Employment contracts in Spain: A guide for foreign companies
Thinking of hiring employees in Spain? Understanding employment contracts is a legal requirement for foreign businesses expanding into the country. Whether you’re hiring your first employee, setting up a subsidiary, or outsourcing payroll, you must comply with Spain’s labor laws.
But don’t worry—we’ve got you covered. In this guide, we’ll explain employment contract types, legal requirements, and compliance best practices to help you hire the right way in Spain.
What you’ll learn:
Employment contracts in Spain: How many are there?
Indefinite or permanent contracts
Fixed-term or temporary contracts
Training or apprenticeship contracts
Work experience or internship contractsWhat about remote work? Can I employ without an office?
What about part-time contracts?
Employment contracts in Spain: The mandatory laws, policies, and other common elements
Legal compliance: How to avoid hiring penalties in Spain
But do contracts officially start right away? What is the probationary period in Spain?
What about overtime? How does it work?Is it illegal to work without an employment contract in Spain?
Employment contracts in Spain: How many are there?
Spain has many employment contracts, each designed for different work arrangements. So, depending on how you want to employ workers—and for how long—you must choose the best-suited option. Here are the most common:
Indefinite or permanent contracts (Contrato indefinido)
Temporary contracts (Contrato temporal)
Training and apprenticeship contracts (Contrato de formación y aprendizaje)
Internship or work experience contracts (Contrato en prácticas)
Let’s go through them in detail.
Indefinite or permanent contracts
In Spain, permanent employment contracts are a key part of the job market.
Often considered the default work agreement, this type of contract has no set end date, ensuring more stability for employees. It can be either full-time or part-time, and it also includes a special category called fixed-discontinuous contracts, designed for seasonal or recurring jobs (i.e., without a continuous schedule).
With a permanent contract, a job can last indefinitely—until retirement, for example—unless the employee resigns, faces dismissal (due to performance or disciplinary reasons), or develops a disability. And there are different types of contracts, designed to suit different situations (for domestic workers, people with disabilities, individuals over 52, victims of gender-based violence, among other cases).
A permanent contract offers higher financial security, and the right to compensation if dismissed. It can also help secure long-term residency in Spain, i.e., for over 5 years.
Some permanent contracts come with government incentives for specific groups, such as older employees, women working in male-dominated fields, and young job seekers.
And there’s also some flexibility to the employer, as severance pay for improper dismissal has been updated to 33 days of salary per year worked—with a cap at 24 months’ salary. This change shows the Spanish commitment to protect workers while balancing flexibility for employers.
Fixed-term or temporary contracts
In Spain, temporary work contracts employ workers for short-term hiring needs, though they are less common than the previous ones. Unlike open-ended agreements that can last indefinitely, fixed-term contracts have a specific start and end date, making them ideal for covering temporary business needs.
And there are 3 types to choose from: contracts for specific work or services, contracts due to market circumstances, accumulation of tasks or excess orders; and contracts to replace workers entitled to reserve a job.
Depending on the one you choose, each has different maximum durations.
One of the latest labor laws, from December 2021, places stricter limits on using temporary contracts—pushing hard toward permanent employment.
Today, employers can use short-term contracts in 2 situations: when a company experiences a temporary spike in workload (beyond its usual operations) or when an employee is absent but has the right to return to the job.
Know them in detail:
Project-based contracts, which last for an undetermined period but are tied to a specific task or service.
Workload-related contracts, which cover increased demand but cannot exceed 6 months within a 12-month span.
Substitution contracts, used to temporarily replace employees on leave, that have the right to resume their position.
These agreements must be written down and properly documented, clearly outlining the reason for their temporary status, the specific circumstances justifying them, and their connection to the expected duration. If a contract lacks these details or doesn’t comply with legal requirements, it could automatically be considered permanent.
One of the main benefits of temporary contracts is that they generally come with lower severance costs compared to indefinite contracts.
Training or apprenticeship contracts
Apprenticeship contracts help young people enter the job market. They’re usually designed for youngsters between 16 and 21 years old, who don’t yet have the qualifications for a standard work experience contract.
However, an accredited education center must provide specific training, ideally at the youngster's company. Everything must be documented, so there’s proof of the completed training at the end (which must be included in the contract). Trainees may receive a certification or vocational diploma, and their learning can count toward future qualifications through partial accreditation.
The length of an apprenticeship contract can range from 6 months to 2 years, with the possibility of extending it up to 3 years through collective labor agreements. Generally, the age limit for these contracts is 25, but if national unemployment exceeds 15%, it raises to 30.
These contracts offer employers financial benefits, including reduced social security contributions when hiring registered jobseekers. So, if you plan on setting up a subsidiary in Spain, you’ve added another perk to the list.
Work experience or internship contracts
These are the ideal contracts for individuals looking for hands-on experience in their chosen field, acting as a first short-term job. These agreements are ideal for university graduates, students, or those with equivalent certifications. The contract length can vary from 6 months to a maximum of 2 years.
The main goal of an internship contract is to help employees develop professional skills related to their studies. To qualify, candidates must have earned their degree within the last 5 years—though this increases to 7 years for individuals with disabilities. However, there’s no time limit for workers under 30.
Employers who hire through these contracts can have financial benefits. Overall, internship contracts provide a great opportunity for young professionals to transition from education to the workforce while offering employers incentives to support new talent.
What about remote work? Can I employ without an office?
There’s a contract for that: Remote Work or Distance-Work employment contract.
As remote work keeps growing, the need for such a contract was mandatory. So, Spanish law has established guidelines ensuring that remote employment arrangements remain fair and well-structured for both businesses and their team.
