Madrid is Spain’s largest talent market and its business capital. It has the greatest concentration of corporate headquarters, senior professionals and technical roles, and it accounts for the largest share of software and engineering openings in the country. If you are hiring for scale, seniority, finance, or roles that benefit from proximity to big-company experience, Madrid is usually the deepest pool.

That depth comes at a price: Madrid, along with Barcelona, tends to command the highest salaries in Spain, often noticeably above the national average. For senior and specialist roles, that premium is frequently worth it for the calibre of candidate available.

Barcelona is Spain’s startup capital and its most international tech city. The 22@ innovation district in Poblenou is home to a dense cluster of tech companies, scale-ups, and coworking spaces, and the city draws talent from across Europe thanks to its lifestyle and connectivity. It is especially strong for product, design, engineering and roles that suit a startup or scale-up culture.

Salaries are broadly comparable to Madrid at the senior end, and the international, English-speaking talent base makes it a natural first hire for many overseas companies building a European team.

Valencia has become the value pick. It has a growing tech scene and a solid pool of engineering and digital talent, at salary levels typically below Madrid and Barcelona, paired with an excellent quality of life on the Mediterranean coast. For companies that want strong people without top-tier-hub salaries, Valencia is increasingly the answer.

The lifestyle also helps with retention: people who move to or stay in Valencia tend to want to remain there, which supports building a stable team over time.

Málaga is the fastest-rising tech hub in Spain. Its technology park is one of the largest in the country, home to hundreds of companies and thousands of workers, and major international firms have opened significant operations in the city, including high-profile investment in cybersecurity. That momentum is drawing engineering talent to the south coast.

For companies in tech and cybersecurity in particular, Málaga now offers a genuinely deep and growing pool, often at a lower cost than Madrid or Barcelona, with the same coastal quality-of-life draw as Valencia.

The major cities are not the whole story. Bilbao and the Basque Country bring strong engineering and industrial talent; Seville and other regional centres have capable, competitively priced workforces; and university cities across Spain produce graduates every year. For many roles, especially remote ones, limiting your search to Madrid and Barcelona means missing excellent people.

This is where remote work changes the calculus. With hybrid and remote now standard, and an Employer of Record able to employ someone wherever they live in Spain, the practical question is not which city has an office, but where the right person is. You can hire the best candidate in the country and employ them compliantly from day one.

• Madrid: scale, seniority, corporate and finance roles.
• Barcelona: startups, product, design, international talent.
• Valencia: strong talent at lower cost, great retention.
• Málaga: fast-growing tech and cybersecurity hub.
• Everywhere else: widened by remote, reachable via an EOR.

However you choose, employing the person is the same job. Our guide to how to hire an employee in Spain covers the steps, and what an Employer of Record is explains how to do it without a local entity.

In most US states, employment is at-will: an employer can end it at any time, for any lawful reason or no reason, and the employee can leave just as freely. Spain has no equivalent. Every dismissal must rest on a valid legal ground, whether objective (economic, technical, organisational or production reasons, or certain individual grounds) or disciplinary (serious misconduct).

So the first change is conceptual: in Spain you do not end employment at will, you justify it. That reframes how you plan an exit and how you document performance along the way.

US at-will employment often involves no required notice at all, though many employers give some as a courtesy. Spain sets a statutory notice of 15 days for an objective dismissal, and the applicable collective agreement frequently extends it, often to 30 days. If the notice is not given, the employer pays salary in lieu for the missing days.

Disciplinary dismissals take effect on communication, but they still require a formal letter. The theme is consistent: process is not optional in Spain.

This is the most tangible difference. US at-will employment generally carries no statutory severance; any payment is a matter of policy or negotiation. Spain has defined statutory severance: 20 days of salary per year of service for a fair objective dismissal, capped at 12 months, rising to 33 days per year, capped at 24 months, if a dismissal is found unfair. A proven disciplinary dismissal carries none.

For budgeting, this means a US company should provision for potential severance on a Spanish hire in a way it would not at home. The full mechanics are in terminating employment in Spain, and the cost context is in US vs Spain employer costs.

