EMPLOYMENT CONTRACT (contrato de trabajo)
Workers in Spain enjoy a strict protection of their rights, which are enshrined in minute detail in their contracts. It is advisable that those seeking work make sure they are provided with a contract that correctly specifies their job description, rights and responsibilities.
To legally work in Spain you must either be autonomous or hold a contract. Work contracts are typically in Spanish, it is to your advantage to have it translated if your understanding of Castilian is shaky.
THERE ARE TWO MAIN CONTRACTS:
A short term contract stipulates the contracted period, they can vary from three, six, nine months or twelve months depending upon the nature of the job. Infrequently offered are indefinite term contracts which have greater workers’ rights and are usually extended after an emplloyee has successfully held several short term contracts.
Many contracts accommodate a siesta period between 14:00 and 17:00 in the afternoon. The Work Ministry of each region publishes the “convenios”, guidelines that define the established legislation applicable to each type of employment.
On many one-year contracts, there are 14 or 15 monthly payments with extra pays at Easter and Christmas and sometimes for the month of August. All contracts stipulate the number of paid holidays.
At the termination of a contract, depending upon the length of employment, employees are generally granted a severance payment, a “finiquito”, which is equivalent to the wages for 45 days work per employment year.
In the case of wrongful dismissal, employees are entitled to present a demand for conciliation within 20 days, but obviously the sooner presented, the better. This is a prejudicial process, reliant on an agreement between the two parties. If no agreement is reached, you may place a suit before the Labour Court (Juzgado de lo Social). If the court finds in your favour, you will receive 45 days compensation for every year of your employment. If you remain unsatisfied, you have five days to file for recourse.
WORKING HOURS AND HOLIDAYS
The standard working week is 40 hours and overtime can go up to 43 hours. The normal working day is split in half and includes a two or three hour afternoon siesta and a later finishing time. In summer, working hours may change. Although not tremendously enforced, employees are entitled to a rest break after 4 to 6 hours in accordance with the established agreement of their profession.
In Spain, overtime is not compulsory and can never exceed 80 hours a year. Overtime should be paid at normal rate plus a minimum of 75% of normal hourly rate. Time off may be given in lieu of overtime but there must be a written agreement beforehand.
Employees are entitled to a minimum of 2 and a half days off each month plus bank holidays. A full time employee is entitled to one month’s paid annual holiday (30 days). There are 14 legal paid holidays a year: 10 nationwide, 2 autonomous (regional) and 2 local.
When a holiday falls on a weekend, another day is not usually granted unless the number of public holidays that year falls below a certain number. It is advisable to check with your employer what the allowances are in your workplace.
COST OF LIVING & QUALITY OF LIFE
If you open your first wage packet and feel slightly aggrieved, bear in mind that while wages in Spain tend to be lower than those earned in the UK, living costs are lower and the general standard of living is higher. Spain does enforce a minimum wage, which from July 2004 was set at 17.10€ per day, or 513€ per month.
As a contracted employee, your employer deducts the corresponding taxes and Social Security contributions and pays them directly to the official offices. You should receive monthly documentation of these payments.
Minimum deductions come to around 8.4%, which breaks down to 2% IRPF (tax, which is proportional to salary with a limit of 45%) and 6.4% Social Security contributions. Fringe benefits for contracted employees include health coverage under social security, workmen’s compensation, unemployment and retirement.
A complete listing of offices is online at: www2.inem.es/general/dirinte/ asp/dirinte.asp?proceso=provincia&id=29 or www.inem.es
Spanish confederation of the small and medium enterprises
Confederación Española de la Pequeña y Mediana Empresa (CEPYME)
tel_ 954 488 900
Confederación de empresarios de Málaga
tel_ 952 060 623
Comisiones Obreras CCOO
tel_ 952 226 600
SETTING UP A BUSINESS
When starting a business, it is important that the company is formed correctly right from the start. There are many kinds of business: limited and unlimited companies, joint ventures, workers’ partnerships, branches, etc. We recommend that you get advice from a good lawyer or an established gestor. As in the UK, the type of company that you establish, will determine its liability.
Step one is to visit the local police station and apply for a NIE number (fiscal identity number for foreigners). As part of the process of starting up a business you also have to register at the local town hall for a Licencia de Apertura – an opening licence. This registers your business in the local area, defines what it is and how it trades.
You are generally required to submit a map of your business location, a photograph of the exterior and a floor plan. Each town hall has different requirements; there are guidelines to be followed for each kind of business.
You also have to register with the Spanish tax authorities (Agencia Tributaria) in order to pay the appropriate tax on your business activities. The next stage is to register for social security payments – income tax style contributions to the state allowing you to participate in workers’ benefits: Spanish health system and Spanish state pension, etc. Currently, retirement benefits are based upon the last 15 years of employment, but reforms are in the works.
All of this process is best organised through a good lawyer or gestor who should be able to offer you a complete package. You may require bilingual support to help you fill in the forms, etc. It is essential to employ a Spanish accountant to ensure you fully comply with all the legalities and serve as a consultant assisting you with your initial business plan.
