Foreign Companies Hiring in Spain
At Ecovis Legal Spain, we do often receive inquiries from foreign companies about their possibility and options to employ workforce in Spain. In some cases, the foreign company plans to operate in Spain, while in others, it does not.
Below a series of most FAQ with their answers.
FAQ
Can a foreign company hire an employee in Spain without establishing a Spanish legal entity?
Yes, this is possible, and in fact a resource that is frequently used by foreign companies that do not intent to have operations in Spain.
Can the hiring be done through an EOR?
Although this figure is widely accepted in different jurisdictions, it is not regulated under Spanish labour law. The use of this figure by foreign companies in Spain can trigger major legal consequences for companies, due to the fact that, to date, Spanish labour law only allows the assignment of workers throughout duly authorized temporary employment agencies (ETT), and only in the event of temporary assignments.
Is having a contract under Spanish employment law a requirement?
Although art. 8 of Rome I Regulation establishes the possibility of choosing the law that applies to the employment contract, in practice, the employee will be granted with the application of the minimum legal standards established by Spanish employment law due to Spain being the place from where the employee carries out the work. Hence, we always recommend having an employment contract that complies with Spanish employment regulations.
How can it be done?
By accomplishing a series of formalities and requirements that enable the foreign company to act as an employer, in the same way as any Spanish company, that is, so the foreign company can comply with labour, social security and tax obligations that apply to any employer in Spain. Some of these formalities; obtaining a foreign identity number issued by Spanish tax authorities, enrolment with Social Security, registration of the employment contract with labour authorities etc.
From an employment perspective, is there any difference between hiring an employee resident in Spain through an established Spanish entity or doing so without establishing a legal entity?
No, the obligations for the employer are the same no matter whether the employer is a Spanish entity or a foreign entity.
So, does that mean that in cases of termination, Spanish employment regulations would then apply to the dismissals?
Yes, it would. Hence the importance of having legal advice to properly understand the different regulations, such as the disciplinary regime.
Contact us
Should you be interested in learning more about this topic, the advisors at ECOVIS Legal Spain (Madrid) and ECOVIS Legal Spain – Canary Islands will be pleased to respond all your questions and assist you with the required legal assistance to ensure compliance with Spanish regulations on this matter.
