Payroll in Spain: what you need to know as an entrepreneur
After setting up a business in Spain, many entrepreneurs will start thinking about expanding their staff. In this article, we will try to offer entrepreneurs several tips in terms of payroll. In Spain, companies need to issue payrolls for their employees (usually on a monthly basis). It’s crucial for both employees and companies, to understand the different parts of a payroll.
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40 hours/working day is the general rule for full-time, but each collective agreement establishes its own rules of working hours.
There are also options to work part-time
Workers are permitted to work a maximum of 80 hours of overtime per year, and this is subject to specific social security contributions.
Numbers of payments:
Employers generally pay their workers’ gross annual salary in 12, 14, or 16 installments. The most common option is 14 payments, whereby the annual salary is divided into 12 monthly payments plus two additional payments.
If employees prefer to divide their salary into 12 payments, they must sign a declaration to this effect.
Workers are entitled to a holiday of a minimum of 22 working days/year, equal to 30 calendar days
Besides, they will have 14 holidays each year as determined by the calendar (bank holidays), which are 10 national holidays, 2 regional holidays, and 2 local holidays.
Paid and unpaid leave: Although not all expenses of the following types of leaves are borne by the company, it’s still important to notice that might occur extra costs to the company due to the employee’s absence.
If an employee is sick from 4 to 20 days, and you receive the medical certificate within three days. You need to apply for sick leave for the employee on the social security website and will pay the cost of the first 15 days of the allowance. After that, Social Security will bear the costs.
Other types of leave without affecting their salary:
15 days’ holiday when getting married
2-4 days upon the death of a relative
16 weeks of maternity, paternity leave
the type of employment contract
If the payroll regulations change, companies need to follow the newest regulations and fulfill the new requirements.
2. Keep a correct record of the workers’ payroll
Companies need to keep a correct record of their workers’ payrolls because these records are the company’s accounting documents and prove that their employees are treated properly and paid fairly for their work.
3. Make social security contributions and pay taxes
In Spain, both companies and workers need to make contributions to Social Security General Treasury (TGSS). As explained here, we understand that workers need to make their part of the contribution by contributing part of their salary. There, companies also need to make contributions to social security by paying:
The contribution share and taxes of the company itself
The contribution and taxes of the workers because these contributions are set aside to cover the costs of healthcare, pensions on retirement, accidents in the workplace, and unemployment benefits, among other things.
4. Clarify the salary correctly
Most companies prefer to talk in gross numbers while some companies prefer to talk in net numbers. Gross numbers are often attractive to candidates while talking in net numbers makes the company seem quite sincere. Our suggestion for you is:
No matter which number you prefer to talk about, you should clarify it the first time.
Be consistent about what you say to avoid any suspicion or confusion.
5. Adeslas wants to support you with starting a new business!
Setting up a new business takes courage, intelligence, and a good choice! Here at Adeslas, we want to offer businesses the best business insurance. If you are an expat thinking about starting a business in Spain, we also offer our expat insurance which fulfills all visa, NIE/TIE requirements. We protect your business, and we also protect you!
If you would like to know more about this topic, check out one of the blogs listed below: