Hiring Your First Employee in Spain: 2026 Employer Guide

What are your options for hiring your first employee in Spain?

There are three legal ways to employ a person in Spain: through your own Spanish entity, through a registered branch or a foreign company registered as an employer, or through an Employer of Record (EOR). Engaging the person as an independent contractor is not an employment option and carries real misclassification risk if the person works like an employee.

Own Spanish entity. A Sociedad Limitada (SL) is the standard vehicle. Since the Ley Crea y Crece (Law 18/2022) the minimum share capital is 1 EUR, although companies with less than 3,000 EUR of capital must build a legal reserve from profits until they reach that figure. Incorporation requires a notarial deed and registration at the Registro Mercantil, and foreign directors need a Spanish NIE (foreigner identification number) first. Telematic incorporation through the CIRCE system can complete in around 5 to 10 working days; the conventional route typically takes 4 to 8 weeks. Set-up costs for notary, registry, and advisory work are commonly quoted in the 1,200 EUR to 3,500 EUR range, before ongoing accounting, corporate tax, and payroll administration.

Foreign company registered as an employer. A company without a Spanish establishment can, in principle, register directly with the Tesorería General de la Seguridad Social (TGSS) and employ staff in Spain. In practice this route raises permanent establishment questions, requires a Spanish tax representative and bank arrangements, and is rarely the simplest choice for a single hire. Take specific advice before relying on it.

Employer of Record. The EOR employs the person in Spain through its own Spanish entity and handles contract, payroll, social security, tax withholding, and compliance. You direct the day-to-day work. This is the fastest route to a compliant first hire and is usually the right answer when you are testing the market, hiring one to a handful of people, or have not yet decided to commit to an entity. See the section below on how EOR works in Spain, because the Spanish legal position is more nuanced than in most European countries.

A useful way to choose: are you testing the market, building a team, or committing long term? Testing and early team-building point toward an EOR. Committing long term with several hires and local revenue points toward an entity, with the EOR often used as a bridge while the entity is set up.

How much does an employee in Spain cost the employer in 2026?

Budget roughly 31% to 33% on top of gross salary for employer social security contributions, plus any benefits set by the applicable collective agreement. Spain's employer contribution rates are among the higher ones in Western Europe, and they apply to a contribution base with a monthly ceiling.

Employer social security contributions in 2026

The following rates apply under the General Regime for an indefinite (permanent) contract, according to the Seguridad Social contribution tables for 2026:

On top of the fixed 30.65%, the employer pays a premium for occupational accidents and diseases (contingencias profesionales). The rate depends on the company's activity code (CNAE) under the official premium tariff. For office-based roles it is typically low single digits; for physical or higher-risk work it is higher. Check the tariff for your activity rather than assuming a figure.

Contribution bases for 2026 are capped. The minimum monthly base for salaried employees is 1,424.40 EUR and the maximum is 5,101.20 EUR. Since 2025 an additional solidarity contribution (cuota de solidaridad) applies to salary above the maximum base. In 2026 it runs from 1.15% to 1.46% depending on the band, with most of it borne by the employer.

Worked example

For an employee on a 45,000 EUR gross annual salary with an indefinite contract, the monthly contribution base is 3,750 EUR, which sits within the 2026 range. Fixed employer contributions at 30.65% come to about 13,790 EUR per year. Add the accident premium for your activity and the total employer cost lands at roughly 59,000 EUR to 60,000 EUR before benefits.

Minimum wage in 2026

The Salario Mínimo Interprofesional (SMI) for 2026 is 1,221 EUR per month in 14 payments, or 17,094 EUR per year, set by Royal Decree 126/2026 with effect from 1 January 2026. Most collective agreements set sector minimums well above the SMI, and those minimums bind you.

Other costs to plan for

• Occupational risk prevention. From the first employee you must have a prevention plan and risk assessment. Small companies usually contract an external prevention service (servicio de prevención ajeno).
• Collective agreement benefits. Many convenios require specific allowances, pay scales, or supplementary insurance.
• Severance reserve. Spanish severance is described later in this guide and should be part of your cost model from day one.

Which registrations are required before the employee starts?

