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Payroll And Social Security

Payroll

Employers are obliged legally to process a payroll which consists of providing monthly payslips to their employees. These give a breakdown of all gross salary payments and deductions, the latter being the employee’s contributions to social security and the withheld personal income tax. The net figure is the amount that the employee should receive not later than 5 days after the end of the month. The signed payslip (nómina) also acts as a receipt of such payment although that is not so important when the amount has been paid by bank transfer.

Social Security

The Spanish Social Security system covers both Spanish nationals and foreigners legally resident and working in Spain. Spanish nationals who do not reside in Spain are also covered under certain circumstances. The protection afforded by the social security system also extends to cover the family of the insured person.

The Spanish Social Security System is divided into a number of different regimes, the 2 most important of which are:

The general regime, or regime for the dependent worker: Monthly payments or contributions to the regime are made by both employer and employee based on a set percentage applied to the employee’s income.

The regime for the self-employed: The worker is responsible for the total amount of contribution. He/she can choose within a range between a maximum and a minimum monthly contribution. This contribution gives no right to unemployment benefit.

In the general regime, both employer and employee contribute, the employer paying the greater share. The employer is also required to comply with all formalities to ensure that workers are covered by the social security system.

Workers are classified into labour categories for the purpose of determining their social security contributions. The contributions that dependent workers and employers pay jointly are higher than those paid by self-employed workers as employees are entitled to unemployment benefit if they lose their jobs. The mandatory unemployment contribution is paid as a percentage of the salary.

Pursuant to social security agreements between Spain and some other countries (including all EU countries and the United States), under certain circumstances expatriates may remain members of the social security system of their country of origin for a limited period (normally 18 months maximum).

Unemployment Benefit

There is a scale that links the time during which contributions are made to the period of time an unemployed worker has the right to receive unemployment benefit. The scale ranges from 2,160 days of contributions which allows 720 days’ unemployment benefit to between 360 and 539 days (12 to 18 months) which allows 120 days’ unemployment benefit. A minimum of 12 months contributions is a basic requisite for entitlement. The effective period for calculating the total contribution of days or months is the 6 years immediately prior to the unemployment.

Transferring Unemployment Benefit

There are two types of unemployment benefit in Spain:

  • Contributory (Prestación por Desempleo)-must have made a minimum of 12 months’ social security contributions.
  • Non-contributory (Subsidio por Desempleo)- available in certain limited cases such as, for example, in the case of having exhausted the contributory unemployment benefit period (e.g. 4 months for 12 months of contributions), your annual earnings in whatever shape or form not being more than 75% of the minimum wage and, at the same time, having family responsibilities.

Both of these benefits may be transferred and received in any EU country with the following requirements and conditions:

You must already have been granted either one of these benefits.

You must be signed on as unemployed and actively looking for work in the Employment Office (INEM) and remain at least 4 weeks at their disposal.

Your moving to another EU country must be for the purposes of looking for work.

The maximum time period for receiving unemployment benefit in this way is 3 months. If you still have not found work after this time you may return to Spain and continue to receive any benefit due to you, or continue to look for work in the other country (in this case the UK), at the same time losing any right you had to continue receiving unemployment benefit.

Applications for the transferral of unemployment benefit to another EU country (Solicitud de Exportación de Prestaciones) should be made in your local Employment Office (INEM). You will also need to apply for an E.303 form (also in the INEM).