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How Spanish Employer of Record (EOR) Works?

An Employer of record can be your best bet for reaching your goals for international expansion. Especially, if slowness or a lack of local knowledge are among your top worries when growing to or hiring personnel in Spain. Therefore, if you want to hire support, learning about the workings of Spanish Employer of Record services is essential.

In this article, we will be talking about the workings of Spanish Employer of Record services. In this way, you will understand the whole process of working alongside an expert in the area. EOR support can come in handy when hiring employees in Spain. Consequently, hiring this type of solution will be a peak for your business.

Introduction to Spanish Employer of Record (EOR)

As teams become more distributed and flexible schedules become the norm, more employers are turning to foreign talent pools to fill their open positions. Thanks to the large number of highly skilled workers in Spain, the country is becoming a serious rival for tech recruiting. Barcelona and Valencia are also well-known digital hubs. Plus, Amazon recently chose the Spanish metropolis of Madrid as its Southern European innovation hub.

There are a couple of issues you should be aware of if you want to grow your staff by hiring Spanish-speaking computer specialists. Hiring overseas is not quite simple in Spain, as it is in most other nations. Setting up a company to operate legally across borders involves challenges. Many firms turn to employer of record services in Spain to handle this difficulty.

In Spain, the term “employer of record” refers to the organization that is authorized to hire local workers on behalf of another business, sometimes a foreign business. Through this employment solution, a foreign corporation can outsource any employment-related issue. This, without having to become familiar with local legislation and customs.

Partnering with a Spanish employer or record has the primary benefit of freeing up the company to concentrate on other crucial business issues. Such as, registering a regional corporation and completing the fundamental incorporation requirements.

You may hire and onboard personnel in Spain quickly by using an EOR, also referred to as a global PEO. This, without having to incur the expense and risk of forming a local corporation.

What is an Employer of Record?

As you explore establishing a business center in another country, a number of ideas might come to mind. Unquestionably, some of these queries have to do with financial matters. The most important ones, however, have to do with adhering to foreign legal obligations.

At this time, an Employer of Record enters the scene. In fact, a third-party company performs a variety of legal duties. It can, for instance, handle your payroll, filing taxes, and other regionally specific duties.

An EOR is a firm that serves as an employer for tax and legal reasons, allowing your business to operate legally abroad. EORs manage tasks including payroll, taxes, regulation, and perks for your remote employees as well as HR and legal duties. These third-party companies handle all formal employment-related requirements, enabling you to easily acquire individuals in international markets.

In a nutshell, using an EOR in Spain enables you to access the nation’s strong talent pool without having to deal with the traditional problems associated with working abroad. By taking care of all aspects of work for you, including:

  • Local laws compliance
  • Onboarding
  • Payroll
  • Benefits
  • Time off management
  • Offboarding

Even though the person they hire is now working for a different organization, it still serves their tax and citizenship needs. On the other hand, the Employer of Record activities abides by standard employment obligations, including administrative staff obligations.

Additionally, this company makes it straightforward and hassle-free to hire people from other countries. EOR hires employees and is their official employer, whilst your company supervises the work of its employees. As a result of the EOR’s administration of payroll, benefits, risk management, and employee assistance, the firm will run more successfully and efficiently.

The Role of the Employer of Record in Spain

An EOR takes on the recruiting of a firm’s personnel in a new area. Consequently, enabling the company to avoid the difficulties and hazards of creating its own presence. This, while still remaining legally in line with all regional employment rules. The EOR in Spain provider serves as the employee’s “on paper” employer. However, the business continues to manage the employees’ daily tasks.

An EOR often performs the following duties:

  • Payroll management: Taxation of payroll, enrolling with local taxing authorities, submitting all paperwork, and assuring legal compliance are all the responsibility of the employer of record. Additionally, they will handle the minute details of a payment process, gathering paperwork, taking deductions, issuing pay-slips and tax reports, as well as any other necessary information.
  • Contracts: Setting up contracts should be significantly easier when hiring staff using the workings of Spanish Employer of Record services. An EOR will draft contracts of employment that are entirely compliant with local regulations and conduct background checks to search for any warning signs. For instance, you must be aware of the PTO, sick leave, and other requirements in a certain area before hiring there.
  • Benefits: This is true for benefits for staff, with different locations having very different expectations. EORs will establish connections with a range of benefit providers, including pension funds, health insurance companies, and occasionally even training firms, to help the staff under their care with all of their benefits, both compulsory and optional.
  • HR advice: Your EOR is your local expert in the new area. So, you should turn to them first for any queries or problems that may arise there. This might be obtaining employee visas, establishing equity agreements, making sure regional holidays are in place… Experts in local labor laws might be crucial in relation to all of these difficulties.

Benefits of Using an Employer of Record in Spain

EOR solutions have grown particularly popular in UAE industries. Advantages of Employer of Record Services in Spain are:

  • Expansion support: When trying to hire specialists across many countries or locations, it is frequently vital to have a local firm in place to formally engage personnel. With the workings of Spanish Employer of Record services, experts can be hired from a variety of countries without the need for local incorporation. This lowers the cost of establishing several international companies and makes it easier to quickly onboard new employees. An EOR solution also ensures that every worker is chosen in accordance with all applicable visa and immigration rules.
  • Payroll and social contributions adherence: The regulations that control health insurance needs, pension payment requirements, and payroll obligations are intricate and up-to-date. Complex tax issues include how to treat options granted to workers who work abroad. An EOR is responsible for violations and is aware of all pertinent regulatory requirements in their capacity as a compliance specialist. With an EOR, you can cover Important Employment Factors in Spain.
  • Top-notch benefit packages: Finding inexpensive insurance policies for their employees can be difficult for SMEs. However, with the assistance of an Employer of Record in Spain, firms can offer their staff members first-rate benefit packages. Offering the best-of-the-best benefits to employees is great for small, medium, and large firms in the region.
  • Avoid worker misclassification: Some companies may be more likely to hire only independent contractors rather than any employees. This is a risky move. If tax or work officials, or courts, decide that the professional’s action genuinely qualifies as employment, a corporation may be subject to heavy fines and liabilities. The likelihood of misclassification is lower because EOR specialists are lawful employees.

