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HIRING STAFF




HIRING EMPLOYEES

Updated: January 2014

This constantly updated guide takes you trough the Spanish Social world of Hiring employees. Information is up to date on time of writing.
Mistakes/errors are always possible, so please take advice before you handle.

SUMMARY


Chapter 1.
How it works: the Social Security system.

Chapter 2.
How much does it cost?

CHAPTER 1

HOW IT WORKS: THE SOCIAL SECURITY SYSTEM


Spanish “Seguridad Social” or Social Security covers the following:

- Health service, including medication at reduced price;
- Accidents;
- Pension from 65 to 67 years of age;
- Unemployment (for Employees only)
- Daily allowance in ncase of incident(illness, accident, work accident)

The Spanish Seguridad Social has two basic systems:

Cuenta ajena (working as an employee)

Any E.U. citizen can work in Spain with no more formalities than the presentation of his passport or national identity card and a Tax number (N.I.E.). Some Citizens from new E.U. countries have to wait up to two years after their country’s E.U-joining date.

Fines (in case of an inspection):
If you hire a person without contracting before starting work, you risk a fine:
E.U. citizens: 3.120 € minimum per employee;
NON E.U. citizens and new E.U. citizens not yet allowed to work:
12.000 € minimum. (or 6.000 € if reduced fine))

Cuenta propia or “Autónomo”  (working as Self-employed or sole trader)

Any E.U. citizen can work in Spain with any more formalities than the presentation of his passport or national identity card. Recently however, Spanish Hacienda (Tax office) and Social Security require a N.I.E. (foreign identification number)

The employees pay Social Security as a percentage on their wages (Nómina), also does the business on the same.

The self-employed pays his or her own Social Security, a fixed amount for the whole year, calculated on a basic earning, that is lower than the lowest basic employee’s salary. In 2013, you will pay approximately 270 € per month, depending on the options you choose.
Even if you have no income, you have to pay the monthly fees; but you can stop and restart whenever necessary.

There is nothing like a “franchise” threshold that allows you to work without paying Social Security in Spain.




CHAPTER 2

HOW MUCH DOES IT COST?


Cuenta ajena (working as an employee)

Employees are paid per month; not per week (although usually the working hours are calculated on a weekly basis), which means that if you pay them every week, this payment will be considered as a partial payment of the monthly salary on the wage slip.

RESTAURANT & BAR STAFF ON CONTRACT

Approximate Monthly cost of a full time average employee.
Here are a few examples (amounts rounded):

Hours per week @ Minimum wage (gross)
Employee’s Social fee Approx. 8%
Employer's Social fee: approx. 32%

Hrs  Wage  Employee Employer
12h 304,00   24,50     98,00
14h 355,00   28,50    113,50
20h 490,00   39,50    157,00
40h 980,00   78,50    314,00
All amounts are subject to variations.
Salary varies according to job type subject to official agreements.

The business retains the Employee’s Social fees on the wage slip and pays them together with the business’ fees to Social security at the end of the next month.

DISCOUNTS FOR CREATING A NEW EMPLOYMENT POSITION

DISCOUNTS APPLY ON EMPLOYER’S SOCIAL SECURITY PAYMENTS.

These discounts are constantly changing.
Ask your accountant for the discounts

If you dismiss and don't rehire in the same position, discount does not apply and will have to be refunded since the beginning.

Cuenta propia or “Autónomo”  (working as Self-employed or sole trader)

Self-employed workers pay a percentage on a basic virtual salary.

The minimum fee one can pay in 2014, is approx. 270 € per month.

Young entrepreneurs (up to 30 years of age), get discount during the 15 to 18 first months.

Certain types of working S.L. - shareholders pay more: 315 € approximately.

The payment is due from the starting month till the end of the last month declared as active. Payments are always for a full month and are to be paid during the current month, up to the last day of the same.

One MUST set up a direct debit, directly at the Social security when starting, or at the bank when paying a monthly fee. The direct debit will occur on the last day of the current month.

Fine for late monthly payments:

20% from the first month

If unpaid after around 6 to 9 months (decision time is variable), the payment goes into so called “Ejecutiva” mode, which raises the fine to 35% and if still unpaid, the Social security will enforce payment, first by embargo on any of the debtor’s bank accounts, later if previous attempts were unsuccessful, by embargoing his vehicle(s) and real estate. At the ultimate stage, the real estate or vehicle(s) will be put on sale by public auction.

Important to know:

Social security and taxes are paid “voluntarily” in Spain, which means that they don’t have to send you the bill. It is up to the interesee to look out if payment has been done or not and to respect the due dates. No excuses will be accepted;
You have to subscribe to a direct debit, or go each month to the S.S. Office to pick up a payment bulletin;;
One cannot pay Social fees without a reason. This means that you cannot pay when not active;
Self-employed cannot get unemployment benefits (you cannot dismiss yourself…) apart of  some exceptions added-in since 2008;
Social security is slow in detecting payments and slow at stopping direct debits.
Therefore:
In case you are too late to pay, get a payment bulletin and pay at any bank;
When you stop your activity, always CANCEL the direct debit at your bank from the month after the one you have been stopped;
You can cancel an undue direct debit only within 7 days. After that it has to be reclaimed; this can take months to happen.
If Social security is not notified of your stop of activity before the 6th of a month, the whole same month is due.

-  When you stop paying your fees, you stay covered for 3 more months at the Health service. Past that delay, they will invoice you each intervention.

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