Understanding Spanish Labor Laws and Payroll

Posted on Oct 30, 2024 in Law & Jurisprudence

1. Difference Between Wages and Non-Wage Perceptions

Wages are payments subject to social security contributions. Non-wage perceptions, such as certain reimbursements or benefits, are not considered wages and are excluded from these contributions. Some non-wage perceptions are only reported when they exceed established limits.

2. Overtime Categories for Social Security Contributions

Overtime hours generate additional social security contributions beyond the standard Professional Contingency Base Contribution (BCCP). Two types of overtime are distinguished:

• Common Overtime: Extra hours worked due to increased orders, peak production periods, unplanned absences, shift changes, maintenance, etc.
• Force Majeure Overtime: Extra hours worked to prevent or repair damages or address other extraordinary and urgent situations. Contributions for this type of overtime are calculated using reduced rates (12% for the employer, 2% for the employee).

3. The Minimum Wage (SMI)

The Spanish Constitution guarantees every worker sufficient remuneration to meet their needs and those of their family. The government sets the annual Minimum Interprofessional Wage (SMI), the minimum pay for a standard 40-hour workweek. This wage is determined after consultations with unions and business associations, considering factors like the Consumer Price Index (CPI) and the national economic situation. The SMI is non-seizable except for specific situations like alimony payments for spouse or children.

4. Working During Holidays

No. The right to paid holidays is irrevocable, and employers must grant a minimum of 30 calendar days. This period cannot be shortened or compensated financially. The Constitutional Court has upheld the dismissal of a worker who took another job during their holiday period. This ruling affirms workers’ freedom to pursue other activities, provided there’s no full-time commitment, exclusivity pact, or unfair competition with their primary employer.

5. The Wage Guarantee Fund (FOGASA)

FOGASA is an autonomous body under the Ministry of Labor and Immigration that partially guarantees unpaid wages and severance pay in cases of insolvency, bankruptcy, or suspension of the employment relationship. FOGASA covers:

• Unpaid Wages: Up to three times the daily SMI, including prorated extra payments, for a maximum of 150 days.
• Severance Pay: Up to 30 days’ salary per year of service, capped at one year’s worth of salary, as determined by a judicial or administrative decision.

FOGASA is financed by employer contributions based on worker social security contributions.

6. Shift Work

Shift work is an organizational system where workers successively occupy the same positions according to a continuous or discontinuous schedule, requiring employees to work at different times over a given period. In companies with continuous 24-hour operations, shift rotation must be implemented to prevent any worker from being on the night shift for more than two consecutive weeks, except for voluntary assignments. Workers pursuing academic or professional qualifications have preferential rights to choose shifts.

7. Leave Entitlements (Article 37.3 of the Workers’ Statute)

8. Payroll Deductions

Several deductions are made from an employee’s gross salary (total accrued) to arrive at the net amount received. The two primary deductions are:

• Social Security contributions
• Personal income tax (IRPF) withholding

Other deductions can include:

• Value of in-kind benefits
• Advances
• Other deductions

9. Calculation of Contribution Bases: BCCC vs. BCCP

The Common Contingency Contribution Base (BCCC) excludes overtime pay, while the Professional Contingency Contribution Base (BCCP) includes it. The BCCP is calculated by adding the overtime amount to the BCCC.

10. Salary in Kind

Yes, the payment is correct. In-kind payments are legally capped at 30% of the total salary (€604.50 in this case), and €500 is within this limit.

11. Salary Advances

Yes, Monica can request an advance. The maximum advance allowed is 10% of her salary. The advanced amount will be deducted from her next paycheck.

12. Vacation Days Calculation

James is entitled to a prorated amount of vacation days based on his employment period. The calculation is as follows:
213 days / 365 days * 30 days = 17.51 days
Therefore, James is entitled to 17.51 vacation days.

13. Wage and Non-Wage Perceptions

14. Rest Periods According to Labor Law