High-level advisory for Spain's employment and HR sector

Spain’s employment services sector — comprising temporary employment agencies (ETTs), recruitment firms, HR outsourcing companies and Professional Employer Organisations (PEOs) — concentrates approximately 5,900 active companies and directly employs more than 248,000 Social Security-registered workers, a figure that represents only a fraction of the millions of employees these companies manage on behalf of their clients. With aggregate revenues of €8.5 billion, a five-year survival rate of 47.6% and gross margins of just 3.4%, operators rely on tight control of labour, tax and regulatory costs as the principal lever of profitability. Spain’s 8.0% share of the European market is a position that leading domestic groups maintain by competing against global-scale multinationals.

Spain’s Labour Inspectorate has intensified enforcement campaigns targeting unlawful labour supply, bogus worker cooperatives and misclassified employment relationships, raising the risk significantly for operators without proper legal support. Law 14/1994 on ETTs, the Employment Act (RDL 3/2015), sectoral collective agreements and data protection legislation together create a compliance environment that requires constant monitoring. Pressure on sector margins is further compounded by the rise of digital staffing platforms whose worker classification models are being scrutinised by the courts in the wake of the Rider Law and its evolving interpretations.

At BMC we advise ETTs, selection agencies, BPO firms and PEOs across their full range of legal, employment and tax needs. Our services cover obtaining and renewing administrative authorisations to operate as an ETT, negotiating and applying collective agreements, managing ERTE and ERE processes for both the HR company and its client businesses, running payroll for placed workers, and representing clients before the Labour Inspectorate and in the social jurisdiction courts. We also support international operators in structuring their entry into the Spanish market via the PEO model or through establishing a directly licensed ETT.

Data protection compliance is a critical area in a sector that processes employment and biometric data at scale: professional histories, candidate profiles, health data for occupational risk prevention, and performance metrics. We advise on drafting GDPR-mandated records of processing activities, structuring contracts with client companies as data processors, managing international data transfers within multinational groups, and handling security breach notifications within the 72-hour window required by the supervisory authority. Our integrated employment, legal and compliance approach ensures that HR companies can scale their operations in Spain with full confidence.