A Q&A guide to employment and employee benefits law in Spain.
The Q&A gives a high level overview of the key practical issues including: permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; pensions; intellectual property; restraint of trade agreements and proposals for reform.
To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits Country Q&A tool.
The Q&A is part of the PLC multi-jurisdictional guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-mjg.
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Parties can choose which law regulates the employment contract, although there are certain mandatory provisions that apply regardless of the choice of law. In particular, if a European Economic Area (EEA) national, or a non-EEA national working for an EEA-based company, has been posted to work in Spain, Directive 96/71/EC concerning the posting of workers (Posted Workers Directive) (implemented by Law 45/1999) applies. This provides that employees posted to work in another member state are protected by that member state's mandatory employment legislation (Article 3, Posted Workers Directive). In Spain, this includes:
Minimum rates of pay, including overtime rates (see Question 7).
Equal treatment and non-discrimination (see Question 15).
Conditions and restrictions on work by minors.
Prevention of risks at work (see Question 23).
Freedom to join a trade union and the right to strike.
The right to privacy and dignity at the workplace.
The mandatory employment legislation that applies in the absence of a choice of law also applies to non-EEA nationals and nationals working for non-EEA-based companies (Article 6, Rome Convention on the law applicable to contractual obligations (1980/934/EEC) (Rome Convention)).
Unless the parties have agreed on a choice of law, the general rules apply. This means that the employment contract is governed by the law of the country in which the employee habitually carries out his work in performance of that contract, even if the employee is temporarily employed in another country (Article 6, Rome Convention).
The usual retirement age for all employees is 65, but it is not compulsory to terminate an employment contract when this age is reached. There are no specific age restrictions on managers or company directors. However, major Spanish companies are increasingly imposing age limits on company directors in accordance with good corporate governance rules (for example, the OECD (Organisation for Economic Co-operation and Development), Principles of Corporate Governance 2004, the Olivencia Code and the Aldama Code). This practice has not been affected by Spain's implementation of European provisions on age discrimination.
There are no specific nationality restrictions on managers or company directors.
The government issues an employment plan every year that sets out specific incentives available for employing certain categories of people. The most common incentives are:
Reducing social security contributions for employing people over the age of 45 years.
Reducing social security contributions for employers converting temporary employment contracts into permanent contracts, to promote employment stability.
Reducing social security contributions for employers converting contracts of replacement or contracts for training into permanent contracts, to promote employment stability.
Awarding bonuses to employers, such as direct payments from social security, for employing women and unemployed persons for more than one year.
In addition to the government's discretionary incentives, Law 43/2006 brought into force specific measures and incentives for employing the following people:
Unemployed persons registered at the Employment Office.
Female victims of domestic violence.
Employees suffering from social exclusion.
Unemployed persons with family responsibilities.
Further, Royal Decree 2/2009 brought into force incentives relating to unemployment for:
Employers that offer indefinite employment contracts to persons who have been receiving unemployment benefit.
Employers that reduce working hours or suspend employment contracts instead of terminating employment relationships as a consequence of redundancy agreements.
Royal Decree 1/2011 and Law 3/2012 had now brought into force specific measures and incentives for employing people with the following characteristics:
Persons under the age of 30 who were unemployed on 1 January 2011.
Unemployed people registered at the Employment Office for at least 12 months in the 18-month period prior to the hiring measure.
Unemployed persons registered at the Employment Office on 1 January 2011 who have had difficulty finding employment and who are aged between 16 and 30.
Unemployed female victims of domestic violence aged between 16 and 30.
Female victims of domestic violence who were unemployed on 1 January 2011 and registered at the Employment Office for at least 12 months in the 18-month period prior to the hiring measure.
The employment contracts signed must be presented to the National Employment Institute (INEM) within the next ten days of the signature.
Procedure for obtaining approval. Any foreign national who is not from the EEA and wants to work in Spain must obtain, prior to commencing their work activity, a work permit and its corresponding work visa (once the work permit has been approved).
