Hiring Know-How

Continuing on from last month, now that you know the various types of contracts available to potential employees,

Continuing on from last month, now that you know the various types of contracts available to potential employees, the next step is to learn how to set one up. A code is required from the Social Security office to allow you to hire. From there as the employer, you become responsible for informing them of any new, cancelled or modified contracts and each month you must pay an additional Social Security contribution for that contract (an amount equivalent to approximately 40% of the employee’s salary), however your asesor can check to see if any reductions apply depending on the contract and the employee’s circumstances.

HIRING KNOW-HOWAny person you wish to employ must be registered at Social Security as well and have their own Social Security number. Once the contract has been signed it must be registered at INEM (employment office) within 10 days and a copy returned to the employee. At the end of each month you asesor will provide you with pay slips that your employee must sign upon receiving payment of their salary. You will note that there are amounts automatically deducted from their wages to cover their own contribution to the Social Security system.

During 2012, Spain’s labour laws suffered many changes that didn’t go down too well with most workers. One of those changes applies to the trial period for each new contract. Most contracts establish a period normally between 15 days and 2 months but new laws have extended that period to one year in some instances. Either party is able to cancel the contract without prior notice within the trial period and the worker wouldn’t have the right to receive compensation, only their salary in proportion to the days worked.

What happens if you have to fire an employee on a fixed contract? Again, new labour laws apply regarding the compensation they should receive in these cases as follows:

For unfair dismissal:

  • New contract: 33 days salary per year worked and a maximum of 45 months
  • Contracts signed before new labour laws: 45 days salary per year worked up until the change and reduced to 33 days per year afterwards

For an objective dismissal:

  • 20 days salary per year worked and a maximum of 24 months


Self-employed people are not permitted to hire direct family members. Instead they must register as self-employed themselves but only as collaborators. The good news is that new labour laws establish a reduction of 50% on their monthly contribution during the first 18 months as long as they’ve not been registered as self-employed in the past. The exception to this rule is that now it is possible to hire your child if they are under the age of 30. The other positive is that even though they would be registered as self-employed, they wouldn’t be liable for quarterly taxes, liquidation of IGIC etc as they are only working in a collaborative capacity.

So there you have it, a crash course in employment regulations but remember that as with anything, exceptions always apply and we all know that in Spain the law can change at any given moment so I would always recommend you contract the services of a registered professional to advise you.

About Sabrina L. Williams

Although I was born in the UK, I moved to the Canary Islands, Spain at a young age and I haven't looked back. The Canaries is a fantastic place to live, I mean you can do all types of outdoor activities practically all year round because of the great weather. Horses are my poison but the islands are also a superb spot for water sports so they do attract a lot of attention from people around the world. Anyway, enough about that. Back in 2011, I made one of the biggest, scariest yet best decisions I'd ever made and set-up my own business in the middle of a recession. I love what I do as no two days are the same, plus Spanish law keeps me on my toes as it is constantly changing (often without warning!) so there is always something new to learn. As I've branched out in the world of Administrative Consultancy, I decided to create a blog to discuss topics of interest to others in my industry and my clients, share tips and experiences, to see what new ideas people have for improving their businesses and the like so I hope you'll find the time to join me on this venture...

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