Expanding your business into Spain can be an exciting opportunity. Spain is known for its strong economy, access to European markets, and highly skilled workforce. However, navigating the local employment laws, tax regulations, and compliance requirements can be challenging, especially for businesses unfamiliar with the country’s legal environment. Partnering with an Employer of Record (EOR) in Spain can make a big difference.

An EOR takes care of all employment-related responsibilities, allowing your business to operate in Spain without setting up a local entity. Here’s a simple, step-by-step guide to help you understand how to do business with an EOR in Spain.

1. Understand the role of an EOR

Before anything else, it’s important to know what an Employer of Record in Spain does. An EOR is the legal employer for your employees in Spain, handling payroll, taxes, benefits, and compliance with local labour laws. Your business controls the employees’ daily tasks and operations while the EOR ensures everything is legally compliant. This partnership reduces the administrative burden on your business and ensures you avoid legal complications.

2. Evaluate your business needs

Ask yourself why you need an Employer of Record in Spain. Are you planning a small expansion with a few employees, or are you looking to establish a larger presence? If you need to hire quickly, minimise risks, and avoid the complexities of setting up a legal entity, then an EOR is likely the best option for your business. It allows you to focus on your core activities while the EOR manages all your employees’ legal and HR tasks.

3. Choose the right EOR provider

Not all EOR providers are the same. It’s essential to select an EOR with experience in the Spanish market. Look for an EOR with a strong reputation, good client reviews, and a deep understanding of Spain’s employment laws. They should offer various services, including payroll, tax compliance, and employee management. Ensure the pricing structure is transparent so you know exactly what you’re paying for.

4. Discuss compliance and legal requirements

Spain has its own set of employment laws, and failing to comply with them can result in fines or legal issues. Your EOR will help you navigate these laws by managing employee classification, payroll taxes, and social security contributions and ensuring that employment contracts comply with Spanish regulations. 

For example, an EOR will ensure that your employees receive the correct benefits, such as paid holiday leave and social security coverage, as Spanish law requires. In Spain, employees are entitled to 30 days of paid annual leave per year, which is more generous than in many other countries. 

Moreover, your EOR will ensure that all employees are enrolled in Spain’s social security system, which covers healthcare, unemployment benefits, and pensions. This means you won’t need to worry about handling complex benefit calculations or navigating the local bureaucracy, as the EOR will take care of everything to ensure full compliance with Spanish labour laws.

5. Plan your budget

Budgeting is a crucial step when expanding into Spain. You must account for employee salaries, social security contributions, taxes, and EOR service fees. Your EOR provider will give you a clear breakdown of all costs so you can plan accordingly. This allows you to avoid unexpected expenses and financially keep your expansion on track.

6. Draft a service agreement

Once you’ve chosen your EOR provider, the next step is to draft a service agreement. This agreement outlines the roles and responsibilities of both your business and the EOR. It should include fees, services provided, and the contract duration. Ensure the agreement is explicit, and consider seeking legal advice if necessary to ensure all terms are fully understood.

7. Onboard your employee

After the agreement is signed, the EOR will begin the employee onboarding process. They will prepare employment contracts that comply with Spanish labour laws and set up payroll. The EOR will also ensure that all employee benefits, such as health insurance and pension contributions, are in place. This helps to ensure that your employees are properly onboarded, reducing the risk of compliance issues later.

8. Manage employee relations

Even though the EOR handles legal employment responsibilities, managing employee performance and relations remains your role. It’s essential to communicate regularly with your employees and provide them with the guidance they need to succeed. According to Spanish laws, the EOR will support you by handling any employment-related issues, such as resolving disputes or managing terminations.

9. Monitor compliance and performance

Once your employees are onboard, your EOR will continue to ensure that everything remains compliant with Spanish employment laws. They will provide regular updates on payroll, taxes, and any changes in local regulations. Regularly reviewing the EOR’s performance is essential to ensure it meets your expectations and that your employees receive the correct benefits and support.

10. Scale your operations

As your business grows, you may want to expand further within Spain. An EOR makes scaling much easier as it handles the complexities of hiring additional employees and ensuring compliance with local laws. This allows your business to grow without establishing a legal entity in each new region. Your EOR will support you through every step of the scaling process, ensuring that your expansion runs smoothly.

Things you should know before hiring in Spain

Before hiring in Spain, you must understand the local work culture and employment practices. Spain has strict labour laws around employee benefits, working hours, and holiday entitlements. For example, employees are entitled to 30 days of paid annual leave, and work contracts must adhere to local rules about wages and working conditions.

Another essential aspect is Spain’s social security system. Both employers and employees must contribute to cover healthcare, unemployment benefits, and pensions. An EOR ensures these contributions are made correctly and on time.

Start hiring in Spain

Let us help you make your expansion into Spain simple and efficient. By partnering with an Employer of Record in Spain, you can reduce risks, streamline operations, and focus on your core business. 

I invite you to explore how our EOR services can simplify the process and support your growth. Contact us today to learn more about how we can help you successfully hire in Spain.