Cost. The administrative costs for a working visa are about EUR100 (as at 1 August 2012, US$1 was about EUR0.8) for US nationals, but the fee can vary for other foreign nationals, depending on the nationality of the applicant.
Time frame. The work visa takes between seven and 15 days to be issued.
Procedure for obtaining approval. EEA nationals are free to work in Spain without permits.
Non-EEA nationals must usually obtain a work permit. Different permits are required, depending on the length of employment and the employee's geographical location. If a job does not require specific qualifications, a permit is only granted if there are no Spanish people available to take up the position. As indicated above (see above, Visa), foreign nationals should obtain the work permit and its corresponding visa independently from their citizenship. The work permit is subject to the labour market test, except for the cases indicated in Article 40 of the Immigration Law and for Peruvian and Chilean citizens, who are exempted.
A company wishing to hire a non-EEA national must obtain a permit from the labour authorities. The work permit application can be filed in one of the following organs, depending on the characteristics of the Spanish sponsoring company and the professional skills of the assignee:
The General Immigration Directorate: the process takes around 30 days to resolve the application.
The local immigration office: the process takes a minimum of three months.
Once the work permit is approved and notified, the assignee has to apply for the corresponding work visa within one month from the Spanish consulate that has jurisdiction over the applicant's place of residence.
Cost. The charges for a work permit can vary from approximately EUR192 to EUR380 depending on the salary the applicant will receive.
Time frame. The process can take from 30 days to three months, depending on which organ the work permit application is filed with.
There is no general requirement for an employment contract to be in writing, except for temporary contracts lasting for more than four weeks.
If the contract is not in writing, employees must be provided with certain written particulars of employment, including details identifying the following matters (Royal Decree 1659/1998 24 July and Article 8.5, Workers' Statute):
Name of the company.
Date on which employment begins.
Place of work.
Hours of work.
Holiday and holiday pay entitlement.
Collective agreements applicable to the employment relationship.
Professional group to which the employee belongs.
Statute and case law imply certain terms into employment contracts. Common implied terms are the:
Mutual duty of trust and confidence.
Employee's duty to obey the employer's instructions.
Employee's duty to comply with the company's internal rules.
Collective agreements between unions and employers are quite common in public services, and at private industry and company level. Almost every company in Spain is subject to a collective agreement. The provisions in collective agreements apply regardless of the terms in the employment contract.
Employers can unilaterally change the terms and conditions of employment provided they fulfil the requirements established by Article 41 of the Workers' Statute. Under Article 41, where demonstrated economic, technical, organisational or production justifications exist, the company management can resolve to make substantial changes to the following terms and conditions of employment:
Hours of work.
Working patterns for shift work.
Remuneratory system and salary.
Procedures for compensating employees.
Procedures for measuring employees' work and performance.
Employees' functions, where these exceed the limits set by Article 39 of the Workers' Statute for functional mobility.
The justifications contained in Article 41 will be presumed to exist where the adoption of the proposed change will be linked with:
Technical or labour organisation.
Substantial changes to working conditions can be of an individual or collective nature. A change to the working conditions of individual workers is considered to be of an individual nature. A change to the working conditions that has been acknowledged by the workers by virtue of a collective agreement, or that is collectively enjoyed by the workers following a unilateral decision of the employer, is considered to be of a collective nature. Employers must follow different procedures for changes, depending on whether they are individual or collective in nature.
The minimum wage for 2012 is EUR641.40 per month (Royal Decree 1888/2011). It applies to all employees.
The Spanish working time regulations state that employees must (Workers' Statute):
Not work (on an annual average) more than 40 hours a week.
Not work more than nine hours a day.
Be given at least 12 hours' rest before starting the next day's work.
There are exceptions for certain industries (for example, agricultural work), management executives and other specified employment relationships.
Whenever the duration of the continuous working day exceeds six hours, a rest period of not less than 15 minutes must be given during that period. This rest period is considered as working time where this is established by either a collective bargaining agreement or the employment contract. For workers under the age of 18 years, the rest period must be a minimum of 30 minutes long and must be given whenever the duration of the continuous working day exceeds four and a half hours.