Having taken care of the legal aspects, you need to consider the right location and property. This is key in starting any new business and you need to undertake a careful evaluation of space requirements, set-up costs, competitors, ease of access and customer flow etc.
Whether to buy or rent in the early stages of a business is a difficult call to make. There are advantages and disadvantages both of the economic kind. It can be risky at the start, therefore consider in the early stages using the facilities of a business centre that will be able to offer you various options from virtual offices to short-term serviced offices.
MAKING A LIVING IN SPAIN
Making a Living in Spain, written by Anne Hall, was published in April 2005 by UK publisher, Survival Books, publishers of a vast range of essential reading for those who plan to reside abroad. Anne Hall’s book contains comprehensive straightforward advice about starting a business, being self-employed and getting a job in Spain. It leads you through the seemingly endless Spanish bureaucracy, discusses how to finance your business and prepares you for the unexpected cultural differences which may affect you.
Covering business and job opportunities in the main cities and popular coastal areas, the book tells the stories of individuals and businesses all over Spain. These diverse and informative experiences help readers to avoid some of the more common pitfalls of doing business in Spain.
Making a Living in Spain is available in all good bookshops in the UK, in Bookworld España in Spain, via www.amazon.co.uk or direct from the publisher, www.survivalbooks.net.
THE MOST POPULAR POSSIBILITIES ARE:
- Empresa individual – To be a sole trader you need a NIE but be aware that in sole proprietorship, your liability for debts is unlimited as you are personally liable for your business’ debts.
- Sociedad Limitada (S.L.) – Limited liability company. The minimum capital requirements are 3,005.06€ to be placed in a business bank account. Although many people withdraw the funds when the registration process is finished, legally these funds should remain in the bank. Partners are not personally liable for company’s debts; their liability is limited to their investment in the company. Only one share holder is needed; however there is no limit on the number of shareholders. The administrator holds the financial responsibility.
- Sociedad Anonima (S.A.) – Stock Corporation. Minimum share capital is 60,101.21€. As a large company with registered shareholders, the shareholders are not personally liable for corporate debts; they are only liable to the extent of their contribution to the corporation. The administrator holds the financial responsibility.
OPENING A BANK ACCOUNT
Having a Spanish bank account is very convenient as many of your household bills can be paid by direct debit from the account and most banks offer debit cards which allow you to shop and pay directly from your account. Generally, most Spanish banks supply internet banking, allowing clients 24 hour a day access to their accounts.
While some banks offer extended opening hours, in the main you will find that they operate between the hours of 8:00 and 14:00 and do not re-open until the next day.
Saving accounts are available, but you must specifically ask to open one. Interest is at an all time low and some savings banks are offering only 1% interest. Banks are required to ask non-resident account holders to sign a document biannually affirming their non-resident status.
There are two types of banks in Spain: savings banks and regular banks. Savings banks do not have shareholders and invest in social and cultural projects. There is a nationwide network of savings banks recognisable by the sign saying Caja de Ahorros.
To open an account as a non-resident you must present a current passport. To open an account as a resident you must present your registry certificate. The bank staff will do the paperwork for you and the process is speedy.
While cheques come with the basic account, the cuenta corriente, they are very infrequently used in Spain, as most people prefer cash or plastic. If you decide that you feel more comfortable using cheques, use the same precautions you would at home: Treat the cheques like cash. After filling in figures include a horizontal line filling up the blank space; if you make a cheque out to cash, al portador, add two parallel lines horizontally across the cheque and between these parallel lines write “y cia”. When you do this, it means the cheque will have to be deposited into an account and will be traceable.
When you open the account, you will be given a temporary chequebook and within about ten days, your personalised chequebook will arrive at the branch. When you see you are running low on cheques, contact the bank, as they will not offer you new cheques unless you ask.
Note: Spaniards do not use cheques and many shopkeepers will be reluctant to accept them.
Your debit card will take about ten days to arrive at your branch. When you pick it up you will be given your PIN number. Ask at the branch what you must do to access your account over the internet. You may use non-Spanish credit and debit cards as long as you have proper ID.
To cancel a direct debit you need to visit your branch and tell them you wish to remove the company from your list of direct debits.
Normally they charge you a small fee for this service. Also directly contact the business and cancel their service.
Many bills can be paid by direct debit: utilities such as electricity, water and telephone, amenities including satellite television, insurance, as well as all town hall bills, circulation and property tax.
Your debit card gives you access at all connected ATM machines that dispense cash twenty-four hours a day. Using your bank’s cash point will incur no fees. Fees vary when using cajeros automáticos from a bank that did not issue the card.
Ask your bank manager to give you a print out of all your direct debits and give this list to your new bank of choice. You simply open a new account and add your direct debits, then close your old account.
Most banks and savings banks now offer internet access. You must sign up for this in the office and they will give you your user name and PIN number. Generally there is a second PIN number or a code card used to authorise transactions. Many of the websites are at least partially available in English.