Spain Employment Law & Compliance Guide for Employers

Can a foreign company hire employees in Spain without a local entity?

Yes. A foreign company can register as an employer with Spanish Social Security without a subsidiary, using a Spanish tax number and usually a local representative, and run Spanish payroll. This can create a permanent establishment for corporate tax. Many companies use an Employer of Record instead, which employs the worker under Spanish law. Any such arrangement must respect article 43 of the Workers’ Statute, which reserves the supply of workers to licensed temporary work agencies.

How much does an employee cost in Spain on top of gross salary?

Typically about 31.5% to 33% of gross salary for an office employee in 2026. The employer pays 23.60% common contingencies, 5.50% unemployment (6.70% for fixed-term contracts), 0.75% MEI, 0.60% training, 0.20% FOGASA and accident insurance, on pay up to EUR 5,101.20 a month. Above that cap only a small solidarity contribution applies. Add any benefits required by the collective agreement.

What is the minimum wage in Spain in 2026?

EUR 1,221 a month in 14 payments, or EUR 17,094 a year, for full-time work. Royal Decree 126/2026, published on 19 February 2026, set this rate with effect from 1 January 2026, a 3.1% increase on 2025. The daily rate is EUR 40.70, and domestic workers paid by the hour receive at least EUR 9.55. Most collective agreements set higher minimums by job category.

How much notice and severance does an employer owe when dismissing an employee in Spain?

For an objective dismissal, the employer gives 15 days’ written notice and pays 20 days’ salary per year of service, capped at 12 months. If a court rules a dismissal unfair, the employer must reinstate the employee or pay 33 days per year, capped at 24 months. A justified disciplinary dismissal needs no notice or severance. A null dismissal, such as one linked to pregnancy, means reinstatement with back pay.

Can a company hire a foreign national in Spain, and what permit is needed?

Yes. EU, EEA and Swiss citizens can work after registering. For other nationals, the employer usually applies for an initial residence and work authorisation, which requires a labour-market test unless the job is on the shortage list; the authority has 3 months to decide. Highly qualified staff, EU Blue Card holders and intra-company transferees can use the faster Law 14/2013 procedure. The worker then obtains a visa and a TIE card.

Is it risky to engage contractors instead of employees in Spain?

Yes. Spanish courts and the Labour Inspectorate look at how the work is done, not at the contract’s name. A falso autónomo [bogus self-employed] who works under your direction, on your schedule and for regular pay can be reclassified as an employee. The result is back Social Security contributions with surcharges, fines and employment claims such as severance. Genuine contractors work independently, with their own tools and other clients.