Under Law 10/2021, remote work regulations apply when an employee carries out at least 30% of their contractual hours remotely within a three-month period. This requires a mutual agreement and a formal written contract. On top of that, employers are obligated to reimburse employees for any work-related costs they incur—such as electricity usage—and must supply the necessary equipment for their work (like a laptop).
This agreement must be voluntary and revocable, specifying key details such as the:
Division between remote and in-office work
Designated working hours
Employer-provided resources
Reimbursement policies
Primary work location
Supervisory mechanisms
Data security protocols
Confidentiality measures.
A copy of this agreement must be submitted to both the employee’s legal representative and the Public Employment Service within 10 days of signing.
What about part-time contracts?
That’s a good question.
In Spain, part-time contracts provide a flexible work arrangement, either permanent or temporary. These contracts must be documented in writing, specifying the work location and hours.
Employers must clearly state the number and distribution of working hours; otherwise, the contract may be considered full-time. Part-time workers have the same rights as full-time employees, though some benefits are adjusted based on hours worked.
Overtime is generally not allowed, but additional hours can be agreed upon. These supplementary hours are 30% of regular hours, or 60% if a collective agreement allows. The total hours worked must always remain within part-time limits.
Employment contracts in Spain: The mandatory laws, policies, and other common elements
Now that you know the main types of employment contracts in Spain, it’s time to dig deeper and understand the information you must include in those documents—regardless of their kind. All contracts in Spain must comply with:
National minimum wage: Compliance with the base salary, which differs based on negotiated labor agreements.
Working hours: Respect the maximum working hours set by law, including required breaks and rest periods.
Overtime: Oversight of extra working hours and corresponding pay according to legal or contractual terms.
Evaluation period: Implement a trial or assessment phases when applicable.
Paid holidays: Guarantee the legally required annual leave, as determined by labor laws or negotiated agreements.
Sick leave: Ensure employees' rights to medical leave and any related financial support.
Maternity and paternity leave: Allocation of parental leave in accordance with legal standards.
Discrimination: Strict ban on workplace discrimination of any kind.
Termination and severance: Clear guidelines on employee dismissal, including required notice and severance benefits where applicable.
Social Security: It’s the employer’s responsibility to make required contributions toward employee social security benefits.
Notice period: Defined timeframe for informing employees of contract termination (and the other way around).
Legal compliance: How to avoid hiring penalties in Spain
By adding mandatory information in every contract. All of those documents must include the following information:
Identification of both parties: Full legal details of the employer and employee-
Job position and related duties: A clear outline of the role, responsibilities, and expected performance.
Work schedule and salary: Specific information on working hours, base pay, and any extra earnings.
Benefits and allowances: Clear description of additional perks, like health coverage, pension plans, or travel reimbursements.
Termination clauses: The specific conditions for ending the contract, including required notice and severance details.
Confidentiality clause: Ensure commitment to safeguarding company-sensitive information during and after employment.
Implied terms: Legal rights automatically applied to the contract that cannot be overridden.
Probationary period: The length of any trial period where the employer can end the contract without justification.
Type of contract: Specify if it’s permanent, temporary, training-based, or project-specific—following the main types of contracts mentioned earlier.
Employee rights: State all the entitlements as defined by law or collective agreements.
Project team or training: Information on team participation or required learning programs.
Amount for retirement: Include details on retirement contributions based on salary and contract terms.
Mandatory information: Employer’s duty to provide written employment terms within 2 months of starting the job.
Depending on each case, you (as an employer) can include other optional clauses, because not every contract is the same.
But do contracts officially start right away? What is the probationary period in Spain?
Employers often include a probationary period in employment contracts. That allows both parties to assess whether the relationship is a good fit.
The probationary period for indefinite contracts typically lasts up to 6 months for technical staff and up to 2 months for other types of employees. During this period, either party can terminate the contract with minimal notice or cause.
The probationary period for fixed-term contracts is generally shorter (2 months) and aligned with the contract's length.
When that time ends, employers and employees deal with different, mandatory responsibilities until the contract ends.
What about overtime? How does it work?
Overtime begins when employees work past the standard working hours defined in their contract—which must be recorded every day in the company’s registry.
In Spain, the Estatuto de los Trabajadores (The Workers’ Statute) regulates overtime, and it says it should be compensated either through additional pay or time off—depending on the employment agreement. Typically, overtime pay is at a rate of 1.5 times the regular hourly wage. However, the specific terms can vary depending on the sector and the collective bargaining agreements in place.
Though the Spanish labor law regulates overtime work, employers must ensure it is voluntary—and that the total working hours don’t exceed the legal limits (typically 40 hours per week, divided into 8 hours per day).
According to the Spanish Government, overtime work is:
Voluntary, except if a collective agreement exists;
Compensated for, either through the payslip or by rest periods over the following 4 months;
Set at a maximum of 80 hours a year;
Calculated based on the record of the daily hours worked and reflected in the payslip.
But remember that the time spent working to prevent incidents and other extraordinary—and urgent—damage isn’t considered overtime.
Is it illegal to work without an employment contract in Spain?
From the second someone works for you in a specific place, under a certain schedule, you must employ them. That said, there must be a written employment contract between both parties. However, you don't need employment contracts in Spain if you’re looking for a freelancer or contractor.
The difference between employees and contractors in Spain is simple, and you must respect it to avoid heavy penalties.
Understanding employment contracts in Spain is essential for businesses expanding into the country. With different contract types, strict labor laws, and mandatory clauses, ensuring compliance is critical.
Whether hiring permanent employees, temporary staff, or trainees, employers must carefully structure agreements to meet legal requirements while maximizing benefits.
By staying informed and implementing best practices, companies can successfully navigate Spain’s labor market, attract top talent, and build a strong, compliant workforce. And if you need professional guidance, you know where we are.