The employee must be registered with Social Security before their first minute of work. Registration can be filed up to 60 days before the start date, but never after it. Late registration exposes the employer to fines per employee and to liability for any benefits the worker would have been entitled to.

The sequence for a company hiring in Spain for the first time:

1. Tax registration. Obtain a Spanish tax identification number (NIF) and register the activity with the Agencia Tributaria using Modelo 036.
2. Employer registration with the TGSS. File form TA.6 to register the company as an employer and obtain a Código de Cuenta de Cotización (CCC). You need a separate CCC for each province where you have employees, and you must select a mutua colaboradora (the insurer for occupational accidents and diseases) as part of this step.
3. Employee's Social Security number. If the employee has never worked in Spain they need a Número de Seguridad Social first, requested with form TA.1.
4. Employee registration (alta). File form TA.2/S through the Sistema RED to register the employee under your CCC. This must be done before the start date.
5. Written employment contract. Sign before the start date. Details below.
6. Communicate the contract to SEPE. Report the contract through the Contrat@ platform within 10 business days of the start.
7. Employee's tax data. Collect Modelo 145 from the employee. It records personal and family circumstances that determine the income tax withholding rate. Keep it on file; it is not filed with the tax office.
8. Occupational risk prevention. Have the risk assessment and prevention plan in place and offer the employee a medical examination.

Most first-time employers in Spain run this sequence through a local payroll provider or an EOR because the Sistema RED requires an authorised user and a digital certificate.

What must a Spanish employment contract contain?

Since the 2022 labour reform (Royal Decree-Law 32/2021) the indefinite contract is the default. Fixed-term contracts are only allowed for defined production circumstances or to substitute an absent employee, and each must state its justification. A contract without a valid written justification is presumed indefinite and full-time.

Write the contract in Spanish (a bilingual version is fine) and include at minimum:

• Identity of employer and employee and the place of work
• Start date and, for fixed-term contracts, the legal ground and expected duration
• Job title and professional group under the applicable collective agreement
• Salary, structure of payments, and pay frequency
• Working hours and their distribution
• Annual leave entitlement
• Notice periods
• The collective agreement that applies
• Probation period, if any
• Remote work terms, if the employee will work remotely for at least 30% of their time over a three-month reference period, which triggers a separate written remote-work agreement under Law 10/2021

Probation periods in Spain

The Workers' Statute (Estatuto de los Trabajadores, article 14) caps probation at 6 months for qualified technical staff (titulados) and 2 months for other employees. Companies with fewer than 25 employees may agree up to 3 months for non-qualified roles. The applicable collective agreement may set shorter limits. During probation either side can end the contract without notice or severance, but discrimination protections apply from day one.

Collective agreements apply automatically

Almost every employee in Spain falls under a sector or company collective agreement (convenio colectivo). It applies whether or not you reference it, and it governs minimum pay scales, working hours, leave, allowances, and often probation and notice. Identifying the correct convenio for your activity and province is one of the first things a local advisor or EOR will do.

What are the working hours, leave, and pay rules?

The statutory maximum is 40 hours per week on an annual average. Paid annual leave is at least 30 calendar days. Salary is paid in at least 14 instalments per year unless the collective agreement allows the two extra payments to be prorated across 12.

Working time and the 37.5 hour debate

A government bill to reduce the legal maximum from 40 to 37.5 hours was rejected by the Congreso de los Diputados on 10 September 2025 and no replacement has been approved as of September 2026. The statutory limit therefore remains 40 hours. Many collective agreements already set lower limits, commonly between 38 and 39.5 hours, so check the convenio.

Daily time recording (registro de jornada) has been mandatory for all employers since 2019. A royal decree that would require the record to be digital, tamper-proof, and remotely accessible to the labour inspectorate is still being processed. Adopting a digital system now is sensible regardless.

Leave and public holidays

• Annual leave: minimum 30 calendar days, which most convenios express as 22 working days. Leave cannot be replaced by payment except on termination.
• Public holidays: up to 14 per year, combining national, regional, and two local holidays.
• Paid leave: the Workers' Statute grants paid leave for events including marriage, hospitalisation or serious illness of close relatives, moving house, and public duties.
• Family leave: birth and care leave is 17 weeks per parent under Royal Decree-Law 9/2025, with the first 6 weeks taken immediately after the birth. Each parent also has 8 weeks of parental leave to use before the child turns 8, of which 2 weeks are now paid, giving up to 19 paid weeks per parent. Single-parent families receive 32 weeks. Paid family leave is funded by Social Security, not by the employer, although the employer keeps paying its own contributions during the absence.