Workers have the right to an uninterrupted minimum weekly break of one and a half days, which can be accumulated to up to 14 days. This break period, as a general rule, should include either Saturday afternoon or Monday morning, together with the whole of Sunday. Persons under the age of 18 years must have a weekly break of two days without interruption (it is irrelevant which days of the week this weekly break takes place).
In companies with continuous 24-hour production processes, account must be taken of shift rotation when organising work shifts, and no worker must be on night shift for more than two consecutive weeks, unless they volunteer to do so.
Companies which, owing to the nature of their activity, work in shifts including Sundays and holidays, may either do this with teams of workers performing their activity for whole weeks, or by contracting personnel to complete the teams necessary for one or more days a week.
When scheduling working patterns for shift workers, employers must ensure that they consider the tasks undertaken by employees, particularly with a view to reducing the effects of monotonous or repetitive work, and taking into account any health and safety requirements. These same criteria must also be taken into consideration when determining rest periods during the working day.
Once employees have been continuously employed for one year, they are entitled to 30 calendar days' paid holiday every year. Holiday entitlement cannot be replaced by payment in lieu.
There are 14 public holidays which are not included in the minimum holiday entitlement.
Employees are entitled to a maximum of 18 months' sick leave in cases of illness or injury. Once the 18-month period has expired, employees can be designated as permanently ill and claim a social security pension.
Employees receive social security payments during the sick leave period (up to a maximum of 18 months). The amount of social security payment varies depending on the employees' salary and their position in the employer's organisation. Some employers, on their own initiative or under the provisions of a collective agreement, supplement the social security payment to match the employee's current salary.
Employers are compensated for payment made in favour of employees from the day after the accident (or after the 16th day in the case of a common contingency) by discounting the amount of the delegated payments made from their periodic settlements of social security contributions.
The delegated payments by employers end after 365 days. If there is an extension after this date, that payment is made directly by the National Social Security Institute.
Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
Carers (including those of disabled children and adult dependants)?
Pregnant employees can take a maximum of 16 weeks' maternity leave. They must take the leave immediately after the birth. Maternity leave is increased where there are:
Multiple births (by two weeks for each additional child).
Maternity leave can also be increased where the child is disabled. If the mother dies whilst taking maternity leave, the remaining leave is transferred to the father (see below, Paternity rights).
Pregnant employees and those who have recently given birth are entitled to time off for, among other things, attending antenatal clinics and breastfeeding, in addition to the 16 weeks' maternity leave.
No statutory leave is available to women undergoing in vitro fertilisation (IVF) treatment.
Social security benefits are paid to employees on maternity leave. Employees must generally satisfy a qualifying period of paid employment to receive benefits, depending on their age:
Employees under 21 years old: no qualifying period applies.
Employees aged between 21 and 26 years old: a qualifying period of 90 days' paid employment within the previous seven years. However, benefits will be received if the employee has had 180 days' paid employment during the whole of her life.
Employees aged over 26 years old: a qualifying period of 180 days' paid employment within the last previous seven years. However, benefits will be received if the employee has had 360 days' paid employment during the whole of her life.
The monthly benefit is equal to 100% of the mother's average monthly salary.
The father of a newly born child can take up to two working days' paid absence immediately after the birth.
Fathers are also entitled to 13 additional days' paternity leave. Paternity leave can be increased for multiple births (by two weeks for each additional child) (see above, Maternity rights). Social security benefits are paid to employees on paternity leave, provided that the father has had 180 days' paid employment within the previous seven years. The monthly benefit is equal to 100% of the father's average monthly salary.
A male employee can also share his partner's maternity or adoptive leave if either:
There is a mutual agreement between the parents.
The mother dies whilst on maternity leave (see above, Maternity rights).
The parents of the child do not have to be married for this right to apply. If maternity leave is shared, the father can take a maximum of ten weeks out of the full 16 weeks allowed (in addition to the paternity leave period). The mother must take a minimum of six weeks' leave immediately following the birth.
