Start-up employment adviser: build your team on the right foundations

Employment advisory for start-ups and tech companies in Spain: employment contracts, flexible pay plans, remote working, dismissal management, equity plans, and international hiring.

The problem

Tech start-ups make recurring employment errors that become costly as the company scales: employment contracts that do not protect the company's intellectual property, equity remuneration plans lacking correct employment law provisions, personnel on freelance contracts who are in reality employees, or remote working policies that do not comply with the Distance Working Act. When a funding round's due diligence arrives, these issues come to light and complicate or increase the cost of the transaction.

Our solution

At BMC we advise start-ups and tech companies on employment matters from the first contracts through to international scaling policies. We draft employment contracts with the specific clauses required by the tech sector, advise on the correct structuring of equity and flexible pay plans, and resolve employment disputes at the pace a growing company requires.

Process

How we do it

1

Employment contracts for the tech sector

We draft employment contracts for the typical start-up profiles: developers, product managers, designers, growth specialists, executives, and C-suite. Contracts include tech-sector-specific clauses: assignment of intellectual property rights to the company, confidentiality obligations, reasonable post-contractual non-competition, and compatibility with the company's equity plan.

2

Remote and hybrid working

We advise on compliance with the Distance Working Act: individual remote working agreements, remote working policy, reimbursement of connectivity and equipment costs, home-based risk prevention, and the right to digital disconnection.

3

Flexible pay and equity plans

We design flexible pay plans (meal vouchers, private health insurance, transport, training) to optimise the employee's net cost, and advise on the compatibility of equity plans (stock options, phantom shares) with employment law.

4

International scaling: hiring abroad

For start-ups hiring employees in other countries or seeking to expand internationally, we advise on the available options: employer of record, local subsidiary, independent contractor, and the employment and tax implications of each option in the most common expansion markets.

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Employment law in start-ups: the errors that surface in due diligence

Tech start-ups tend to move fast and deal with employment compliance later. That is understandable, but the errors that accumulate in the early contracts — the CTO who signed as a freelancer when in reality they are an employee, the first employee whose contract does not assign intellectual property to the company, the developers working remotely without a remote working agreement — are precisely what investors find in due diligence, and what delays or increases the cost of the round.

At BMC we advise tech start-ups with the agility their pace demands: correct contracts from the first employee, remote working policies compliant with the law, and equity plans that work from both an employment law and a tax perspective.

Tech employment contracts: the clauses that make the difference

An employment contract for a tech start-up cannot be the generic form used by a hospitality business. The sector-specific clauses — intellectual property assignment, confidentiality, non-competition, compatibility with the equity plan — are the ones that protect the company’s most valuable assets: the code, know-how, and client data.

IP assignment in particular warrants attention: although the law establishes that works created in the context of an employment relationship belong to the employer, the ambiguity about what was created “in the context of the employment relationship” can generate conflicts when the key employee who developed the company’s core product leaves and sets up a competing business. An explicit contract eliminates that ambiguity.

Remote working: complying with a law designed for large companies

The 2021 Distance Working Act was designed with large companies in mind but applies to start-ups from the first regular remote worker. The individual remote working agreement, the cost reimbursement policy, the right to digital disconnection, and the protocol for accidents at the employee’s home are real obligations that many start-ups are unaware of. Implementing them correctly from the outset is easier than correcting them later.

International scaling: beyond Spain

When a Spanish start-up begins hiring employees in other countries — to develop business in local markets, to access specific talent, or to follow an international investor’s requirement for local presence — the options available are several and carry very different implications: employer of record (the fastest and most flexible solution), independent contractor (the most risky if the conditions are those of an employee), or a local subsidiary (the most robust but most costly to establish).

We analyse each start-up’s situation and recommend the most efficient option for each target country.

Contact our specialist tech ecosystem employment advisers for a review of your start-up’s employment position.

FAQ

Frequently asked questions

In a tech start-up, the most important employment clauses are: (1) assignment of intellectual property rights over work produced in the context of the employment relationship (the law already establishes that it belongs to the employer, but being explicit avoids doubt); (2) confidentiality obligations covering know-how, code, client data, and company strategy, both during and after the employment relationship; (3) the post-contractual non-competition clause (valid if it carries financial compensation and a reasonable duration of up to two years); and (4) compatibility with the equity plan (if an option plan is provided, its conditions must be consistent with the employment contract).
Law 10/2021 on distance working applies when an employee works at least 30% of their hours remotely on a regular basis. In that case, the company must: sign a written remote working agreement setting out the means provided, working hours, cost reimbursement, and reversibility conditions; reimburse the employee for connectivity and equipment costs arising from remote working; guarantee the right to digital disconnection; and apply the working time recording obligation to remote work as well. For start-ups operating as fully remote from the outset, implementing these requirements from the first contract is recommended.
Yes, but with implications that must be managed. If the employee habitually works from another country, they may be considered tax resident there, not in Spain, which means the Spanish start-up may need to comply with that country's employment and tax legislation. The employer of record (EOR) model allows the start-up to engage employees in other countries through a local company acting as the formal employer whilst the start-up retains operational control. This is the most common solution for start-ups hiring their first international employees before establishing an overseas subsidiary.
Temporary remote working abroad (for example, an employee working two weeks from Portugal in summer) may be acceptable under Spanish employment law if the employment contract is Spanish and the activity is carried out on an occasional basis. However, for Social Security and tax purposes, the applicable bilateral conventions between Spain and the country of temporary work must be checked to determine whether the stay gives rise to obligations in that country. For stays exceeding 183 days in a year, the employee may become tax resident in the foreign country, with all the implications that entails.
A phantom share plan grants employees the right to receive a cash payment equivalent to the value of a notional number of shares when a specified trigger event occurs (typically a company sale, a funding round at or above a target valuation, or an IPO). Unlike real stock options, phantom shares do not create actual equity or cap table entries — the employee never becomes a shareholder. From an employment law perspective, the phantom payment is deferred remuneration and must be correctly structured in the employment contract or a supplementary incentive plan document. From a tax perspective, the payment is employment income subject to IRPF withholding at the time of receipt, unlike real shares which can benefit from the €12,000 annual exemption for qualifying stock options. BMC advises on the design and documentation of phantom share plans for Spanish start-ups.
Stock options on real shares of a Spanish SL must be documented in the employment contract or a supplementary incentive plan. The Ley de Startups (Ley 28/2022) reformed the tax treatment: the taxable event is deferred from exercise to sale, meaning the employee is only taxed when they actually sell the shares, not when they exercise the option. The annual exemption for qualifying options rises to €50,000 (from €12,000 pre-reform). To qualify for the deferred and exempt treatment, the company must be a certified innovative startup (ENISA certification) or meet specific size and age criteria. Employees must hold shares continuously from exercise to sale. Correct documentation of the plan, exercise notice, and share transfer at exercise is critical to preserve the tax benefit.

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