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  1. Overview: Spain
  2. Global HR Compliance
  3. Global PEO and Payroll
  4. Work Permit for Hiring Expats via PEO
  5. Expand without a company set up
  6. Contractor vs. Employee: Which Is Better?
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Global HR Compliance in Spain

If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Spain Guide below will help you understand the nuances of labor legislation in the country.

There are two main reasons for companies hiring foreign workforce:

  • Expanding into foreign markets to sell company product or products there. In this case, companies hire sales representatives who would exclusively represent their product in the target market and sell it to their local client base.
  • Hiring the right foreign talent with a unique expertise, often related to IT sphere that cannot be found in the home country or that costs less compared to local specialist with similar skills.

After you have found the right candidate, the question is how to hire and provide compensation to this person so you as a business remain 100% compliant when working with global workforce. Another thing to consider is whether you want to keep the talent long-term and how you can do that.

If you need to hire foreign workforce in Spain so you can expand there, then our Global Employer of Record solution may be of help. We help you legally hire and reward your foreign workforce by making them employees via a global employment outsourcing service. This is simple as employ your in-house workforce with the only difference that workers can live anywhere in the world and Acumen International would be their legal employer on your behalf. This means we would bear all employment risks, not you. Also, we manage bonuses, vacations, sick leave and can rent the office and a car for your foreign sales representatives if that is what you need.

With our solution, you can test new foreign markets before deciding whether you are going to get established there. You gain flexibility and expand with reduced costs, and easily withdraw from the unattractive countries.

We are experts in global workforce employment in Spain, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Spain.

Hiring and Firing Workforce in Spain Guide

Sure! the hassles with global expansion can make even the most ambitious to resort to thinking that their dreams of being one of the global players in Spain is no more than a pipe dream. But here’s the good news for you, Acumen International, a global express employer of record provider has designed a solution that will help take these hassles out for you.

Be it as it may, to succeed in doing business in Spain, it is of fundamental important that you should know and understand the make-ups of its business environment, including its values and culture as that will help you avail yourself of the numerous opportunities and benefits that are readily available when doing business in Spain. Here are some helpful hints about doing business in Spain.

Employment Agreements

Fixed-term contracts. Employment contracts can be full-time or part-time. A part-time contract is defined as a contract in which the number of hours of work agreed with the employee per day, week, month or year is less than those agreed with a “comparable full-time employee” (a full-time employee at the same company and workplace who performs identical or similar work).

Part-time employees have the same rights as full-time employees, although at times, according to their nature, such rights will be recognized proportionally (according to the time worked). Part-time employees cannot do overtime, except to prevent or repair losses and other urgent and extraordinary damages. However, they can carry out complementary hours, which cannot exceed 30% of ordinary working hours (except if they are increased up to 60% in the applicable collective bargaining agreement).

Permanent contracts. Indefinite contracts or contrato indefinido in Spanish, aim to start a working relationship without establishing a time limit.

The main characteristics of normal permanent contracts in Spain are:

  • The contract of employment has no end-by date
  • The reimbursement pay for improper dismissal is a maximum of 45 days’ salary for each year worked, for a maximum of 43 months’ equivalent salary
  • No Social Security subsidies or other financial inducement
  • If there isn’t any other formalized contract type, it’s presumed to be a normal indefinite one.

Indefinite contracts with incentives may be used when hiring:

  • Workers over 45 who have been unemployed for at least one year
  • Women unemployed for more than a year who have been hired for work in sectors where women have been traditionally under-represented
  • Workers between 30 and 44 who have been unemployed for more than a year
  • Unemployed workers under 30 years of age. Workers with disabilities
  • The main feature of an indefinite contract after the latest changes to the labour law is that severance pay for improper dismissal is now 33 days of salary for each year worked with a maximum of 24 months of salary.

Temporary contracts (Fixed-Term)

The main types are:

  • Contract for a specific project or service, arranged for the purpose of performing work or providing a service which is temporary but of uncertain duration. If the duration exceeds one year, advance notice of 15 days before the end of the task or service is required to terminate the contract. If the employer fails to provide this notice, the worker is entitled to compensation.
  • Casual contract due to production overload or backlog. The maximum duration of this type of contract is six months in any twelve-month period.
  • Contract to sit in for employees entitled to return to their job. The duration of this contract is the period during which the absent employee retains the right to return to his or her job.
  • Work experience contract. This contract can be arranged with university or junior college graduates or persons with vocational qualifications or recognised equivalent qualifications, provided that not more than four years have elapsed since they completed the related training. The duration is from six months to two years.
  • Trainee contract. This type of contract can be arranged with workers aged 16 to 21 who do not have the necessary qualifications to obtain a “work experience contract”. The duration of this contract ranges from six months to two years, although it may be extended to three years by a collective labor agreement.

