Temporary employment agencies as a labour management tool
A temporary employment agency is legally defined as a company whose main activity consists of making workers directly hired available to another user company on a temporary basis. This concept, regulated by Law 14/1994 and Royal Decree 417/2015, responds to the demand for flexibility on the part of companies, allowing them to cover specific staffing needs, manage projects of limited duration and access specialised profiles without directly assuming the employment relationship.
The operation of the temporary employment agency means that the company assumes all labour and social security obligations with respect to the assigned worker, including the management of payroll, contributions, compensation and the protection of labour rights. For its part, the user company benefits from the outsourcing of personnel management and the possibility of adjusting its workforce to the real needs of the business.
It is important to distinguish between a temporary employment agency and a recruitment agency. While the temporary employment agency hires and temporarily assigns the worker to the user company, the recruitment agency acts merely as an intermediary, connecting candidates with employers without assuming the employment relationship or the obligations arising from it.
Legal and administrative requirements for setting up a temporary employment agency
The establishment of a temporary employment agency in Spain is subject to rigorous regulatory requirements, aimed at guaranteeing financial solvency, professionalism and the protection of temporary workers. The administrative authorisation to operate as a temporary employment agency is unique, valid throughout the national territory and granted without any time limit. However, in order to obtain this authorisation, a series of legal and organisational conditions must be met.
One of the most important aspects is the need to have an adequate organisational structure in place to enable the company to fulfil its obligations as an employer. In making this assessment, the labour authority takes into account factors such as the size and equipment of the workplaces, the number and professional qualifications of permanent employees, job stability and the technological systems used for the selection and training of workers.
The regulations require that the company have at least three employees with permanent contracts at the start of its activity, a requirement that must be maintained throughout the term of the authorisation. When the temporary employment agency exceeds one thousand temporary workers hired in the previous year, it must prove that it has a minimum of twelve permanent employees for every thousand temporary workers, or sixty if it exceeds five thousand.
Compliance with tax and social security obligations is another essential requirement. The company must be up to date with its tax obligations and must not have been penalised with suspension of activity on two or more occasions.
The company name must expressly include the terms “temporary employment agency” or the abbreviation “ETT”, and its exclusive activity must be reflected in its articles of association and in its registration in the Commercial Register, although it may be compatible with the activity of an employment agency in accordance with current regulations.
Financial guarantee and protection of labour rights
One of the pillars of the regulation of temporary employment agencies is the requirement to provide a financial guarantee to cover any wage debts, compensation and social security contributions. During the first year of operation, the amount of the guarantee must be twenty-five times the current minimum interprofessional wage calculated on an annual basis. This guarantee may be provided in the form of a cash deposit or government securities, a bank guarantee, a joint and several guarantee or an insurance policy.
The guarantee must be updated annually until it reaches 10% of the previous year’s payroll, without being less than twenty-five times the minimum wage. In the event of enforcement, the guarantee must be replaced within a maximum period of fifteen days. This mechanism strengthens the protection of temporary workers and ensures the solvency of the company in the event of possible breaches.
Administrative procedure and information obligations
Obtaining administrative authorisation requires the submission of comprehensive documentation: sufficient legal power of attorney, deed of incorporation and articles of association, certificate of registration in the Commercial Register, certificates from the Tax Agency and the General Treasury of the Social Security, a copy of the financial guarantee deposit receipt and a detailed report on the organisational structure.
Once authorised, the temporary employment agency is obliged to periodically send the labour authority a list of the contracts of employment entered into, as well as data relating to the total payroll for the immediately preceding financial year. Compliance with these reporting obligations is essential for transparency and administrative control of the sector.
Business strategies and keys to effective management
The establishment and management of a temporary employment agency requires strategic planning aimed at optimising resources and regulatory compliance. Defining a solid organisational structure, selecting the most appropriate financial guarantee model and implementing advanced technological systems for the selection and training of workers are key elements for business success.
Sector specialisation, investment in training, and the development of efficient selection processes can make all the difference in an increasingly competitive market. The ability to adapt to the needs of user companies and the guarantee of labour rights protection are determining factors for the consolidation and expansion of the business.
Market outlook and current challenges
The temporary employment market in Spain has a significant turnover, managing millions of contracts annually and generating opportunities for both large operators and smaller companies. However, competition is intense and the public perception of temporary employment requires temporary employment agencies to maintain high standards of quality and transparency.
The recruitment of national workers may be limited by their preference for stable jobs, while attracting foreign workers, especially from other European Union countries, may represent a significant opportunity, although this is conditioned by language and cultural barriers.
The taxation of temporary employment agencies is governed by the general corporate tax regime, with no specific incentives, although they may benefit from regional regimes applicable to new companies or specific sectors.
Benefits of operating as a temporary employment agency and legal certainty
The establishment of a temporary employment agency allows companies to access the flexibility necessary to manage peaks in demand, specialise in talent selection and reduce occupational and administrative risks. The regulatory framework provides legal certainty, promotes business planning and protects the rights of temporary workers.
At Belzuz Abogados, S.L.P., Madrid, Commercial Law Department, we offer comprehensive advice on the incorporation and management of temporary employment agencies, helping companies to comply with all regulatory requirements and maximise the opportunities offered by the temporary employment market in Spain.
Conclusion
The establishment and operation of a temporary employment agency in Spain represents a strategic opportunity for companies seeking flexibility, specialisation and legal certainty in personnel management. Strict compliance with legal requirements and the adoption of an efficient organisational structure are essential for the success and sustainability of the business.
In a business environment marked by competitiveness and innovation, having the support of experts in commercial and labour law is essential to ensure legal certainty and take full advantage of the sector’s benefits. The Commercial Law Department at Belzuz Abogados, S.L.P. Madrid is at your disposal to advise you on all stages of the process of setting up and managing a temporary employment agency, ensuring that your company complies with regulations and benefits from all the opportunities offered by the Spanish market.