns. That continuity is the reason conversion timing should be planned at the start of an engagement rather than at the point a local entity is finally incorporated. Compare the domestic alternative on our PEO reference by state and model total cost using the EOR cost calculator.

What this doesn't cover

This page reports the statutory employer obligations that any Employer of Record in Spain must carry for a client. It does not quote a specific provider's management fee, deposit policy or benefits catalogue, and it does not model income tax withheld from the employee. Sector collective agreements can and do improve on every statutory floor listed here; the applicable agreement is determined by the activity performed, not by the client's own sector. See the sourcing methodology for how each field is verified, and the EOR country index for comparable markets.