A US termination can sometimes be a short conversation and a final paycheck. A Spanish dismissal is a documented process: a formal dismissal letter stating the facts and the legal grounds, the correct notice where applicable, the calculated severance offered, and the relevant filings. The letter and the timing carry real weight, and a sound reason delivered through a flawed process can still be ruled unfair.

For a US employer, the practical adjustment is to treat exits as a procedure to be run carefully, not an instant decision to be executed.

Because at-will gives US employers wide latitude, wrongful-termination claims are relatively contained. In Spain, challenging a dismissal as unfair is common and straightforward for the employee. If the reason or the process does not hold up, the result is the enhanced 33-day severance or reinstatement. That is a higher, more routine exposure than most US employers are used to.

The good news is that it is controllable. Correct classification, a valid reason, proper notice, an accurate severance calculation, and clean documentation keep the risk low. That discipline is exactly what an Employer of Record brings to every exit as the legal employer.

This is the headline difference. In most US states, employment is at-will: either party can end it at any time, for almost any lawful reason or none, usually without severance. Spain does not have at-will employment. A dismissal needs a valid, justified reason, the correct procedure, and, in most cases, statutory severance.

For a US employer, this reframes the whole relationship. You cannot simply let someone go at will in Spain; you plan the exit, classify it correctly, and pay what the law requires. We cover this fully in US vs Spain termination rules.

US employment often runs on an offer letter and at-will terms. Spain expects a proper written contract that fits the Estatuto de los Trabajadores and, crucially, the collective agreement (convenio colectivo) for the sector. Convenios cover the majority of Spanish employees and set binding minimums on pay, hours and leave, whether or not the person is in a union.

This is a concept with no direct US equivalent for most employers, and missing it is a common early mistake. Our guide to Spanish employment contracts explains how the convenio shapes the deal.

Spain sets a statutory maximum of 40 hours per week averaged over the year, with caps on annual overtime and mandatory daily and weekly rest. It also requires employers to record every employee’s daily working time, a duty that applies to office and remote staff alike. US federal law, through the FLSA, focuses on minimum wage and overtime for non-exempt employees, with fewer central limits on the hours of exempt staff.

The practical effect is that a Spanish employer tracks and manages working time more formally than many US employers are used to, and cannot simply treat salaried staff as having unlimited hours.

Spain guarantees at least 30 calendar days of paid annual leave plus public holidays, along with paid family and sick leave backed by social security. The US has no federal minimum paid vacation. Spain also has strong protections against discrimination and unfair treatment, and specific rules protecting employees during pregnancy, parental leave and illness.

None of this makes Spain a difficult place to employ people; it just means the baseline of entitlements is higher and more codified than a US employer may expect. Building those entitlements in correctly is routine once you know they exist.

The takeaway is not that Spain is hard, but that it is different, and the differences are knowable. Plan for just-cause employment rather than at-will, respect the convenio, track working time, and build in the leave and protections. Do that and a Spanish hire is entirely manageable.

The simplest way to get it right without becoming an expert in Spanish law is to use an Employer of Record, which applies all of this for you as the legal employer. For the cost side of the comparison, see US vs Spain employer costs, and for the wider case, why US companies are hiring in Spain.

In the US, the employer’s core payroll tax is FICA: about 7.65% of wages, made up of 6.2% for Social Security up to an annual wage cap and 1.45% for Medicare with no cap. There are also state unemployment taxes, but the federal payroll burden is comparatively light.

In Spain, employer social security is around 30.65% on a standard permanent contract, plus a small accident premium. The gap is roughly four to one. But the Spanish figure is doing far more work: it funds public healthcare, unemployment insurance, and a larger pension and leave system, which in the US are paid for separately or not at all. The mechanics are in our guide to Spanish payroll.

This is the big equaliser. In the US, employer-sponsored health insurance is a substantial cost, frequently several thousand dollars a year per employee and often much more for family cover. It is effectively a private tax on employment that does not show up in the FICA number.

