Employment aspects of foreign investment in Spain

Every foreign investor who is to create a company in Spain should get to know the basic employment principles imposed by our employment normative regulation.

Firstly, if the investor intends to stay or work in Spain, to begin the procedures for the opening of a company, or to work in our country, he should take into account what is put forward in our Foreign Law, regarding the opening, continuance of residence and the activity exercise in Spain.

On the other hand, once obtained the permission or authorization required, the investor should get to know the steps that he is to follow for the opening of a workplace establishment in Spain, just like the principle obligations imposed on companies by the Spanish employment law for the development of an activity.

With the objective, we move on to develop in various sections the employment aspects that any businessman or woman should get to know when exercising in Spain an activity, like what the obligatory documentation that a company should hold, what are the procedures when hiring employees and of the companies in regards to social security, what types of contracts should be employed in regards to employees of certain activities, what bonuses are required in current contracts, what are the quotas that should be paid for social security, when and how should the employee’s wages be liquidated, the amount determined, and the payment periods, what is the applicable norm concerning security and health.

With general character, we refer to the applicable norm for employees who work for a company, excluding for the time being, freelance workers, who abide by the special regime of autonomous workers, where there exist special norms concerning valuation and assistance, however, we will refer to this briefly at the end of this document.

We do not review social security (health assistance, temporary incapacity, permanent incapacity, unemployment, maternity, pensions, etc) as they require an individual study.

The foreigner who wants to enter Spain should do so via effective means, with a passport or travel document which certifies his identity and demonstrates means by which he or she could live during their time in Spain.

Different situations of foreign nationals in Spain:

• Permanence – of a period of no more than 90 days, the permanence can be extended for a further 90 days
• Temporary residence — authorization to remain in Spain between 90 days and 5, authorizations inferior to 5 years can be extended
• Permanent residence — authorizes indefinite permanent residence in Spain and is also authorized equal working conditions to that of the Spanish. It is obtained after a period of temporary continuance residence of 5 years
• Special cases: Stateless individuals or refugees, underage children, family reunification, etc.

The foreigners should access employment through one of the various routes:

• Contingent system set up by the government
• Free access system through an individualized petition
• The single permanent regulation process
• Awarding of residence permit through humanitarian motives, exceptional circumstances or unofficial detention
• Family reunification
• Bilateral agreements between countries.

When the legal requirements are fulfilled, the individuals have a right to a remunerated activity, as workers or freelancers, just as well as accessing the social security system. The residents in Spain can access equally the conditions that nationals of the member states of the European Union when accessing public organisms such as employment.

Administrative authorization: It will be necessary for the realization of economic activities as a freelancer of business or industrial character, etc unifying the requirements that the current legislation requires from nationals for the opening and functioning of the projected activity.

Work permit: Authorization to carry out in Spain working activities for an establishment. The permit will have a duration of less than 5 years and will be limited to a certain territory, sector or activity. It can be renewed, after the first concession, and the work permits will be awarded without any geographical, sector or activity type limitation. After 5 years of the first work permit, you can renew and the new work permit will have permanent character.

The types of permits have a limited validity, they extend in regards to the period of validity, the activity that can be carried out, the professions that are to be exercised and the geographic ambit:

• Initial authorization of residence: maximum duration of one year
• Authorization of renewed residence: duration two years
• Authorization of permanent residence: indefinite duration and it is conceded after 5 years of legal residence or in special cases such as those of civil servants in Spain, or having been born in Spain, or having Spanish origin amongst others.

The law foresees special regimes; of stay and residence, for students, and temporary workers.

There exist obligations of obtaining work permits, for personal conditions just as those for the type of activity that is to be realized, as special authorizations to work to realize professional internships.

There is no need for a work permit if the foreigner is in a situation of permanent residence, the citizens of the European Union and those of Austria, Finland, Iceland, Sweden and Liechtenstein. The workers who contract a foreign worker should solicit and obtain previous permission from the Ministry of Work and Social Issues.

The person, who intends to work in Spain, if he is to exercise a profession that requires specific qualifications or membership of an association, should obtain recognition of his title or membership of the association recognition.