There are no applicable rights in the case of surrogacy.
Employees have the right to leave of up to three years to attend to the care of each child, whether natural, adopted or being fostered permanently or as a pre-adoptive measure. The leave is to be counted from the date of birth or, where applicable, from any relevant legal or administrative resolution.
The leave envisioned in the present legislation, the duration of which can be apportioned, is an individual employee's right, applicable to both males and females. Nonetheless, if two or more employees from the same company exercise this right on account of the same person, the employer can limit its simultaneous exercise for justified reasons concerning the company's operation.
The period for which the employee remains on leave is calculated by seniority, and the employee retains the right to attend professional training courses that the employer wishes him to participate in, particularly on the occasion of their reinstatement. During the first year, the employee has the right to reserve their work post. After that period, the reservation applies to a work post of the same professional group or equivalent category.
Female workers have the right to one hour of absence from work each day to breastfeed an infant of less than nine months. This can be divided into two half-hour periods. The duration of this leave will be increased proportionately in cases of multiple births.
Women can choose to substitute this right for a reduction of their working day by half an hour for the same purpose. Alternatively, they can let this accumulate into complete days under the terms provided for by the collective bargaining agreement or by the agreement arrived at with the employer.
In the case of the birth of premature infants or children who, for any reason, have to remain hospitalised after childbirth, the mother or the father have the right to be absent from work for one hour. Likewise, they have the right to reduce their working day by up to a maximum of two hours, with a proportional reduction in salary.
This leave can be enjoyed by either the mother or the father, in the event that both work.
A person legally charged with the direct care of a child of less than eight years of age, or a person with a physical, psychic or sensory handicap who does not perform any paid activity, will have the right to a reduction in the working day. There will be a proportional decrease in salary of between one eighth and one half of the salary.
If two or more employees from the same company exercise this right on account of the same person, the employer can limit its simultaneous exercise for justified reasons concerning the company's operation.
The Law on the Promotion of Personal Autonomy and Care for Dependant Adults was enacted in 2006. It focuses on encouraging the independence of, and care for, dependent people. Under its provisions, dependent people can receive financial assistance for the hiring of a personal assistant. Carers do not have any applicable rights in Spain.
None of the statutory employment protection rights are dependent on a minimum period of continuous employment. However, some social services benefits, for example, unemployment benefits, do depend on the length of employment.
When individuals are transferred to a new entity, they retain their continuous period of employment if the new entity is an associated employer. Employers are associated if either:
One controls the other (directly or indirectly).
A third party controls both of them (directly or indirectly).
Employees also retain their continuous period of employment if they are transferred to a new entity and the business transfer falls within the definition of a "change of ownership" (Article 44, Workers' Statute). A change of ownership includes any legal transaction that alters the employer's legal identity (such as a merger, spin-off, sale or assignment, and split or asset purchase). The ownership change can take place in:
A specific workplace (or several specific workplaces).
An autonomous productive unit.
However, under case law, a transaction must be carried out as an asset acquisition to qualify under Article 44. Transfers of shares do not alter the employer's legal identity and, therefore, do not qualify as a change of ownership.
Temporary and agency workers are entitled to the same rights and benefits as permanent employees (Article 15.6, Workers' Statute).
However there are some temporary employees who are bound by an employment contract linked to a specific work or service. In this kind of employment contracts, the duration is unknown and will be linked to the finalisation of the work or service agreed. Therefore these contracts expire at the same moment the work is finished and entitles the employee to a severance payment according to the following schedule:
Eight days salary per year of work for contracts signed up to 31 December 2011.
Nine days salary per year of work for contracts signed after 1 January 2012.
Ten days salary per year of work for contracts signed after 1 January 2013.
11 days of salary per year of work for contracts signed after 1 January 2014.
12 days of salary per year of work for contracts signed after 1 January 2015.
