What does payroll management in Spain involve?

payroll management in spain

Spain is much more than a tourist destination or a country with a quality of life that is world famous. In fact, in business circles it is considered to be an extremely attractive business destination for multinationals, with access to highly qualified professionals, while labour costs remain competitive.

When a foreign company arrives in Spain, one of the many challenges it has to face is management of payroll.

However, due to the great complexity of the regulations, especially with respect to collective agreements, setting up business in Spain may not go as smoothly as it should.

What is payroll management?

Although legislation and regulations are different in each country, no company or business can avoid payroll management. Furthermore, handling it successfully has an enormous influence on the smooth operation of the company.

But what is payroll management exactly? Payroll management involves the calculation and payment of workers’ salaries, administering the different types of leave, payment of Personal Income Tax (IRPF) to Agencia Tributaria (the Spanish tax authority) and of the Social Security contributions applicable to the workers in the company.

When regulating salary and working conditions in Spain, particular account must be taken of collective agreements, which are established between workers’ representatives and companies.

These agreements have a considerable impact, not only on employment regulations, but also on the structure of the payroll. Each type of work is regulated by specific collective agreements, with a particular salary range according to the industry, set monthly or daily working hours, annual holidays… Moreover, these agreements are often applied to specific sectors in certain geographic areas.

If it is a complex matter for companies to produce a payroll, it is certainly not easy for workers to fully understand all the components of their salary.

In fact, a payroll is a financial record compiled by a company showing the salaries of its employees, with their allowances and deductions. It is more than just a piece of paper. A payroll is a document with legal effects that condition law-related aspects of the company, and it is full of compulsory fields for each worker that will be taken into account in the financial records of the company.

In order to calculate and produce a payroll in Spain, first it is important to be familiar with the country’s laws, administered by the Ministry of Employment and Social Security.

Why is payroll management important?

As we have already observed, preparing and managing payroll in Spain means calculating workers’ salaries, withholding the applicable taxes, updating holiday and sickness pay, remaining up to date with the legislation in force…

Offering a good payroll service guarantees a pleasant and harmonious working environment, since employees feel they are well looked after and valued.

It’s not all payrolls

In addition to handling everything related with salaries, account must be taken of Spanish legislation. We refer to those laws that include the key requirements regarding the hiring of employees and which regulate aspects such as the minimum salary, extra hours, annual holidays and the type of employment contract, without forgetting temporary or indefinite layoffs.

It is also necessary to have a knowledge of the tax laws relating to salaries, with relation to which there are obligations incumbent on both the worker and the company.

Note should also be taken of the enforcement of new laws or decrees such as the Royal Decree-Law which outlines the implementation of the Organic Law on Equality in the workplace. This Law stipulates that companies must draw up and apply an Equality Plan by March 2022.

payroll management inspain rosclar

In view of these complex idiosyncrasies, the decision to outsource the payroll management service by hiring a specialist company that will take care of every last detail is an option well worth considering. In this way, companies will not feel so overwhelmed and defenceless when faced by so many regulations.

There are several advantages of outsourcing payroll management in Spain: above all, greater efficiency is achieved by optimising the company’s time, allowing it to focus on its core business without neglecting internal requirements.

ROSCLAR has a wealth of experience with international clients and it has the know-how to successfully handle every aspect of payroll services. And while it is important to have a team of experts who can offer advice on matters of employment and tax, every company is different. Therefore, we offer a personalised service based on quality and total trust: we work side by side with our clients to guarantee that workers – a company’s most valuable assets – will receive the correct salary in accordance with the current tax and employment laws in Spain.