In Spain, healthcare is delivered through the public system, funded by the social security contributions already counted above. There is no separate premium the employer must pay. Some Spanish employers add private medical insurance as a perk, but it is optional, not the baseline. Add the US health premium back into the comparison and much of the apparent Spanish disadvantage disappears.

Spain guarantees a minimum of 30 calendar days of paid annual leave, plus public holidays, and provides paid family and sick leave through statute and social security. The US has no federal minimum paid vacation, and paid leave varies widely by employer and state.

So a Spanish employer carries a higher guaranteed cost of paid time off. This is not a separate line item you pay like a tax; it is built into the salary you are already funding across the year, but it is real, and it is worth factoring in when comparing headline salaries between the two countries.

The end of the relationship is where the systems differ most. US at-will employment usually means an employer can end a role at any time with little or no statutory severance. Spain is the opposite: a dismissal needs a valid reason, and it carries statutory severance of 20 days’ salary per year of service for a fair objective dismissal, rising to 33 days if a dismissal is found unfair.

For a US company used to at-will, this is the biggest mindset shift. It is not a reason to avoid Spain, but the potential severance should be provisioned for as part of the total cost. We cover it fully in US vs Spain termination rules and in terminating employment in Spain.

Put it all together and the comparison is more even than the tax rates imply. Spain front-loads cost into a high social security rate that covers healthcare and a strong safety net, and adds guaranteed leave and severance. The US has a low payroll tax but shifts healthcare onto the employer and offers less job security to the employee.

For the full worked cost of a Spanish hire, see what it costs to employ someone in Spain, and for the wider case, why US companies are hiring in Spain.

Yes, a UK company can hire an employee in Spain. The person works in Spain, under Spanish employment law, and is paid through Spanish payroll. The UK company does not need any UK immigration permission for this, because nobody is coming to the UK. What it needs is a route to employ the person compliantly inside Spain.

That route is either a Spanish entity or an Employer of Record. Once one of those is in place, employing a Spain-based person is much like employing anyone else, just under Spanish rather than UK rules.

Brexit ended free movement between the UK and the EU, which mainly affects people relocating across the border. It changed the rules for a Spanish national who wants to move to the UK to work, and for a UK national who wants to move to Spain. It did not remove the ability of a UK company to employ someone who stays in Spain.

Crucially, a UK sponsor licence, the thing UK employers now need to bring overseas workers into the UK, is irrelevant here. The employee is not entering the UK immigration system at all. They live in Spain, they have the right to work in Spain, and that is where the employment sits.

A tempting shortcut is to keep the person on UK payroll and pay them through PAYE. It does not work. Someone who lives and works in Spain must be employed under Spanish law, with a Spanish contract, IRPF withholding, and Spanish social security. UK PAYE does not discharge any of those Spanish obligations, and running it instead creates tax and compliance exposure in Spain.

In short, the employment has to be Spanish. That is the whole reason a UK company needs a Spanish employer of some kind, rather than just adding the person to its existing payroll.

There are three ways to make the employment Spanish.

• Set up a Spanish entity and employ the person directly, taking on all the payroll, tax and compliance yourself.
• Use an Employer of Record, which employs the person on its own Spanish entity on your behalf and handles the compliance.
• Engage the person as a self-employed contractor, which is only genuinely appropriate if they are truly independent.

The contractor route is the one to be careful with. If the role is really a job, with set hours and direction, Spanish rules can treat it as employment, creating falso autónomo risk. For a genuine hire, that leaves the entity or the EOR.

For most UK companies making one or a few hires in Spain, the Employer of Record route is the practical choice. It avoids the cost and delay of setting up and running a Spanish company, and it makes the person a properly employed Spanish worker in a matter of days. You keep the working relationship and manage them day to day, exactly as you would a UK employee.

Spain is well suited to UK teams: it is only an hour ahead, so the working day lines up almost perfectly, and the talent pool is deep and competitively priced. Our comparison of an EOR versus a Spanish entity weighs the routes, and how to hire an employee in Spain covers the steps.

