As your company grows, you may need to hire independent contractors to help with specialized projects. Independent contractors based in Spain can offer the expertise and skills you need to reach your goals.
Hiring independent contractors in Spain
Before you begin the hiring process, you must understand this worker type, how to classify employees and independent contractors, and other legal responsibilities.
Independent contractors vs. employees
The National Workers’ Statute, or Estatuto de los trabajadores, establishes the designations for different types of workers in Spain. The law presumes an employment relationship where an individual provides services to a company on an ongoing basis. However, a worker may be considered an independent contractor if the individual is not dependent on the employer, is not under the supervision or control of the employer, and is generally free to arrange their work and services according to their own needs, schedule, and methods. There are additional factors that courts examine when determining whether a worker is an employee or an independent contractor, so make sure to research these before hiring independent contractors in Spain.
Penalties for misclassification
Proper classification is essential when working with independent contractors. If you misclassify an employee as a contractor, your company could be held liable for all benefits payments owed for the duration of their service, including severance pay, social security contributions, social benefits, and withholding tax. You also risk high fines, lawsuits, and other penalties if you mistakenly treat an employee as a contractor.
How to hire independent contractors in Spain
As you prepare for the independent contractor hiring process, keep these 3 steps in mind.
1. Carefully conduct interviews.
Interviews with potential employees have a personal element; however, independent contractors are not part of your company or its culture. Keep in mind that you’re conducting a business-to-business transaction. Interviews should focus on the contractor’s skill set, industry knowledge, certifications, and project-specific experience.
2. Create a service agreement.
Though there’s no legal requirement to create a written agreement covering the service terms with a contractor, the best practice is to do so. Make sure to include the following details:
- Pay rates and arrangements
- Services the contractor will provide
- Length of the contract
- Termination conditions
3. Introduce necessities.
While extensive training should not be necessary for a contractor role, you may need to introduce some key necessities for project completion. Make sure to provide the contractor with essential points of contact and discuss any company-specific systems and workflows.
How to pay independent contractors in Spain
Independent contractors are not on payroll. Most companies will pay a lump sum for completing the specified project or for hitting certain milestones.
Companies do not generally need to cover any tax contributions or benefits for independent contractors, but you must meet payment schedules and rates set in the service agreement.
Terminating independent contractors
Most contractors work on a project-by-project basis and have a set duration of service. As a result, termination of service is usually straightforward.
However, it’s wise to establish protocols in case you need to end a contractor’s service unexpectedly. Take time to outline termination and extension conditions in your service agreement so both parties understand the process clearly.
Turn to G-P when hiring independent contractors in Spain.
As a part of our #1 suite of global employment products, G-P Meridian Contractor™ allows companies to hire and pay global contractors faster, with self-service workflows and a wide set of flexible payment options. Whether you’re hiring employees or contractors, our platform streamlines the process with a single solution for your global workforce.
Contact us to learn more.