Contracts, payroll, Social Security, convenios colectivos and the full compliance layer behind your first — and fiftieth — Spanish hire. Built for foreign-owned SLs and autónomos scaling teams.
Spanish employment law is more protective of employees than most common-law systems and substantially more detailed than what UK, US, Irish or Canadian employers are used to. Every role sits inside a convenio colectivo — a sector-wide collective agreement that fixes minimum salaries, working hours, paid leave and dozens of other terms. Every contract type has its own regulation. Social Security contributions sit around 30% of gross salary on the employer side.
For foreign-owned SLs, the reality is that hiring in Spain is entirely workable — but it has to be done correctly from day one. Contracts need to match the real role, the right convenio has to be applied, the right contract type has to be chosen, and the payroll machine (nómina, Social Security, IRPF withholding) has to be set up before the first employee starts.
This page walks through the framework, where foreign employers usually misstep, and how we structure the first hire so it sets the template for the next twenty.
Employment contracts, onboarding packs, payroll setup and convenio analysis — all scoped at the outset. Monthly payroll and ongoing compliance run on a predictable retainer.
Four layers sit on top of each other. Every hire is regulated by all four simultaneously, and contracts that ignore any one layer are routinely challenged.
The Workers' Statute is the foundational employment law — contract types, minimum working conditions, dismissal regime, discrimination protections. It applies to every employment relationship in Spain regardless of sector.
The 2022 labour reform materially changed the contract landscape: fixed-term contracts are now only allowed in narrow circumstances, most new hires must be indefinite, and there are serious penalties for misuse of temporary contracts.
Every industry is covered by a sector-wide collective agreement negotiated between employer associations and trade unions. The convenio fixes minimum salaries by category, working hours, paid leave above the statutory minimum, annual salary increases and frequently sector-specific rules.
The convenio is not optional and not negotiable at the contract level. Offers below the convenio minimum are automatically raised to the convenio level by the labour inspectorate. For foreign employers, correctly identifying the applicable convenio is the single most frequent source of contract error.
Employer contributions to Seguridad Social run around 30% of gross salary — covering pensions, unemployment, sickness and workplace accident insurance. Employee contributions are a further ~6.4%. Both are withheld and paid monthly by the employer.
IRPF withholding is also the employer's responsibility — progressive rates from 19% to 47% depending on salary and personal circumstances. Employer payroll (nómina) must be run monthly, filed through the Social Security's electronic system (Sistema Red) and declared through Modelo 111 (quarterly) and Modelo 190 (annual).
Terminating an employee in Spain is substantive. There are two routes: objective dismissal (economic, technical, organisational or production reasons) with 20 days' salary per year of service up to 12 months' salary, and disciplinary dismissal for serious misconduct with no compensation but requiring proof at the labour courts.
Dismissals without proper cause or procedure are routinely declared improcedente by the courts — unfair dismissal — with compensation rising to 33 days per year of service up to 24 months. Settlement is the norm; trial is the exception but happens regularly.
The 2022 reform simplified the landscape substantially. Most hires now fall into a small set of permitted structures.
The default contract — open-ended, full or part-time. Applies unless a narrow exception applies. Most stable and most expensive to terminate.
For trainees aged up to 30 combining work and study. Reduced Social Security; time-limited to the training programme.
For recent graduates, limited to one year, providing an entry into the profession linked to the degree earned.
Indefinite but seasonal — for roles that are recurring but not year-round. Heavily used in tourism and agriculture.
For covering an absent employee (maternity, long-term sickness). Ends when the substituted employee returns.
Temporary for unexpected, specific demand peaks. Strict time and justification limits post-2022 reform.
Senior management — separate regulatory regime, higher compensation floors, distinct termination rules.
Self-employed economically dependent on one client (TRADE). Not an employment contract but regulated as if partially one.
Getting the first hire right creates the template for every subsequent one. Most problems we inherit from other advisors trace back to the first contract being wrong.