Hiring in Spain puts a US company inside the European Union, one of the largest markets in the world, with a person on the ground who understands it. For companies expanding into Europe, that first local hire is often worth more than the role itself: it is a foothold, a time-zone bridge, and a source of local knowledge all at once.

Spain is an attractive place to plant that flag. It is a major EU economy with strong digital infrastructure, active government support for the tech sector, and a steady flow of foreign investment into Madrid, Barcelona and beyond.

Spain produces a large number of engineers, developers, designers and multilingual professionals, and its universities and tech schools feed a competitive market in Madrid, Barcelona and increasingly Valencia and Malaga. English is widely spoken in the tech and international business communities, and many candidates have worked with or for international firms.

For US companies, this means access to senior, experienced people who are sometimes overlooked in a US-only search, at a point in the market where remote and hybrid hiring has become completely normal.

The cost structures look very different, which is why a straight comparison of one number is misleading. In the US, employer payroll taxes are around 7.65%, but employers typically carry significant health insurance costs on top. In Spain, employer social security is about 30.65%, but that funds public healthcare and a broad benefits system, so there is no separate health premium to add.

Put the total employment cost side by side, including salary, and strong Spanish talent is frequently competitive with, or cheaper than, comparable US hires. We break the two systems down in detail in our comparison of US vs Spain employer costs.

Spain sits on Central European Time, roughly six hours ahead of US Eastern. That is close enough to give a genuine overlap: the US morning is the Spanish afternoon, which leaves a solid block of shared hours for meetings and real-time work. For teams already used to hybrid working, that overlap is more than enough to run a distributed team smoothly.

It also means a Spanish hire can cover European business hours that a US-only team cannot, extending the working day for customers and partners on that side of the Atlantic.

The practical question is how a US company employs someone in Spain without a local office. There are two routes: set up a Spanish entity, or use an Employer of Record that already has one. For a first hire or a small team, the EOR route is usually the answer, because it lets you employ your chosen person compliantly in days rather than spending weeks incorporating and registering a company.

You keep the working relationship and manage the person day to day; the EOR is the legal employer in Spain and handles the contract, payroll, and compliance. If you are weighing the options, our comparison of an EOR versus your own Spanish entity lays them out, and what an Employer of Record is explains the model.

When you employ someone in a different country, you cannot assume your home-country IP terms carry across. Spain has its own rules on who owns inventions, software and creative works made by employees, and its own limits on clauses like non-compete. Rely on assumptions and you can end up with a gap between what you think you own and what you actually do.

The good news is that the Spanish defaults are largely sensible for employers. The work is in translating them into clear contract terms, which is exactly where a compliant Spanish employment contract earns its place.

Spain’s Patent Act sorts employee inventions into three broad categories. If an invention is made as part of research or inventive duties the employee was hired and paid to perform, it belongs to the employer. If it has nothing to do with the job and did not draw on company resources, it belongs to the employee. In between sits a category where the employee’s work substantially used the company’s means or knowledge; the employer can claim these, usually with fair compensation to the employee.

For most technical hires the first category covers the important cases, but the distinctions matter, and a clear IP assignment clause in the contract removes the ambiguity about which bucket a given piece of work falls into.

Software gets special treatment under Spanish intellectual property law. Where an employee writes software in the course of their duties, the economic rights are presumed to pass to the employer unless the parties agree otherwise. That default is helpful, but presumptions can be argued, so confirming ownership expressly in the contract is the sensible course.

Other copyright works, such as designs, written materials and marketing content, are best handled with an explicit assignment of economic rights in the contract, since the general copyright rules are less automatically employer-favouring than the software provision.

Spain has a dedicated Trade Secrets Act, Ley 1/2019, which protects confidential business information that has commercial value and is kept secret through reasonable measures. Employees owe a duty of good faith and confidentiality during and after employment, and the law gives you remedies if a trade secret is misused.

To rely on it, you need to actually treat the information as secret: a clear confidentiality clause in the contract, plus practical controls such as limiting who can access sensitive data and systems. Protection follows the effort you put into keeping something confidential.

