1. Introduction
Spain has traditionally been considered a great place to do business due to its geographical location, financial resources, and overall convenience.
It may be difficult for organisations to ensure full legal compliance when expanding. The following checklist will allow your organisation to understand some of the most important legal requirements for opening up shop in Spain.
Suárez de Vivero is a law firm specialised in employment law and social security, with offices in Barcelona and Madrid (Spain). We have over 40 years of experience advising and assisting foreign corporations in entering Spanish markets and setting up their local operations across the country. We also advise and assist in conducting compliance audit exercises, drafting policies, drawing employment contracts, litigation and conducting collective bargaining negotiations.
We would be delighted to have the opportunity to assist with your organisation’s expansion into Spain. We have provided an indicative checklist below which will allow your organisation to evaluate the legal and regulatory framework for starting a business establishment in Spain.
2. Labour and Employment Law Requirements
A. EMPLOYER POLICY REQUIREMENTS
In order to be legally compliant, employers are required by legislation to comply with certain obligations, and in order to do so, companies usually create and implement a number of employment policies. The following are required statutory policies for an organisation that is commencing work in Spain:
- A written occupational health and safety policy which must include 4 preventive specialties: safety at work, industrial hygiene, ergonomics and psycho- sociology and occupational medicine.
- A policy with respect to workplace harassment (including sexual harassment) and a program to implement the policy.
- An equality plan in all companies with more than 50 employees. An equality plan is an orderly set of evaluable measures aimed at removing barriers to effective equality of women and men. Likewise, companies required to elaborate an equality plan must also prepare a remuneration audit.
- A salary register. This record must include all the average amounts of the salaries of the company’s employees, including salary supplements and non-wage benefits, separated by gender and distributed by professional groups, professional categories or jobs of equal value.
- It is also mandatory to establish a time control system for employees. This aims to avoid labour abuses and lack of payment of the overtime performed. Thus, companies must record and store the time of entry and exit of each one of their employees.
- Recently, the Spanish Employment Law has been reformed, establishing as a general rule hiring employees for an indefinite period of time. Therefore, it is highly advisable to be aware, either through an internal policy or another method, of the possibilities that a company has to hire employees on a temporary basis.
- In Spain, European Directive (2019/1937) on Whistleblowing, it has not yet been transposed, but it has been approved as Draft Law regulating the protection of persons who report regulatory infringements and the fight against corruption, by the Council of Ministers and is awaiting processing in the coming months.
It consists of an internal whistleblowing channel whose objective is to guarantee that any employee has a tool to report infractions or irregularities in the company.
Private sector companies with more than 50 employees will be mandated to implement it.
- There are a number of policies that employers should create, considered as best practices. These policies will help an organisation manage employee relations and mitigate the risk of legal liability in the future:
- Recruitment, hiring and professional development.
- A discipline policy to address employee misconduct and how your organisation will respond to misconduct.
- Policies surrounding the use of employer tools (computer and mobile phone use, internet use, social media, physical tools, etc.) and confidentiality to ensure employees are aware of the expectations surrounding their employment.
- Attendance and leave of absences policies to govern employee expectations for absenteeism and workplace attendance; and
- Image and corporate reputation policies, commonly known as Dress Code.
- Best practices and work behaviour polices for the fight against fraud, corruption and bribery and on the management of conflicts and unfair competition.
While not a policy itself, many employers in Spain decide to put all of the foregoing policies and procedures within a unified employee “handbook” that contains all the information every employee would need in the employment relationship. A Spanish employee handbook would help your organisation from operations and human resources perspectives.
Our firm has prepared precedent policies which can be efficiently modified for your organisation.
B. EMPLOYEE TRAINING REQUIREMENTS
Employers are required to complete certain training activities. The following is statutorily mandated training that employers must provide:
- Ensure that all workers complete basic health and safety awareness training;
- If your workplace contains hazardous material, workers must receive training and instruction on the handling of such material;
- Provide workers with information and instruction on the contents of the workplace harassment policy;
C. EMPLOYMENT AGREEMENTS
In Spain, employers are urged to create written employment agreements for all employees. Employment agreements are essential to limit the risk of legal liability and financial exposure in operating the employment relationship or on the contrary, to give voluntary improvements to the employees beyond the Law.
Our firm has prepared thousands of precedent employment agreements. Modifying the precedent agreements for your organisation will be a key part of the project.
This guide is intended as general information only. For legal advice and assistance with your business needs, please contact our Spanish firm, Suárez de Vivero.
3. Corporate Law Requirements
In order to incorporate a company in Spain, there are a number of steps and requirements that are needed to ensure legal compliance, which may vary depending on the legal form of the company.
The main steps and requirements are the following:
1) Define your idea of entrepreneurship (activity to be developed, the global and long- term planning, the risk assessment, the financial capacity, the viability of the business, the market study, etc.). All these aspects should be collected in a document, which is called the “Business Plan”.
2) Choose the legal form of your company (type of company: e.g. limited liability).
3) Fill the requirements according to the type of company you have chosen.
4) Choose the jurisdiction for registration.
5) Prepare and file articles of incorporation.
6) Create all the necessary organisation and foundational resolutions, including drafting the initial corporation by-laws.
7) Establish the initial registered office address.
8) Establish a board of directors, whenever needed.
9) Draft a unanimous shareholder agreement/declaration restricting powers of the board, if applicable.
10) Register the company in the General Treasury of the Social Security.
11) Register in the Census of entrepreneurs, professionals and retainers or in the Special regime of Self-Employed Workers (RETA).
12) Obtain a Tax Identification Number at the Tax Agency (AEAT).
13) Legalisation of the guestbook/ Electronic certificates.
14) Obtain a license according to the activity
15) Design of employment contracts.
16) Search for financing.
17) Obtain the physical site or the official web domain.
Our firm has established a relationship with experts in the above business law requirements and will coordinate the work with completion included in the quoted project budget.
This guide is intended as general information only. For legal advice and assistance with your business needs, please contact our Spanish firm, Suárez de Vivero.
4. Payroll and Benefits Providers
In Spain, the vast majority of employers outsource payroll and benefit responsibilities to third party companies. This reduces the administrative burden faced by the company by outsourcing payroll deductions and benefit administration to qualified companies who specialise in these areas.
We would be happy offer you our payroll services in order to fit your business’s requirements. We can provide a customised quotation to offer a payroll service according to your company’s needs.
CONCLUSION
We are pleased to offer our services for all of the required work identified above and assist your organisation to open in Spain.
Depending on the amount of work needed we will be happy to offer you a closed budget that suits all your needs. If needed, we can also work on an hourly basis offering you a blended rate of €270 per hour in addition to any required disbursements and tax.