In this event, the employment contract is linked to the finishing of a specific work (such as building a house). The employment contract, although temporary, has an uncertain date of termination, until the house is finished. However, whatever the work or service is, it cannot last more than three years, otherwise the employees temporary employment contracts will become immediately indefinite.
Agency workers are entitled to the following rights and benefits:
During the periods where employees are rendering their services, they are entitled to the same essential conditions as if they were directly hired by the employer. Essential conditions include the following:
night time work;
They are entitled to be applied the same dispositions regarding health and safety measures.
They are entitled to the same dispositions regarding pregnancy, breastfeeding and non-discrimination.
Should the agency employment contract be a fixed term, the employee will be entitled to a severance payment of 12 days salary per year of service.
Employees are entitled to receive information from their employer concerning the processing of ordinary and sensitive personal data about them. They also have a right of access to processed personal data, and can prevent the processing of data that is likely to cause substantial damage or distress (Data Protection Act 1999 (Ley Orgánica de Protección de Datos de Carácter Personal)).
Discrimination and harassment are illegal if they take place on any of the following grounds:
Sex (including marital status, sexual orientation and transgender).
Religion or belief.
Any action taken by an employer that is viewed as illegal harassment or discrimination is invalid. In these circumstances, the labour authority can also impose administrative fines of between EUR6,251 and EUR187,515.
Employees can terminate their employment contract and receive severance pay of 45 days' salary per year of service, together with moral damages compensation.
Employees who have been treated less favourably by employers because they have made an allegation of discrimination or harassment can file a claim to stop the employer's less favourable treatment and receive compensation.
See above, Protection from discrimination.
Any action that an employer takes against whistleblowing employees (for example, dismissing them) is invalid.
Where employees are dismissed on disciplinary grounds, there is no duty to give them notice of dismissal.
If a dismissal is made on disciplinary grounds and a judge subsequently rules that the dismissal is unfair, the employer will have the following options:
Reinstatement of the employee in its previous job and payment of the processing salaries. These salaries correspond to the amount of salary that the employee has lost since the dismissal date and up to the judge’s ruling.
Payment of a severance payment consisting of:
45 days of salary per year of contract up to 12 February 2012;
33 days of salary per year of contract from 12 February 2012 (employment contracts signed after this date will only have a compensation of 33 days of salary per year of contract).
If the dismissal is on disciplinary grounds, a specific procedure must be followed (Article 55, Workers' Statute). Under this procedure, the employer must communicate their decision to the dismissed employee in writing, specifying the facts giving rise to the dismissal and the date on which the dismissal will take effect. In addition, if any employee representative is being dismissed, proceedings must be held in which both parties are entitled to be heard and receive proper notice. Spanish law does not, however, provide for any notice periods for dismissals.
Disciplinary dismissals constitute unfair dismissals if employers cannot prove, before the court, the disciplinary grounds stipulated in the written notice to the employee, or if the employer did not observe the requirements contained in Article 55.1 of the Workers' Statute.
All employees are protected from unfair dismissal. For unfair dismissal, the employer can choose between either:
Paying severance pay (see Question 17, Severance payments).
Reinstating the employee.
Protected employees include the following:
A union representative.
A staff delegate (that is an employee representative).
A member of the works council.
A protected employee (rather than the employer) can choose between severance pay or reinstatement if he is unfairly dismissed.
Redundancies are defined as the extinction of work contracts based on economic, technical, organisational or production reasons where, in a period of 90 days, the following numbers of workers are affected:
Ten workers in a company employing less than 100 workers.
10% of the total workforce in a company employing between 100 and 300 workers.
30 workers in a company employing 300 or more workers.
The employer must state the certain causes that lead into and justify the redundancy/layoff. If an agreement is not reached with the workers’ representatives regarding the causes or its consequences, the employer can apply by itself (once followed the procedure explained below) the redundancy/layoff. Once applied, the employees and workers’ representatives are entitled to challenge the redundancy/layoff before court.
The following procedural requirements are necessary to dismiss an employee for reasons of redundancy (Article 53, Workers' Statute):
Informing the employee of the reason for dismissal in writing.