A post-contractual non-compete, the pacto de no competencia, can be valid in Spain, but only within strict limits. It cannot last more than two years for qualified technicians, or six months for other employees. The employer must have a genuine commercial or industrial interest to protect, and, crucially, the employee must receive adequate financial compensation for agreeing to it.

That compensation requirement is the one companies from other countries most often miss. A non-compete with no real payment behind it is generally unenforceable in Spain, so it needs to be designed properly or it protects nothing.

All of this comes together in the employment contract. A well-drafted Spanish contract for a role that touches valuable IP should cover the assignment of inventions and IP, ownership of software and other works, a confidentiality clause aligned with the Trade Secrets Act, and, where justified, a properly compensated non-compete.

• Assignment of inventions and intellectual property to the company.
• Express ownership of software and copyright works created in the role.
• A confidentiality clause backed by practical access controls.
• A non-compete only where justified, and with the required compensation.

Building these terms into a compliant contract, correctly for Spanish law, is part of what an EOR service in Spain handles, so your IP is protected from the first day of employment.

Spanish social security, the Seguridad Social, is a broad public system. The contributions from employer and employee together fund public healthcare, the contributory state pension, unemployment benefit, sick pay after the employer’s initial period, parental and family leave, and support for workplace accidents. It is why the deductions are larger than income tax alone in many cases.

On a standard permanent contract in 2026, the employer pays around 30.65% of salary and the employee about 6.5%. The mechanics of those rates are covered in our guide to Spanish payroll; this article is about what they pay for.

The centrepiece is the contributory state pension. In 2026 the ordinary retirement age is 66 years and 10 months for people with fewer than 38 years and 3 months of contributions, while those who have contributed 38 years and 3 months or more can still retire at 65. This is the last step of a long transition toward a standard age of 67.

To qualify for a contributory pension at all, a worker needs at least 15 years of contributions, with two of those years falling in the 15 years before retirement. The amount is based on the contribution history over a long reference period, currently the last 25 years, with a phased reform beginning in 2026 that will eventually let retirees choose a more favourable calculation.

Because Spain’s population is ageing, the government introduced the Intergenerational Equity Mechanism, the MEI, to shore up the pension system. It is a small extra contribution on top of the normal rates: for 2026 it is 0.90% of the contribution base in total, split 0.75% on the employer and 0.15% on the employee. It rises gradually over the coming years.

For an employer, the MEI is simply another line in the social security cost, but it is worth knowing what it is when it appears on the breakdown. It is the system’s way of pre-funding future pensions rather than a charge specific to your business.

Alongside the state pension, Spain has been actively encouraging a second pillar: employment, or occupational, pension plans (planes de pensiones de empleo), where the employer is the promoter and employees are the participants. Historically these have been less common in Spain than in some countries, and recent policy has aimed to grow them, including simplified collective plans for smaller firms.

For most employers these remain optional, a benefit rather than a legal requirement, though some sectors introduce them through the collective agreement. If you want to offer a competitive package in Spain, an occupational plan is one of the levers, and it can be set up as part of the wider employment arrangement.

The practical takeaway is simple. Your mandatory obligation is the standard social security contribution, which funds the state pension and the wider safety net. Occupational pension plans are an optional extra you can choose to offer. And the employee’s future pension depends on their contributions being paid correctly and on time, month after month.

That last point is where getting payroll right really matters. Every correctly filed contribution counts toward the employee’s pension and benefits, which is one more reason compliant employment beats an informal arrangement. An EOR service in Spain makes sure those contributions are calculated and paid properly throughout the employment.

The formal regime kicks in when remote work is regular, defined as at least 30% of working time over a reference period of three months, or the equivalent share for a shorter contract. In a standard week, that is roughly a day and a half working remotely. Below the threshold, occasional home working is not caught by the full framework, though it is still sensible to document it.

The distinction matters because crossing the 30% line triggers the written agreement and the cost obligations that follow. It is worth being clear at the hiring stage about how much of the role will be remote.

