Social security system

All employees working for an employer who has an establishment in Spain must be affiliated to the Spanish Social Security System as must the employer. Registration with the local Social Security Office should take place prior to an employee being hired.

There are several Social Security treaties between Spain and other countries

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Persons subject to Social Security

EU social security regulations are applicable to Spain. When a worker moves from one Member State to another the following basic rules apply:

Workers are subject only to the social security regulations of one Member State. As a general rule, the applicable social security regulations will be those of the country in which the worker performs his activity. If certain requirements are met, the time during which an EU worker contributes to the social security system of another Member State will be computed as a contribution period to his own country’s social security system for the purpose of determining his future benefits from his national social security system. If a worker of an EU country is temporarily transferred by his company to another Member State to perform a job in the latter State on behalf of his company, this worker will remain subject to the social security regulations of the first Member State, provided that the foreseeable duration of the job does not exceed 12 months and he is not sent to replace another employee who has completed the period of time for which he was transferred. This 12-month period can be extended for an additional period of the same duration or, where appropriate, as provided in the bilateral treaties.

Several Social Security treaties between Spain and other countries are in force (principally, most European and South American countries plus Canada, Morocco and the United States).

Social Security contributions

The combined contribution of the employer and the employee is a function of total remuneration, including benefits, paid to the employee.

Employer contributions

Employers must pay their Social Security contributions by the thirtieth day of the month following the month to which the contribution corresponds. Standard rate employer contributions are about 23.6% of the remuneration. There are maximum limits for contributions depending on the category of such employee.

Employee contributions

Employee contributions are accounted for and paid over by the employer on behalf of the employee. The employer deducts the employee contributions from the salaries at source. In the case where foreign employees are paid directly from outside Spain and the employer has no establishment in Spain, then, it is normal to appoint a fiscal representative who becomes responsible for making the payments to the Social Security. Employee contributions are normally about 4.7% of the total salary of the employee, with maximum contributions established depending on the category of the employee.

Employee benefits

Employee contributions are accounted for and paid over by the employer on behalf of the employee. The employer deducts the employee contributions from the salaries at source. In the case where foreign employees are paid directly from outside Spain and the employer has no establishment in Spain, then, it is normal to appoint a fiscal representative who becomes responsible for making the payments to the Social Security. Employee contributions are normally about 4.7% of the total salary of the employee, with maximum contributions established depending on the category of the employee.

Insured persons are the employees and their dependants. Normally the majority of medical expenses are reimbursed by the State and any excess is funded by the insured person or by a mutual insurance scheme (if the insured person has subscribed to such a scheme).

Maternity leave is 16 weeks of which the first six must be taken uninterrupted. There are additional entitlements if prescribed by a medical specialist. The economic allowance is 100% of the daily basis of the Social Security contributions. This is paid directly by the Social Security.

In the case of work related accidents insured employees are entitled to a daily allowance equal to 75% percent of the daily basis of the Social Security contributions during the first twelve months of disability. This allowance may be extended for a further six-month period.

All employees who have contributed to the Social Security System for a minimum of 15 years (two of them during the last 8 years prior to retirement) are entitled to the statutory pension on reaching 65 years of age. The benefit decreases if the employee retires between the ages of 60 and 65. All benefits are a function of the insured’s average basis of the Social Security contributions during the previous years for which contributions have been paid.

The pension provided by the Social Security ranges from 60% of the social security contributions base for employees with 15 years contributions and up to 100% for employees with 35 years contributions.

Early retirement may also be possible on the basis of specific agreements. In these cases, the employer must fund the pension to be paid to the employee until retirement age.

An increasing number of companies, in particular the larger ones, have their own pension schemes, which need to conform to a code of practice issued by the Spanish Fiscal authorities. Subject to certain limits, contributions by both the employer and employees are tax deductible, thus encouraging the formation of company pension schemes. Employees are permitted to opt out of their employer’s pension scheme and set up their own personal scheme. Either the employer or the employees or both contribute to such schemes. Alternatively, either of them may bear the cost. Company pension schemes must be administered by authorised institutions independent of the management of the company.

Employees are entitled to claim unemployment benefit following redundancy. The benefits are paid by the State through the INEM organisation.