Offering to pay compensation that the employee is legally entitled to: 20 days' wages for each year of service (up to a maximum of 12 months' salary).
Giving the employee at least 30 days' notice before terminating his/her contract. The notice period stars to run from the date the employees are informed of the decision to dismiss them. Although a breach of this requirement does not invalidate dismissals, it places the employer under a duty to pay employees their salaries corresponding to the number of days omitted from the notice period. Employees are entitled to take six hours a week off work during the notice period to look for another job.
Procedures for business reorganisations and redundancies are driven by collective consultation.
Employers must consult affected employees' representatives if, within the next 90 days, redundancies are proposed concerning at least:
Ten workers in a company employing less than 100 workers.
10% of the total workforce in a company employing between 100 and 300 workers.
30 workers in a company employing 300 or more workers.
Consultation must begin in good time and last for at least 30 days. The employer must disclose the following in writing to the representatives:
The reasons for the proposals.
The numbers involved and a description of employees affected by the proposals.
The proposed method of selection for dismissal.
The proposed method of carrying out the dismissals.
A suggested social plan for the employees who are made redundant.
The consultation must:
Discuss ways of avoiding or reducing the number of redundancies.
Consider ways of mitigating the consequences of redundancy.
Be undertaken with a view to reaching an agreement with the representatives.
Employers proposing business reorganisations or redundancies must be aware of the following actual or potential costs:
Statutory redundancy payment. Employees are automatically entitled to this if they are made redundant. The payment is equal to 20 days' salary for each year of service, up to a maximum equivalent to 12 months' salary.
Enhanced redundancy payment. Employees may have the right to a redundancy payment over and above their statutory entitlement. It is common practice to negotiate enhanced redundancy payments during consultation with representatives.
Protective award. If an employer fails to comply with the collective consultation duties, an employment tribunal can declare the dismissals invalid and order all employees to be reinstated immediately.
Employees are not entitled to management representation.
Employers must consult representatives of affected employees when they propose any of the following:
Employers must also consult employees on health and safety matters.
Employee consent is not required for most major transactions. If a business transfer constitutes a change of ownership (see Question 12), both the old and new employers must inform and consult representatives of affected employees. Representatives are elected from the group of affected employees and, if appropriate, delegates of a trade union that the employer recognises. The employees themselves decide whom to elect.
The employer must inform the representatives about the:
Reasons for the transfer and when it is expected to take place.
Legal, economic and social implications of the transfer for affected employees.
Measures that will be adopted to limit any adverse effects of the transfer on employees.
New employer's proposals that will affect the employees after the transfer.
An employer also has a duty to consult representatives if the transfer involves any other proposals that will affect employees, for example, changes to existing working practices or conditions and redundancies.
Representatives must be informed in sufficient time to enable consultations to take place. However, no formal timetable is laid down for consultation.
If employers do not comply with their consultation duties, they can be subject to administrative fines and the measures already taken can be declared invalid.
If employers fail to consult employee representatives when appropriate, employees can file a claim in an employment court to prevent the action going ahead.
Employment contracts are automatically transferred with the business to the new employer. All the old employer's rights, powers, duties and liabilities under, or in connection with, the contract are also transferred.
A dismissal is automatically unfair if it is solely or principally due to the transfer, or a reason connected with it. However, a dismissal is fair if it can be shown that it was for an economic, technical or organisational reason that required changes in the workforce, provided that the employer acted reasonably.
It is only possible to harmonise the employment conditions of all employees through negotiations with the employee representatives or, if these do not exist, by an agreement with employees individually or collectively. Negotiations can take place before or after the transfer, and must last at least 30 days.
An employer can be liable for the acts of its employees?
A parent company can be liable for the acts of a subsidiary company's employees?
An employer is vicariously liable, under common law and statute, for the acts of its employees carried out in the course of their employment. For example, an employer is liable for sexual harassment by an employee (unless the employer took reasonable steps to prevent the employee from carrying out the harassment).
A parent company cannot be held liable for the acts of a subsidiary company's employees if the two companies are separate legal entities.