Understanding the Spanish Employment Landscape

There are several significant variations that are crucial for expats to understand when navigating the company culture in Spain. Understanding these distinctive features is essential to assisting you in integrating into your new home nation, whether you wish to move to Spain for employment or even establish your own business.

Tourism, industry, agriculture, and energy are the main economic sectors in Spain. Valencia, the largest harbor in the Mediterranean and the fifth busiest port in all of Europe, is located in Spain. It has the second-longest high-speed rail network in the world, after China.

Numerous foreign investors are drawn to Spain by its top-notch infrastructure, human resources, and standard of living. In addition, a recent study indicated that 83% of international companies want to increase or keep their personnel in 2021–2022, while 73% of foreign corporations plan to raise or maintain investments in the nation.

The employment rate in Spain (61.1%) is still below the OECD average of 66.6%. This was already rising prior to the epidemic and increased as the nation’s tourism and hospitality industries came to a grinding halt. Additionally, Spain has a higher rate of inequality than other OECD nations. In 2018, the average yearly salary for a full-time employee in Spain was about €29,994, which is less than in many other EU nations. Yet, Spain also has a lower cost of living.

In general, Spanish culture is active and leisurely, and you can anticipate the same pace in commercial dealings. In Spain, the family is the fundamental social unit, and you will discover that Spanish people place a high importance on connections and ethics in the workplace. It is a diverse nation that has been changing due to the foreigners in the area. An Employer of Record in Spain will help find the best talent.

Overview of Spanish Labor Laws and Regulations

Here is an Overview of Labor Laws and Regulations in Spain:

The Statute of Workers, which offers comprehensive worker protections and necessitates meticulous attention to detail on the part of employers, serves as the primary regulatory framework for employment in Spain. The “Convenio Colectivo,” or collective bargaining agreement, governs labor standards by job type, such as the permissible income range, working hours, and vacation days, and it has a significant impact on the terms and circumstances of employees at work.

The broad Spanish labor code provides a high level of employee protection. These regulations regulate both the contractual and interpersonal interactions between employers and employees. Additionally, these regulations include social security, health, safety, and unique employment ties.

In response to the financial crisis of 2008, Spain also implemented significant labor reforms in 2012 and 2021 that would address the nation’s substantial use of temporary workers. Other current legislation deals with workplace safety, gender equality, contract work, remote working, social security, training, and delivery platform workers.

Key Employment Considerations in Spain

Other things to think about when recruiting in Spain include:

  • When recruiting in Spain, you have the option of either infinite or fixed-term contracts. However, under recently passed legislation, fixed-term contracts are severely restricted, and you have to be able to explain the justification for using one. Since indefinite contracts frequently offer better job stability and higher pay, many employees choose them.
  • In Spain, a full-time worker must make at least 1,125.83 EUR every month. There are 14 required payments for your personnel each year, plus two extra ones in July & December.
  • Spain requires that employees work a maximum of 40 hours a week on average.
  • In Spain, contracts have an official notice period that can last up to three business weeks.
  • If an employee’s contract expires early, they can be eligible for pay. The length of employment, structure of the agreement, and the reason for termination are just a few of the many variables that affect severance payouts.
  • Also, employees are eligible for benefits such as:
    • Sick leave
    • Parental leave
    • Holidays
    • Yearly leave
    • Overtime
    • Social security
    • Retirement
    • Health and safety and more

Hiring and Onboarding Process in Spain

Following your selection of an EOR in Spain that meets your requirements, you can start the Effective Hiring and Onboarding in Spain by obtaining the following data from your new workers:

  • Name
  • Birth date
  • Contact information
  • Social security number
  • Bank account data
  • Wage

Send a contract outlining the essential terms of employment next. Employment contracts can be automatically distributed and localized by an EOR. Although verbal agreements regarding employment are permitted in Spain, it is still advisable to draft a written contract because either side may later demand one. Additionally, even though they are not legally necessary, employment contracts might shield your company in the event of a legal conflict.

It will be especially beneficial in Spain, which is recognized for its robust worker rights, to have an EOR design the agreement. The Spanish Constitution, The European Union, and the Workers’ Statute all provide guidelines for Spanish labor regulations. Spain regulates employment according to professional classifications, with regulations governing each profession’s working conditions, wages, and vacation time. These conditions shall apply to your contract. Additionally, prevalent in Spain, collective bargaining may have an impact on your work terms. CBAs can happen at the national, regional, corporate, industrial, or workplace levels.

If you want the support to start hiring in Spain, Iberia EOR is the perfect solution for you! We can take care of the whole hiring and onboarding process. As well as, benefits and HR management. Get in touch with us and expand your business through Spain now! Make the most out of our Workings of Spanish Employer of Record Services now.

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