The now famous adage Spain is different is one of those set phrases that we say to tourists and foreign visitors and it is not unusual for those of us who work in global human resources and employment relations environments to also offer these explanations to our counterparts/clients abroad who have an interest (actual or potential) in Spain.

There is very often a contrast between the way business is done in the country of origin or by comparison with its activities in a neighboring country. However, in the universe in which, also in relation to employment relations, Spain is unique, we would like to draw attention to issues that frequently concern foreign businesses (and which may even surprise a consummate Spaniard):

  1. Registering a foreign company with the Social Security system, although perfectly possible, can be difficult, because the Social Security General Treasury obliges foreign companies to have a representative in Spain, even in those cases in which there is no branch, subsidiary or workplace.
  2. Registering Spanish or EU workers is easy. Registering employees from outside the EU is also easy, provided authorization has been obtained beforehand for the employee to provide services in Spain. The processing of this authorization varies according to the type of company involved and the duties that the employee will be performing.
  3. Hiring conditions in Spain, in general, do not overly differ from those in other EU countries and even share similarities with some countries overseas. However, some specialties attract the attention of the heads of human resources and employment relations, for example:
    • Even if the company has just been created in Spain, it is highly likely that a collective labor agreement will already be applicable to it—with a wider scope than a company agreement. In 2016 approximately 1,600 collective labor agreements were signed, and up to April 2017, 230 had already been registered. One of them (with all its conditions) will be binding on the company.
    • In other countries temporary contracts only require a clear agreement on the term of the contract. In Spain, with temporary contracts, an express reason must be given in the contract itself, and a term cannot be agreed unless it is associated with a specific, temporary need.
    • Although it may seem inherent in an employment relationship, an exclusivity agreement, in order to be valid, must be adequately compensated by the company.
    • Post-contractual non-competition clauses must be adequately compensated according to the restrictions imposed on the employee after his/her contract has terminated. Contrary to common law jurisdictions, neither the company nor the employee may unilaterally revoke the non-competition clause, which may only be eliminated by mutual agreement.
    • As regards variable remuneration, attention should be paid in particular to communicating the objectives that employees are expected to meet and providing information on the levels of achievement of such objectives and the various scenarios that may affect payment of incentives. We have already analyzed in the blog specific cases in which variable remuneration must be paid and in which the policies in other jurisdictions usually establish the opposite.
    • When it comes to terminating employment contracts, employers need to observe the maximum thresholds to carry out collective dismissals and the mandatory consultation procedures required to carry them out, where necessary.

The list does not end here and these are just some of the aspects that may be more complex (and even perplexing) for a foreign company or for a head of human resources who reports outside Spain and that, if known in advance, will enable anyone who comes to Spain to be prepared and to see that we really are different when it comes to employment relations.

Felipe Ochoa

Garrigues Labor and Employment Law Department