What every foreign employer should know before signing a contract
- Hiring employees in Spain starts with a compulsory pre-hire alta with the Tesorería General de la Seguridad Social, typically 60 minutes before the employee begins work.
- Since the 2022 labour reform (Royal Decree-Law 32/2021), the Contrato Indefinido (permanent contract) is the legal default, and temporary contracts are restricted to narrowly defined circumstances.
- Total employer cost is typically 130% to 135% of gross salary once social security contributions of 30% to 32% are added.
- The 2024 SMI (minimum wage) is €1,134 per month over 14 payments, and the standard workweek is 40 hours, capped at 9 hours per day.
- The Valencian Community and national government offer targeted hiring incentives for youth, long-term unemployed, disabled workers and women returning after maternity.
Why Spanish employment rules matter more than UK employers expect
British SMEs opening in Spain routinely underestimate the depth of Spanish employment law.
Where UK employers can rely on flexible contract terms and relatively low statutory dismissal costs, Spanish employers operate within a codified framework that heavily favours permanent employment, protects incumbent staff, and treats dismissal as an exceptional and often costly step.
Hiring employees in Spain is entirely workable, but only when the employer understands the contract types, the mandatory pre-hire steps, the true cost per employee, and the incentives that can reduce it.
This guide sets out what every foreign employer needs to know before making a first Spanish hire.
The framework: Estatuto de los Trabajadores and the 2022 reform
Spanish employment law is codified in the Estatuto de los Trabajadores (Royal Legislative Decree 2/2015), supplemented by sectoral collective agreements (convenios colectivos) and the 2022 labour reform.
Royal Decree-Law 32/2021 (the 2022 reform) reasserted the permanent contract as the legal default, restricted the circumstances under which temporary contracts can be used, and introduced the fijo-discontinuo permanent-seasonal contract for recurring but interrupted work.
Collective agreements
Every Spanish employment relationship is governed by a sectoral or company-specific convenio colectivo, which sets minimum salaries, working hours, holiday entitlements and dismissal notice periods above the statutory floor.
Employers must identify the applicable convenio before offering a contract.
Permanent contracts represented 42% of new registrations in 2023, up from 12% before the 2022 reform, according to Ministry of Labour and Social Economy data.
Contract types after the 2022 reform
Four principal contract types remain in use for hiring employees in Spain.
Contrato Indefinido (permanent)
The default. Applies unless a specific exception justifies a temporary contract.
Contrato Temporal
Available only in narrowly defined circumstances: production-related surges (up to 6 months, extendable by convenio) and substitution of a specifically identified absent worker.
Fijo-Discontinuo
Permanent-seasonal contract used for recurring seasonal or intermittent work.
Contrato Formativo
Training contract available in two variants: dual vocational training and professional practice for recent graduates.
| Contract | Duration | Notice | Dismissal cost |
|---|---|---|---|
| Indefinido (permanent) | Open | 15 days statutory | 20 or 33 days per year worked |
| Temporal (production) | Up to 6 months | By convenio | 12 days per year worked |
| Fijo-discontinuo | Open, seasonal | 15 days | 20 or 33 days per year |
| Formativo (training) | 6 to 24 months | By convenio | Reduced regime |
Unfair dismissal compensation is currently 33 days per year worked for permanent contracts signed after 12 February 2012, capped at 24 months’ salary.
The true cost of hiring employees in Spain
Gross salary is only the starting point.
Employer social security
Employers pay approximately 30% to 32% of gross salary in social security contributions covering common contingencies, unemployment, wage guarantee fund, and vocational training.
Payroll extras
Spanish salaries are typically paid over 14 monthly payments (12 monthly plus two extra pagas in June and December), which is a presentational convention rather than an increase in annual cost.
Annual leave and public holidays
The statutory minimum is 30 calendar days per year (equivalent to 22 working days), plus 14 public holidays.
Total employer cost
For a gross annual salary of €30,000, the fully loaded employer cost is typically €39,000 to €40,500, including social security, without counting training, equipment or benefits.
The pre-hire process step by step
1. Confirmconvenio2. Draftcontract3. Pre-hireTGSS alta4. Registerat SEPE5. Firstpayroll
Company registration prerequisites
Before hiring anyone, the employer must have an active company code (código cuenta cotización, CCC) with the Tesorería, and the company itself must be registered under RETA or in the general regime.
Our guide on creating a limited company in Spain covers the incorporation steps, and autónomo vs SL Spain explains the structural choice for solo founders.
Written contract and registration with SEPE
Every contract must be registered with the SEPE (Servicio Público de Empleo Estatal) within 10 days.
Occupational health and safety
Employers must contract a Servicio de Prevención de Riesgos Laborales (SPRL) and provide medical screening for new hires.