Employees have a legal right to work in a safe environment. As a result, employers must comply with the following general duties (Article 14.1 of Law 31/1995 dated 8 November, on the Prevention of Occupational Risk):
Protecting employees from safety hazards in the workplace and avoiding these hazards as far as possible.
Evaluating any inevitable safety risks.
Prioritising group safety measures over individual safety measures.
Keeping employees informed about health and safety matters at all times.
There is also a specific duty on employers to draw up a risk prevention plan, which must set out the organisational structure, procedures and resources necessary to prevent safety risks in the workplace (Article 14.1, Occupational Risk Prevention Law).
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Whether individuals are subject to Spanish tax on their employment income depends on their ordinary residence. Individuals are resident for tax purposes if they are present in Spain for at least 183 days in any tax year.
Individuals who are resident in Spain are subject to Spanish income tax on all their employment earnings, regardless of whether or not these earnings are for work carried out in Spain. In addition, EU citizens who are employed in Spain are subject to Spanish tax legislation.
EU citizens who are employed in Spain and one or more other EU member states are subject to taxation in the member state where they reside, provided that either:
They work in that member state.
Their employer has a registered office or place of business in that member state.
If employees do not reside in the member state where they work, they are subject to tax in the member state where their employer's registered office or place of business is situated.
Non-EU citizens may be exempt from Spanish tax if an agreement has been made between the employee's home jurisdiction and Spain.
Spanish nationals working in, or seconded to, the EU are taxed under the same principles as EU citizens working in Spain (see above, Foreign nationals).
Spanish nationals who are working in non-EU countries are taxed in both jurisdictions, unless there is a double taxation treaty with the foreign jurisdiction. These double taxation treaties typically specify that any income earned by Spanish employees as a result of their employment in another jurisdiction is only taxed in Spain. However, an exception applies if one of the following conditions is satisfied (in which case, the employees' income is taxed in the jurisdiction where they are working):
The employees remain in the jurisdiction where they are working for more than 183 days during the tax year.
The remuneration is paid to the employees on behalf of an employer resident in the jurisdiction where they are working.
The remuneration is paid by a fixed base that the employer has in the jurisdiction where the employees are working.
Income tax is regulated by Act 35/2006 and Royal Decree 439/2007. There is a dual system: the state (or general) tax and the regional tax.
State tax. The rates are progressive and depend on the employee's salary. If the employee's gross taxable income is:
Less than EUR17,707.20, a rate of 12% applies to the whole of the employee's income.
Less than EUR33,007.20, a fixed sum of EUR2,124.86 is payable on the first EUR17,707.20 of the employee's income. The remainder of the employee's income is taxed at a rate of 14%.
Less than EUR53,407.20, a fixed sum of EUR4,266.86 is payable on the first EUR33,007.20 of the employee's income. The remainder of the employee's income is taxed at a rate of 18.5%.
Less than EUR120,000.20, a fixed sum of EUR8,040.86 is payable on the first EUR53,407.20 of the employee's income and the remainder of the employee's income is taxed at a rate of 21.5%.
Less than EUR175,000.20, a fixed sum of EUR22,358.36 is payable on the first EUR120,000.20 of the employee's income and the remainder of the employee's income is taxed at a rate of 22.5%.
More than EUR175,000.20, a fixed sum of EUR34,733.36 is payable on the first EUR175,000.20 of the employee's income and the remainder of the employee's income is taxed at a rate of 23.5%.
Regional tax. Regional tax is applied in a similar way as the state tax. The rates vary, depending on the autonomous region in which the employee works (Spain is divided into 17 autonomous regions). Under Law 39/2010, each autonomous region must approve its own scales in order to determine the employee's gross taxable income, the applied rate and the regional tax amount.
Social security contributions are paid at various rates, depending on the different contingencies (for example, overtime, unemployment and occupational training) that are covered under the system. For common contingencies, the employer pays 29.9% of the employee's net taxable income and the employee pays 6.35% (this is deducted from the employee's salary). There is a minimum and a maximum contribution for all employees depending on its category within a range from EUR748.20 to EUR3,262.50.