Fixed-term employees cannot be discriminated in comparison with indefinite employees, except if there is an objective justification for doing so. A fixed-term employment relationship that is entered into without justification is considered to be made in fraud of law, and as such, leads to an indefinite employment relationship.

Collective agreement. There are several types of collective agreements in Spain:

  • Sectoral collective agreement: regulates a specific economic sector or branch of activity and is applicable nationally or in a particular autonomous community.
  • Company or consortium of companies’ collective agreement: in order to respond to specific organisation or productivity needs.

Employment Termination and Severance Pay (Dismissal)

In Spain, the following are grounds for termination: Mutual consent of the parties; Grounds established in the contract; Expiration of the contract term or end of the specific job; Employee resignation; Death or permanent illness; Retirement of employee; Employer’s death, retirement or permanent illness; Force majeure that makes it impossible to continue rendering services; Collective dismissal based on objective grounds; Employee’s voluntary departure based on breach of contract by employer; Dismissal of employee.

Terminations based on economic, technical organizational or productivity grounds are deemed collective when:

  • Ten (10) workers are affected in companies with less than one hundred (100) workers.
  • At least 10% of the employees are affected within a period of ninety (90) days in companies that have between one hundred (100) and three hundred (300) workers.
  • Thirty (30) workers in companies with three hundred (300) or more workers.

On employee will. Employer decision – Termination can be based on objective grounds or disciplinary grounds.

Reasons for objective dismissal

  • Worker’s incompetence
  • Worker’s inability to adapt to technical change
  • Layoffs based on economic, technical, organizational and or productivity grounds
  • Lack of attendance at work

Given that labor courts are so restrictive in accepting dismissal based on business grounds, this procedure is very seldom used, unless the grounds are absolutely clear (e.g., bankruptcy).

Reasons for disciplinary dismissal

  • Repeated and unjustified tardiness or lack of attendance at work
  • Lack of discipline or insubordination
  • Verbal or physical offence towards the employer, other people working in the company or residing family
  • Contravention of contractual good faith and misuse of trust
  • Continuous and voluntary decrease of the worker’s normal or agreed performance
  • Intoxication due to alcohol or drugs when causing a negative effect in work
  • Harassment based on: race, religion, birth, gender, age, disability, opinion, social condition and sexual orientation

Mutual agreement. A mutually-agreed termination will only require a simple agreement by both parties that puts an end to the employment relationship. In said agreement, we recommend the parties include certain background that briefly explains the ground for termination, the agreed compensation and way and time of payment, a specific mention to gross and net amounts, and several other clauses such as confidentiality, non-disparagement, waiver against future actions, and possibly a non-compete whenever appropriate. A mutual agreement may be reached between parties independent of the employee’s age. That said, we need to be careful of those separation agreements with employees near retirement age, that are dressed as “dismissal letters”, as they could be subject to inspection by the state who will be in charge of paying said employees their unemployment benefits and subsequent retirement pension. If a mutually agreed termination (with no severance payment) is not correctly addressed, for example by not having a detailed termination agreement, with inclusion of a waiver clause, the employee may challenge the termination by filing a dismissal claim against the employer. In this case, if the employee proves that the termination was really a dismissal and not a mutually agreed termination, the employer may be liable to pay the maximum severance explained for unfair dismissals. These amounts would then be free of taxes and the employee would be entitled to unemployment benefits.

A dismissed employee has the right to report the employer to the employment tribunal if he/she fills he/she is unfairly dismissed. If the tribunal dismisses the employee’s claim of unfair dismissal, the employer can go ahead with the termination with no obligation to compensate the employee. If not, he will be required to either retreat from his/her plan of terminating the contract or compensate him/her in cash in lieu. The compensation for contract termination usually amounts to the 33 days of the employee’s salary for each year of service up to his/her 24-monthly salary.

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