Regular remote work needs a separate written agreement, the acuerdo de trabajo a distancia, signed before the remote work begins and attached to the employment contract. It is not enough to mention remote work in passing; the law expects a specific document.

• An inventory of the equipment and tools the employee needs.
• The expenses the employee may incur and how they are compensated.
• The split between remote and on-site working.
• Working hours and any rules on availability.
• The duration of the arrangement and how either side can reverse it.

This agreement sits alongside the main contract, which we cover in our guide to Spanish employment contracts.

This is the obligation that surprises overseas employers most. Under Ley 10/2021, the company must provide the equipment and tools needed to work remotely, and must cover the expenses that come with it. Those costs cannot be shifted onto the employee. The exact amount and how it is paid are set in the remote work agreement, often guided by the applicable collective agreement.

Remote work in Spain is voluntary on both sides. An employer cannot force an employee to work remotely, and an employee cannot demand it as of right; it has to be agreed. Because it is agreed, it is also reversible under the terms set out in the written agreement, with notice on either side.

Importantly, refusing remote work cannot be used against an employee. It is not grounds for dismissal or for changing their core conditions. The arrangement is a genuine agreement, not something one side can impose on the other.

Article 18 of the law recognises the right to digital disconnection outside working hours. Remote employees are entitled to switch off, protecting their rest time, leave and holidays, and employers are required to have an internal policy setting out how the right works in practice. The same law also reinforces the general Spanish obligation to record daily working time, which applies to remote and on-site staff alike.

Taken together, these rules make remote work in Spain a properly regulated arrangement rather than an informal favour. Handling the agreement, the expenses, and the disconnection policy correctly is part of what an EOR service in Spain manages for a remote hire.

At a minimum, a Spanish contract should identify the parties, the job role and category, the salary and how it is structured across 12 or 14 payments, the working hours and schedule, the place of work, the holiday entitlement, the applicable collective agreement, and the start date and any probation period. Certain contract types must be in writing by law, and in practice every contract should be.

Much of the detail is not really a matter of negotiation, because the convenio and the Estatuto already set it. The contract records the specifics of this job within that framework. For the full hiring sequence around the contract, see our step-by-step guide to hiring in Spain.

The permanent contract, the contrato indefinido, is the default and by far the most common. The 2022 labour reform deliberately made it harder to use fixed-term (temporal) contracts: they are now only valid for specific, justified reasons, such as covering a named employee’s absence or a genuine, time-limited surge in production. Using a fixed-term contract without a proper reason can convert it into a permanent one.

Alongside these are part-time contracts, training and apprenticeship contracts for younger or newly qualified workers, and the fijo-discontinuo, a permanent contract for work that recurs seasonally. Choosing the right type matters, because the wrong one creates risk rather than flexibility.

A probation period, the periodo de prueba, lets either side end the contract without notice or severance while it runs. The Estatuto sets the maximums: up to six months for qualified technicians (técnicos titulados), and two months for other employees, or three months for other employees in companies with fewer than 25 staff. A collective agreement can set its own limits within the law.

The single most important rule is that the probation period only exists if it is written into the contract. If it is not stated in writing, there is no probation, and the employee is a confirmed permanent hire from day one. This catches out employers who rely on a verbal understanding.

This is the point overseas employers most often miss. The convenio colectivo for the employee’s sector and region sets binding minimum terms, on pay, working hours, overtime, leave, and sometimes benefits, that apply over the top of the contract. The contract cannot give less than the convenio requires, and where it is silent, the convenio fills the gap.

So before drafting, you identify the correct convenio and check its minimums, including the minimum pay for the employee’s job category, which may be above the national minimum wage. Applying the right convenio is a core part of getting the contract right.

Two registrations must happen around the start date. The employee has to be registered with social security (the alta) before their first working day, and the contract has to be communicated to the SEPE, the public employment service, through its online system. Both are legal obligations, and missing the social security registration in particular is a serious and common error.

Once those are done and the first payroll is set up, the employee is properly on the books. If you would rather not manage the convenio checks, the drafting, and the registrations yourself, that is exactly what an EOR service in Spain takes on.