Employers and employees do not make direct pension contributions to the state. Funds are applied to the state pension out of the general social security contributions (see Question 21, Social security contributions).
Not applicable (see above, Contributions paid to the government).
Not applicable (see above, Contributions paid to the government).
Is linked to the employee's salary?
Is linked to employer and/or employee contributions and investment return on those contributions?
It is not compulsory for employees to join or contribute to private pension schemes. However, such schemes are common and are usually approved for tax purposes (see below). There are two types of scheme available:
Occupational scheme. This is set up under a trust and administered by the employer.
Personal pension scheme. This is set up and administered by a third-party pension provider (such as an insurance company).
The two schemes are often combined and marketed as the employer's group personal pension plan. However, they remain personal arrangements between the employee and the administrator.
The value of the pensions is usually linked to the employee's final salary, and cannot therefore usually be specified at the start of the arrangement.
Both employees and employers can contribute to these schemes.
This depends on the rules contained within each private pension scheme (see above, Linked to the employee's salary).
There is no single regulatory body that oversees the operation of supplementary pension schemes. One of the main regulations is the Order of 31 May 1971 for the Local Authority Mutuality, which regulates payment of the complementary fee to the Forecast National Mutuality of the Local Authority for its members' pensions.
See above, Regulatory body.
Both employers and employees can contribute to these schemes. Subject to certain limits, employers' and employees' contributions to tax-approved private pension arrangements are tax deductible. Any growth in the value of assets held in an approved pension scheme is not subject to capital gains tax. Pension benefits (usually a fixed amount of money or monthly/yearly payments) are subject to income tax (this includes a withholding tax obligation on the scheme's administrator). Some employees (typically senior employees) participate in unapproved private pension arrangements in addition to an approved private pension scheme.
See above, Tax relief on employer contributions.
The new employer must assume the social security rights and duties granted by the transferring employer to the transferred employees, including pension commitments and any kind of complementary social protection duty acquired by the transferring employer (Article 44 of the Workers' Statute).
See above, Automatic transfer of pension rights.
Employees who are working abroad?
Employees of a foreign subsidiary company?
Employees working abroad can participate in a pension scheme established by a parent company in Spain. The same tax reliefs referred to in Question 30 apply.
Employees of a foreign subsidiary company can participate in a pension scheme established by a parent company in Spain. The same tax reliefs referred to in Question 30 apply.
There is no protection provided for pension scheme benefits where the sponsoring employer becomes insolvent.
Bonuses are common and are regulated either by a collective agreement or the employee's individual employment contract. There are no specific guidelines on how bonuses must be awarded. An employer has discretion to decide on the rules and policies that govern this type of benefit.
IP rights created by employees in the course of their employment usually belong to the employer. In the course of employment refers to the scope of the employees' duties and the terms of employment.
IP rights created by an independent contractor belong to the contractor rather than the employer. Therefore, an employer should include an appropriate assignment of rights in an independent contractor's contract.
A non-compete duty is implied during employment. In addition, the employer and employee can agree an exclusivity clause in the employment contract. This restricts employees from carrying out any work-related activities or jobs for any other employer or on their own account. The employees must be specifically compensated during the term of employment for agreeing to the exclusivity clause.
Employers can agree a non-compete clause with employees for a maximum of two years after their employment is terminated. The employee must be specifically compensated for agreeing to the non-compete clause. Compensation can range from 30% to 60% of the employee's salary.
There are no proposals at this time.
Description. This is the official website of the Spanish Social Security. This website is updated daily and contains official information regarding employment conditions as well as many other labour related issues.
Description. This is the official website of the Employment Ministry. The website is updated daily and contains information regarding social security, employment, immigration, health and safety and employment inspection. The language of the website can be changed to English.
Description. This is the official website of the public employment system containing information on pensions, benefits and employment statistics.
Qualified. Spain, 1992
Areas of practice. Employment and labour law.