Payroll mechanics

• Payslips follow an official model and must show the contribution base, each deduction, and the employer's contributions.
• Income tax (IRPF) is withheld at a progressive rate calculated from the employee's projected annual income and Modelo 145 data. Withholdings are paid quarterly with Modelo 111 (monthly for large companies) and summarised annually in Modelo 190.
• Social security contributions are settled monthly through the Sistema RED and paid the month after the pay period.
• Every company, regardless of size, must keep a pay register (registro retributivo) showing average pay by gender and professional group, and must have a protocol against sexual harassment. Equality plans become compulsory at 50 employees.

How does dismissal and severance work in Spain?

Ending an indefinite contract in Spain outside probation requires a lawful ground and, in most cases, statutory severance. The two figures every first-time employer should know are 20 days and 33 days of salary per year of service.

• Objective dismissal (economic, technical, organisational, or productive reasons, or unsuitability): severance of 20 days' salary per year of service, capped at 12 months' salary, with 15 days' written notice or payment in lieu.
• Unfair dismissal (a dismissal that a labour court finds unjustified or procedurally defective): 33 days' salary per year of service, capped at 24 months' salary, unless the employer chooses to reinstate.
• Disciplinary dismissal for serious misconduct carries no severance if upheld, but the burden of proof sits with the employer.
• Resignation by the employee requires the notice set by the convenio, commonly 15 days.

Termination disputes are common and courts are protective of employees. Document performance and business reasons from the start, and build severance into your Spain cost model.

What changes if the employee is not an EU citizen?

A non-EU national must hold a valid residence and work authorisation before they start work in Spain. Employing someone without it is an offence for the employer, so the immigration route has to be resolved before the alta, not in parallel.

EU, EEA, and Swiss citizens do not need a work permit. They need a NIE and, for stays over three months, registration in the Central Register of Foreigners.

For third-country nationals the main employer-sponsored routes in 2026 are:

• General regime work authorisation under the new Immigration Regulation (Royal Decree 1155/2024, in force since 20 May 2025). The employer applies at the provincial immigration office with the signed contract and proof of solvency. The application is subject to the national employment situation test unless the occupation appears in the quarterly Catálogo de Ocupaciones de Difícil Cobertura for that province. The initial authorisation is granted for one year and the first renewal for four.
• Highly Qualified Professional (HQP) authorisation under Law 14/2013, processed centrally by the Large Companies Unit (UGE) with a 20 working day decision deadline. It suits managerial and specialist roles meeting the salary and qualification criteria and is the most common route for corporate hires.
• EU Blue Card, an alternative for highly qualified roles that also supports later mobility within the EU.

Sponsorship adds weeks to the timeline and paperwork to the employer's file. An EOR with an in-house immigration team can sponsor the authorisation as the legal employer, which is often the deciding factor when the hire is a relocation rather than a local hire. Read about our work permit and immigration services.

How does an Employer of Record work in Spain?

An EOR employs your Spanish hire through its own Spanish entity, runs payroll and compliance, and lets you manage the person's work. In Spain, this needs to be set up carefully. Article 43 of the Workers' Statute prohibits the assignment of workers between companies except through licensed temporary employment agencies (empresas de trabajo temporal, ETT), and an arrangement that separates the formal employer from the company directing the work can be challenged as an illegal assignment (cesión ilegal).

What that means in practice:

• The EOR must be a genuine employer in Spain with its own entity, payroll, and management responsibilities, not a payroll shell.
• The contract between you and the EOR should reflect a service relationship with real employer functions retained by the EOR, and the employee's contract should be a standard Spanish contract under the correct convenio.
• Fixed-term staffing through an ETT is a separate, licensed product for temporary needs, not a substitute for an indefinite hire.
• Recent Court of Justice of the European Union case law on cross-border labour hire is being read by Spanish practitioners as a possible opening for regulated EOR arrangements, but there is no specific Spanish EOR licence today. Ask any provider how their Spanish structure addresses article 43.

