How to hire employees in Spain: 2025 guide for foreign companies

Everything you need to know about Spanish labor law, employment contracts, hiring costs, and administrative requirements to successfully hire your first employees in Spain.

Before hiring any local staff, a foreign company must first establish a legal entity in Spain (e.g., S.L. or S.A.), obtain a Spanish Tax ID (NIF), open a business bank account, and register as an employer with Social Security. If this step hasn’t been completed yet, NeoRetos can assist you in setting up this essential foundation.

Hiring employees in Spain is crucial for foreign companies aiming for successful expansion. This 2025 guide covers every step: legal requirements, contracts, costs, best practices, and the most common mistakes to avoid.

Why Hiring Local Staff in Spain Is a Strategic Advantage

• Access to market knowledge, language, and business culture

• Building trust with clients and partners

• Compliance with Spanish labor law

Legal Requirements for Hiring Employees in Spain

Company Registration Prerequisites

• Set up a Spanish legal entity (S.L. or S.A.) and obtain a tax ID (NIF)

• Register as an employer with Spanish Social Security

Social Security & Tax Registration

• Mandatory registration with Tesorería General de la Seguridad Social

• All hiring must be notified to SEPE (State Public Employment Service)

Spanish Employment Contract Types Explained

Permanent Contracts (Contrato Indefinido)

• No end date, standard for stable positions

Temporary Contracts (Contrato Temporal)

• Fixed duration (max 3 years)

Training and Internship Contracts

• For junior professionals (max 2 years)

Step-by-Step: How to Hire Your First Employee in Spain

1. Define the position and required skills

2. Choose the correct contract type for the job offered

3. Recruitment process: use local job boards (InfoJobs, LinkedIn España), or partner with recruitment agencies/ETT/PEO.

4. Formalize the contract in writing with all mandatory clauses

5. Register the new employee with Spanish Social Security

6. Onboarding: integrate the employee, explain company culture and expectations

Understanding Spanish Labor Law: Essentials for Foreign Companies

Trial and Notice Periods

• Typical trial period: 2 months (may vary)

• Notice period: 15 days (minimum)

Collective Bargaining Agreements (Convenios Colectivos)

• Define minimum salaries, holidays, and work conditions

• Apply to nearly all employees in Spain

Working Hours & Overtime

• Standard: 40 hours/week

• Overtime is regulated, often limited by convenios

Cost of Hiring Employees in Spain: Full Breakdown

• Gross to net salary

• Employer social security contributions: 29–32 % of gross salary

• Minimum wage (SMI) 2025: approx. €1,260/month

• Total cost: Plan for 130–140 % of gross salary (incl. provisions, recruitment fees, benefits)

Administrative Process for Hiring

• Collect all necessary documents: ID, NIF/NIE, proof of address

• Register employment contracts with SEPE

• Ensure GDPR compliance for employee data

• Provide health & safety training

Hiring Options for Foreign Companies

• Direct hiring (via your Spanish company)

• Employer of Record (EOR)/PEO services: hire without establishing a company (good for <3 employees, short term)

• Working with local recruitment agencies or ETTs

Cultural Adaptation: Succeeding in the Spanish Workplace

• Adopt Spanish communication styles: respect for hierarchy, extended greetings, indirect feedback

• Be aware of regional salary & benefit differences

• Invest in onboarding adapted to Spanish norms

Common Mistakes When Hiring in Spain and How to Avoid Them

1. Using home-country contracts instead of Spanish templates (danger: non-compliance)

2. Underestimating total employment costs (always factor social security and severance)

3. Ignoring collective bargaining agreements (risk of salary disputes)

4. Skipping cultural onboarding (can harm employee retention)

5. Hiring too quickly (proper due diligence reduces costly errors)

Frequently Asked Questions

What is the minimum wage in Spain (2025)?

Approx. €1,260/month

Can I hire employees in Spain without a Spanish company?

Yes, via an EOR/PEO, but recommended to incorporate for long-term activity

How long does it take to hire?

Average: 6–9 weeks from job post to start date

What about work permits?

Non-EU/EEA hires require a work/residence permit (process: 3–6 months). EU/EEA citizens do not.

What are employer social security contributions?

Approx. 29–32 % of gross salary

How many vacation days do employees get?

22 paid working days + 14 public holidays (varies by region/convenio)

Can I terminate an employee easily?

Termination is regulated; documentation is critical. Severance depends on contract type and reason.

Ready to Hire Your First Employee in Spain?

Book your free hiring strategy session with NeoRetos now!

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