The Law of foreign nationals establishes that foreign nationals will enjoy the rights and liberties established in the constitution which stems from the international treaties found in Law 4/2000 which were modified by Law 8/2000 and in the law that regulates each one respectively.

The right to join a union freely, or join a professional organization under the same rights as Spanish employees is limited to the possession of a right to stay and reside in Spain & the right to strike is limited to possessing a work permit. The foreigners who satisfy the stated requirements will also have a right to the social security system:

• Sanitary assistance: public sanitary assistance for all foreigners who are currently in Spain and fall ill with a serious illness or suffer accidents, foreign nationals who are pregnant and those registered in their municipality who are under the age of 18.
• Social Security & Social Services: whatever the administrative situation, foreign nationals will have access to basic social services and assistance. If they are residents they will also be able to access specific social services
• Non-contributory assistance: foreign nationals have a right, if they are legal residents in the territory of Spain for a minimum of two years in each case, to incapacity, retirement and child support under the same conditions as Spanish nationals.

The use of services by foreign nationals without having obtained previously a work permit or its renewal and the exercise of any lucrative activity in Spain of their account, when not having obtained or renewed their work permit can constitute serious infringements of the social order, punished with a fine ranging from 3.005.07 up to 90.151,82 Euros, the amount depends on how much should have been deposited to social security, from the beginning of the activity carried out by the foreign national, up to the last day which this activity was rendered, or in a different context the expulsion of the foreigner, in carrying out civil, commercial, tax, finance procedures and proceeds to a communication to the competent employment authority for the opening of a centre of work about their activity after alterations, extension or change of importance in respect to security and hygiene effects concerning the specified work satisfying the general social legislation.

In cases where the data cannot be calculated the infringement will constitute a minor infringement and in regards to companies who are classified as dangerous, unhealthy or harmful due to the elements, processes or materials they deal with, the infringement will constitute a serious infringement.

Period: 30 days after the opening or renewal

Format: for a quadruple application form the official form indicates: identification of the company, location, type and staff, production data or storage… if the activity to be realized is unhealthy, dangerous or harmful the technical project should be accompanied and so should the descriptive communication with the characteristics of the activity. In cases of construction, a plan of security and health should be presented.

There should be a realization before the commencement of activity of all-natural or judicial persons, public or private although the activity need not be profit-making, in which people work who are included in the ambit of the general regime of social security in the forms officially established. It will be carried out in the provincial board of the general treasury of the social security (TGSS) or administrations of the same in the ambit in which the business owner’s address is found. Each owner will be assigned a code for a valuation account.

It should specify who will cover the professional contingencies, just as temporary incapacity, derived from the common contingencies. The variations of data should be communicated within the 6 days of which they are produced. If the entity that will cover the professional contingencies or economic provisions in regards to temporary incapacity is changed then the period for communication will be 10 days before the change is realized.

The workers should be affiliated, with those that fall within the ambit of the general or special regime, which have not been affiliated before in the social security system, with anteriority of the commencement of services, in which it will not be possible in any case that this be carried out before the previous 60 natural days of that foreseen for the commencement.

It will be carried out preferably at the TGSS or competent administration authority of the province where the business is located. A card of Social Security will be administered with a membership number which will be the same for the whole working period of the individual and within the whole system. The procedure will be carried out by the business owner or in the absence of the worker directly.

A choice will be given between INSS work accident benefit or professional illness. In the case of the work accident benefit, a membership document will be formed. In regards to sanitary assistance, IT and recuperated assistance, these services can also be allocated by the company.

Enrolment Book

From the 1^st of January 2002, the obligation of a business owner to maintain a book of enrolment of the company was abolished.

Visit Book

In every work centre, there should be a visit book of work inspection & social security diligently kept up to date, inclusively for freelance workers and title holders of the centres of work or establishment even if there are no employees employed in that establishment.

It will be facilitated by the head of work inspection and Social Security where the work centre is located and there will be a disposition of work inspectors and employment inspectors. These will be conserved for 5 years after the last diligent enquiry.

Such dispositions form part of the Spanish employment aspects regarding Foreign investment, this article intends to lead the reader to understand and gain an awareness of some of the main characteristics that he or she will have to fulfil to fulfil the Spanish regulations regarding labour aspects of foreign investment.

For additional information regarding foreign investment in Spain,