Business development and management solutions in Spain

Labour regulations

Working hours vary greatly according to which part of Spain you are in. In the hotter south, larger lunch breaks are designed to allow time for the afternoon 'siesta', whereas in the north the timetable is normally similar to the rest of Europe. Lunchtime is later than the north of Europe, usually from 13.30 or 14.00, given that evening meals are usually taken after 21.00. In summer many companies work mornings only (jornada intensiva), and some close completely in August. There are also many regional and local holidays, and each town has their own saint's day fiesta.
Labour agreements are usually negotiated on a collective basis for industry sectors between unions (sindicatos) and company representatives (patrimonio). Some companies however negotiate their own agreement (convenio), based on a sector agreement. Companies must be careful not to go below the national minimum wage. Under Spanish legislation, companies over a certain size must set up a works council (comité de empresa) to represent their workers.
Labour contracts must be signed and registered with the local employment office. The type of labour contract is controlled by government legislation, and all contracts must fall within several standard formats. This limits the possibility of part-time and temporary contracts, for example. A copy of all contracts must be given to local labour representatives where appropriate.
Many companies divide their annual payrolls (nóminas) into 14 or more payments, with twelve monthly plus two or more extra payments (pagas extras) in e.g. summer and winter. Income tax is deducted at source each month, as are contributions to social security. Tax rates are higher than most of Europe, with a top rate of 40%. Social security contributions are around 7% gross salary for employees plus 32% for the company (up to a top limit).
The cost of dismissing or laying off employees is amongst the highest in Europe. The norm is to pay up to 45 days salary for each year of service, although this can be reduced under certain circumstances. Any temporary lay-offs must be approved by local authorities, who usually ask for workers representative approval before agreeing to any proposal.