Hiring Your First Employee in Spain in 2026: Cost and Steps

Step 1: register as an employer with Social Security

Before hiring anyone, the business, whether a company or a self-employed person, must register as an employer with the General Treasury of Social Security. This is done on form TA.6 or electronically and gives you an employer account code (código de cuenta de cotización), which identifies the business in all its dealings with Social Security. If you have workplaces in several provinces, you will need one code per province.

When registering you choose which mutual insurance society (mutua) will cover workplace accidents and occupational diseases. Businesses are also required to deal with Social Security electronically through the RED System, either directly or through an authorised agent such as an accountancy firm. If you open premises or an office, you must also notify the regional labour authority of the opening of the workplace within 30 days of starting activity.

Step 2: choose the right contract after the labour reform

Since the 2022 labour reform (Royal Decree-law 32/2021), the permanent contract is the general rule and fixed-term contracts may only be used for a specific reason stated in writing. If it is not justified, the contract is deemed permanent. These are the main options:

• Standard permanent contract, full-time or part-time: the default option.
• Permanent seasonal contract (fijo discontinuo): for seasonal work or work that recurs on uncertain dates, with call-ups as set in the collective agreement.
• Fixed-term contract for production reasons: for unforeseeable peaks in activity, up to 6 months (extendable to 12 by sector agreement), or for foreseeable short occasional needs, up to 90 days a year.
• Fixed-term replacement contract: to cover an employee whose job is protected, such as during parental leave or sick leave.
• Training contracts: work-study training (formación en alternancia), combining work and education, and professional practice contracts for graduates within three years of finishing their studies.

Step 3: register the employee and notify the contract

The employee must be registered with Social Security before they start work, never retrospectively; registration can be filed up to 60 days in advance. Working without being registered, even for a single trial day, is a serious offence that the Labour Inspectorate punishes with heavy fines.

The contract must then be notified to the Public Employment Service within 10 days of signing, usually through the Contrat@ application. Ask the employee to complete form 145 so you can calculate their income tax withholding and, if you need one, agree a probation period in writing: at most 6 months for qualified technical staff and 2 months for everyone else, rising to 3 months in businesses with fewer than 25 employees. If a fixed-term contract lasts 6 months or less, probation may not exceed one month unless the collective agreement provides otherwise.

Employer contributions in 2026

The employer contributes on the same base as the employee: monthly pay plus pro-rata extra payments, with a minimum of 1,424.40 euros a month for groups 4 to 7 and a maximum of 5,101.20 euros (Order PJC/297/2026). The employer's rates are:

• Common contingencies: 23.60%.
• Unemployment: 5.50% on permanent contracts and 6.70% on fixed-term contracts.
• Wage Guarantee Fund (FOGASA): 0.20%.
• Vocational training: 0.60%.
• Intergenerational Equity Mechanism (MEI): 0.75%.
• Workplace accidents and occupational diseases: depends on the activity; 1.00% for purely office-based work.
• An additional contribution of 33.62 euros when each fixed-term contract of under 30 days ends, except for replacement contracts and some special schemes.
• If pay exceeds the maximum base, a solidarity contribution on the excess: between 0.96% and 1.22% payable by the employer.

What an employee costs: a full example

Take an administrative assistant on a full-time permanent contract, earning 24,000 euros gross a year in 14 payments (1,714.29 euros each) in an office job. The monthly contribution base is 24,000 / 12 = 2,000 euros.

Monthly employer contributions: common contingencies 472.00 euros, unemployment 110.00, FOGASA 4.00, vocational training 12.00, MEI 15.00 and workplace accidents 20.00. Total: 633.00 euros a month, 7,596 euros a year, 31.65% on top of gross pay. The annual cost of the employee therefore comes to 31,596 euros, about 2,633 euros a month spread over twelve.

And how much does the employee take home? They contribute 130.00 euros a month to Social Security (6.50%) and, if single with no children, would have 13.51% withheld, i.e. 231.60 euros per payment. Their net pay would be 1,352.69 euros in ordinary months and 1,482.69 euros for the extra payments: 19,197.66 euros net a year. Of the 31,596 euros they cost, around 12,400 goes to Social Security and the Tax Agency.

On a fixed-term contract, unemployment rises to 6.70% and the employer's contribution becomes 657.00 euros a month, 288 euros more a year. On top of these figures come other costs: the occupational health and safety service, payroll management, work equipment and any insurance or supplements required by the collective agreement.

Hiring incentives

Royal Decree-law 1/2023 reorganised the national hiring incentives, which are applied as reductions in the employer's contributions. There is no general flat rate for hiring employees; incentives target specific groups and almost always require a permanent contract. Some examples: hiring on a permanent basis a long-term unemployed person, registered for at least 12 of the previous 18 months, earns a reduction of 110 euros a month for three years, or 128 euros if the person is a woman or aged 45 or over. Hiring a person with a disability starts at 375 euros a month (4,500 euros a year) for the life of the contract, with higher amounts for women and people over 45.

To claim them, the business must be up to date with the Tax Agency and Social Security, must not have been excluded for serious offences and, in general, must maintain its headcount. Regional governments, including Madrid, also run their own grant schemes with specific deadlines and requirements. Always check whether the person you are about to hire qualifies before signing, because many incentives are lost once the registration has been made.

Working-time records, health and safety and other duties

Since May 2019 all businesses must record the start and end of each employee's working day and keep those records for four years, available to staff, their representatives and the Labour Inspectorate. At present this can be done on paper or digitally; the Government is processing a royal decree to require a digital system, but as at the date of this guide it has not been published in the Official State Gazette, so keep an eye on its approval. Choosing a reliable digital tool now makes compliance and future adaptation easier.

Occupational health and safety obligations apply from the first employee: a risk assessment of the job, preventive planning, training and information, and offering health monitoring. Most small businesses hire an external prevention service, although the owner may take it on personally in businesses with up to 10 employees, or 25 with a single workplace, if they have the necessary training and the activity is not hazardous.

• Keep a pay register showing average salaries broken down by sex, which is mandatory for all businesses.
• Adopt measures against sexual and sex-based harassment; the usual approach is to approve a protocol.
• Pay contributions every month, by the last day of the following month, and income tax withholdings on the quarterly form 111, plus the annual summary form 190 in January.

The collective agreement: the rulebook for working conditions

Before setting the salary, identify which collective agreement applies to you based on your activity and location: national sector, provincial or regional. The agreement sets the minimum pay for each category, extra payments, annual working hours, holidays, bonuses and often obligations such as accident insurance. You can find it in the register of collective agreements (REGCON) or in the official gazette of your province or region.

If the agreement sets pay below the minimum wage, the minimum wage prevails: 1,221 euros a month in 14 payments in 2026 for full-time work. Placing an employee in the wrong category or agreement is a common mistake that leads to claims for pay differences going back up to a year and surcharges on contributions. If in doubt, working with an accountancy and payroll firm from your first hire usually saves more than it costs.