EOR is not a shortcut around compliance. It is a way to manage compliance properly when you do not have a local entity, and in Spain it only works when the provider operates through an established local employer. Jackson & Frank employs people in Spain through its own entity rather than a partner network, which is the structure this analysis assumes. Learn more about Employer of Record services from Jackson & Frank. See how Jackson & Frank employs talent in Spain.

EOR or entity: which is right for hiring your first employee in Spain?

If you are hiring one to five people, are not yet generating Spanish revenue, and want them working within weeks, an EOR is the practical choice. If you are committing to Spain as a market, expect to grow past a handful of staff, or need a local entity for commercial or regulatory reasons, incorporate an SL and use an EOR as a bridge while it is set up.

Whichever route you take, the employment rules in this guide apply identically. The difference is who carries them out. Explore global payroll with Jackson & Frank. Try the employer cost calculator for a quick estimate.

Conclusion

Hiring your first employee in Spain is a sequence problem more than a legal one. The rules are clear: register with the TGSS before the start date, sign a written indefinite contract under the correct collective agreement, budget around a third on top of salary for employer contributions, and settle any immigration question before the alta. Get the sequence right and Spain is a straightforward market to employ in.

The larger decision is the hiring model. An EOR gets a compliant employee working in days and keeps your options open, provided the provider is a genuine Spanish employer rather than an intermediary. An entity makes sense once you are committing to the market and building a team.

If you are assessing your options for employing talent in Spain, Jackson & Frank's team can walk you through the specifics for your role, province, and timeline, from the applicable convenio to whether an EOR or an entity fits your plans. Get in touch with the team to talk it through.

Sources

• Boletín Oficial del Estado, Real Decreto 126/2026 (SMI 2026) - https://www.boe.es/buscar/act.php?id=BOE-A-2026-3815 - minimum wage figures for 2026
• Seguridad Social, bases y tipos de cotización 2026 - https://www.seg-social.es/wps/portal/wss/internet/Trabajadores/CotizacionRecaudacionTrabajadores/36537/36538 - contribution rates and bases for 2026
• Boletín Oficial del Estado, Orden PJC/297/2026 de 30 de marzo - https://www.boe.es/buscar/act.php?id=BOE-A-2026-7296 - social security contribution rules for 2026, including MEI and solidarity contribution
• Boletín Oficial del Estado, Estatuto de los Trabajadores (consolidated) - https://www.boe.es/buscar/act.php?id=BOE-A-2015-11430 - contracts, probation, working time (40 hour maximum, article 34), leave, dismissal, and worker assignment (article 43)
• Boletín Oficial del Estado, Real Decreto-ley 9/2025 (birth and care leave) - https://www.boe.es/diario_boe/txt.php?id=BOE-A-2025-15741 - family leave entitlements
• Boletín Oficial del Estado, Real Decreto 1155/2024 (Reglamento de Extranjería) - https://www.boe.es/buscar/act.php?id=BOE-A-2024-24099 - non-EU work authorisation rules in force from 20 May 2025
• Boletín Oficial del Estado, Ley 14/2013 (Highly Qualified Professionals) - https://www.boe.es/buscar/act.php?id=BOE-A-2013-10074 - HQP authorisation
• SEPE, Catálogo de Ocupaciones de Difícil Cobertura, primer trimestre 2026 - https://www.boe.es/diario_boe/txt.php?id=BOE-A-2026-4944 - shortage occupation list
• Boletín Oficial del Estado, Ley 18/2022 Crea y Crece - https://www.boe.es/buscar/act.php?id=BOE-A-2022-15818 - 1 EUR minimum capital for SL
• Boletín Oficial del Estado, Ley 10/2021 de trabajo a distancia - https://www.boe.es/buscar/act.php?id=BOE-A-2021-11472 - remote work agreement threshold
• Congreso de los Diputados, rejection of the working-time reduction bill (session of 10 September 2025) - https://www.congreso.es/ - working time status
• SEPE, Comunicación de la contratación (Contrat@) - https://www.sepe.es/ - deadline to communicate employment contracts