Foreign employers should also read our overviews of relocating UK employees to Spain and social security for cross-border teleworkers, which cover mobility and remote-working scenarios.
Hiring incentives
Spanish and Valencian authorities offer targeted incentives to reduce the cost of certain hires.
National bonifications
Reductions in employer social security contributions for hiring young workers (under 30), long-term unemployed, workers over 45, people with disabilities, victims of gender violence and women returning to work after maternity.
Valencian Community programmes
The Servei Valencià d’Ocupació i Formació (Labora) administers grants for permanent hires of unemployed workers, with amounts scaling by profile and duration of unemployment.
Our detailed post on subsidies for hiring the unemployed and the indefinite hiring programme for youth covers the current national schemes.
Working hours, holidays and time-tracking
The standard working week is 40 hours, capped at 9 hours per day.
Since 2019, all employers must record daily working time for every employee.
Statutory holiday is 30 calendar days per year plus 14 public holidays.
The Valencian Community observes national plus regional and local public holidays, typically totalling 14 days per year.
Dismissal and severance
Spanish employment protection is codified.
Objective dismissal (economic, technical, organisational or productive causes)
Severance is 20 days’ salary per year worked, capped at 12 months’ salary.
Disciplinary dismissal
Where properly documented and found to be procedente (procedurally correct and substantively justified), no severance is payable.
Unfair dismissal (despido improcedente)
Severance is 33 days’ salary per year worked, capped at 24 months’ salary, for permanent contracts signed after 12 February 2012.
Our detailed guide on unfair dismissal compensation sets out the calculation framework and current case law.
Comparison with UK PAYE
Spanish employment costs differ from UK PAYE in three main ways.
Employer social security contributions of 30% to 32% in Spain compare with UK employer NIC of 15% (2025 rate).
Statutory dismissal cost in Spain (20 to 33 days per year worked) is materially higher than UK statutory redundancy pay (0.5 to 1.5 weeks per year worked depending on age).
Contract termination in Spain requires procedural formality that UK employers can find restrictive.
External reference
The Ministry of Labour and Social Economy portal publishes the current framework, sectoral convenios and hiring incentives.
Common mistakes to avoid
Signing a temporary contract where the 2022 reform now requires a permanent one, exposing the employer to fraud-of-law reclassification.
Failing to complete the pre-hire TGSS alta before the employee starts work.
Overlooking the applicable convenio colectivo and paying below the sectoral minimum.
Underestimating the fully loaded employer cost when budgeting.
Attempting to dismiss without meeting the procedural formalities, converting an objective dismissal into an unfair one at 33 days per year worked.
Talk to our team about your first Spanish hire
Our Valencia office advises foreign employers on contract drafting, payroll setup, social security registration, incentive claims and ongoing employment compliance.
We work in English, French, Spanish and Russian.
Email: felix.delaguia@delaguialuzon.com
Phone: +34 963 74 16 57
Avinguda Regne de Valencia 6, 1º-2º, 46005 Valencia.
FAQs: Hiring employees in Spain
What is the default contract type in Spain?
Since the 2022 labour reform, the Contrato Indefinido (permanent contract) is the legal default. Temporary contracts are restricted to narrowly defined production-related and substitution scenarios.
How much does an employee actually cost the employer?
Between 130% and 135% of gross salary, once employer social security contributions of 30% to 32% are added, before training, equipment or benefits.
Does Spain have a minimum wage?
Yes. The 2024 SMI is €1,134 per month over 14 payments, equivalent to €15,876 per year gross.
How many hours can an employee work per week?
The statutory maximum is 40 hours per week, capped at 9 hours per day, with mandatory rest periods.
Do I need a written contract?
Yes for all indefinite, part-time, training and fixed-term contracts over four weeks. Registration with SEPE within 10 days is compulsory.
What is a convenio colectivo?
A sectoral or company-specific collective agreement that sets minimum salaries, working hours, holiday and dismissal notice periods above the statutory floor.
Can I employ someone as a freelancer instead?
Only if they are genuinely independent. False autónomo arrangements (falsos autónomos) are heavily sanctioned by the Labour Inspectorate, with retrospective reclassification and social security contributions.
What incentives are available for hiring in the Valencian Community?
Labora administers regional grants for permanent hires of unemployed workers, and national bonifications reduce employer social security contributions for young, long-term unemployed, disabled and returning-mother hires.
How much notice must I give an employee before dismissal?
15 days for permanent contracts by statute, extended by many convenios. Payment in lieu is standard practice.
Is dismissal in Spain more expensive than in the UK?
Materially yes. Objective dismissal costs 20 days per year worked, and unfair dismissal 33 days per year worked, both above the UK statutory redundancy baseline.