Understanding the actual role, working pattern, location, reporting line. This determines which convenio applies and which contract type is appropriate.
Identifying the applicable collective agreement — by activity code (CNAE), geography and role. Verifying salary, working hours and paid leave baselines.
Bilingual contract (Spanish-English, Spanish governs) with all statutory clauses, probation period where allowed, confidentiality, non-compete if applicable.
Company registration with Social Security if first hire; employee registration at least one day before start date; confirmation of contribution code.
Nómina calendar configured, IRPF retention percentage calculated, Modelo 111 and 190 schedules set. Monthly payroll now runs on a fixed rhythm.
Data protection information notice, health and safety induction, occupational health enrolment, training record — all the small compliance pieces that avoid future challenges.
Anonymised examples showing how the framework plays out.
The situation. UK Ltd setting up Spanish SL and hiring a first developer in Madrid. Uncertain which convenio applies and worried about indefinite contract risk.
How we'd handle it. Identified the TIC consultancy convenio; structured an indefinite contract with statutory probation (six months); briefed the founder on Spanish dismissal costs ahead of hire so the commercial terms were realistic.
The situation. Wanted to hire a sales-rep on full commission. In the US this would be at-will with variable comp.
How we'd handle it. Redesigned the comp to meet the Spanish minimum-wage guarantee (SMI) plus commission on top. Built target-based variable plan compliant with sector convenio and protected against claw-back challenges.
The situation. Had been paying a Spanish resident as a freelancer for 18 months; the person worked only for them, from their office, on their equipment.
How we'd handle it. Clear case of false self-employment. Restructured to indefinite employment; settled back-Social-Security with Tesorería General on favourable terms; avoided labour inspection via voluntary regularisation.
The situation. Scaling from 3 to 15 Spanish employees in six months. Wanted a scalable structure.
How we'd handle it. Built template contract per role family; fixed payroll provider; set up an employee handbook in line with the TIC convenio; briefed management on disciplinary procedure to avoid improcedente dismissals during scaling.
Every costly employment dispute we see at pre-action stage traces back to one of these patterns.
Employer applies a convenio that looks similar but doesn't match the CNAE. Employees later claim salary differential for years — usually successful at the labour courts.
Post-2022 reform, fixed-term contracts without one of the narrow permitted causes are automatically converted to indefinite. Dismissal is then treated as unfair.
Probation beyond the statutory maximum (six months for qualified staff, two for others) is void. Dismissal during the extended period is treated as unfair.
Contractor paid monthly who works only for the employer, from the employer's office, with employer's equipment. Labour inspectorate routinely reclassifies — back Social Security plus fines of up to €10,000 per person.
Verbal dismissal or missing written justification. Automatically declared improcedente, generating 33 days' salary per year of service in compensation.
Every employee must be enrolled with an external occupational-health provider before starting. Missing this is a standard Labour Inspectorate fine — €2,046 minimum.
From decision-to-hire to first payroll, the setup runs about three to four weeks.
If the SL has never hired before, registration with Tesorería General. Generates the Código Cuenta Cotización — the employer's Social Security identifier.
Convenio identified, contract drafted, salary benchmarks confirmed, probation and non-compete terms finalised.
Bilingual offer letter, contract execution on a firm start date.
Employee registered with Social Security (Modelo TA2), occupational-health enrolment, occupational-risk training booked, data-protection notice issued.
Employee starts. Day-one documentation signed; health-and-safety induction delivered.
Nómina issued, IRPF withheld, Social Security paid. Subsequent months run on fixed rhythm via payroll provider.
Side-by-side for the core commercial variables.
Employment law is the area where foreign-owned SLs most often get into disputes with the advisors they inherited from formation. Standard gestor payroll is cheap but doesn't provide employment-law advice; local employment lawyers often don't speak English or understand cross-border needs.
Book a consultation and we'll map the convenio, draft the contracts, set up Social Security and payroll, and structure the onboarding so every hire lands on a compliant footing.