Analysis of Employment Contracts, Payroll, and Legal Frameworks

This assignment analyzes employment contracts, payroll, and relevant legal frameworks. It begins with a scenario involving a new graphic design agency in Barcelona and explores the hiring of an administrative assistant with a disability. The assignment requires an explanation of applicable bonuses, reductions, and the characteristics of an indefinite contract under Spanish law. A sample employment contract is drafted, and a comparison is made with UK employment law. The second part of the assignment focuses on preparing payroll for both the administrative assistant and a visual designer, considering factors like base salary, overtime, bonuses, and deductions. Finally, the assignment calculates severance pay for the administrative assistant, comparing the Spanish and UK approaches to redundancy. The provided solution covers all the aspects of the assignment in detail.

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Accounting and Finance
Student Name
Date

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Question 1
Since 2008, the net worth taxable income for person with disability of less than 65 % was
set to 3,264 Euros. The administrative assistant lies in this bracket as the disability is quantified
to be 37%. The bonus that Mart will get from the government is an annual amount of 3.500
Euros. The government advance bonuses to the employers based on the disability level of the
employee. legislation on hiring person with disabilities has set the bonus to 3.500 for an
employee with a disability below 65% and between 4.100 Euros to 4.700 Euros when the
disability level is equal to or above 65%. Only women and workers above 45 years with a
disability superior or equal to 65% qualifies for a bonus of 4.700 Euros.1
What type of contract would do exposing its main characteristics?
An indefinite contract is deemed as a normal contract and attracts some government
incentives. In particular, since this is the only contract that Marta has issued to the administrative
consultant, then it follows that in the labor law this is a normal and indefinite contract. The
severance pay is an equivalent of 45 days salary for every year that an employee provides
services to the employer and the capping is done up-to a maximum of 42 months salary2. There
are no subsides offered with regard to social security and the government does not offer
additional financial incentives 3.
Prepare an employee contract of a person with disability in relation to Spanish regulation For
persons with disability

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The employment contract:
Language:
The contract is written in English though in ideal situation, it should be drafted in Spanish
Law and Jurisdiction
The employee works in Spain and as a result, Spain labor court laws applies in case there is an
employment related dispute
Expenses for the company
The company will make a social security-contribution of 32.5% of employee gross salary
Salary
The salary payable is subject to withholding tax of 6.4% in addition to Pay as You Earn
(PAYE)
Holidays
You will be entitled to a holiday equivalent to 30days or 23 working days and salary will be
paid normally during this period. In total there are 14 holidays in a year and authorities have
the freedom to transfer them to either Monday or Friday as they may deem it appropriate
Social Security coverage
Amounts contributed for social security purpose by both the employee and the employer
covers the following services:
 Maternity for 16 weeks
 Illness/incapacity, the employer pays salary normally but contribution is reviewed to
60% or 75 % depending on the period that an employee is unwell
Unemployment
The employee is entitled to unemployment payment for a period of 2 years from the
administrations if he/she has worked for 6 years and 1-year payment if worked for 3 years.
Retirement pension
Once you have worked for a period of 30 years, you are entitled to visit the administration and
seek for 100 % payment for your contribution
Other applicable terms as per Spanish labor act and collective agreements.
 The contract is confidential
 You will be expected to work for 40 hours a week excluding the lunch hour

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 Evaluation of performance will be taking place after every 12 months
 Holiday are entitled inline with the applicable laws
 Termination: You will be required to give a notice period of days before leaving the
company. The employer is not entitled to give any notice while terminating an
employee but is required to compensate the employee.
 In case the employer wants to change the working location duties or responsibilities,
this should be done in consultation with the employee and in writing.
Compare the difference in the contract and comparing it to one made in the United Kingdom.
In UK, the employer is expected to give an employee a notice period before terminating his
employment 4. However, in Spain, the employer is at liberty to fire an employee at any time as
long the employee is compensated
The content of information collected from employees in UK is quite detailed such a requirement
to amount of pay and the employee preference on whether to paid once or twice in a month,
which is not the case in Spain4.
UK contracts are drafted mainly in English 4. On the other hand, a Spanish contract is drafted
Spanish and an additional language like English as Spanish is not as popular as English. This
makes it easier for the contract to be understood by a wide-range of people.
Question 2
For the administrative consultant
Step to follow:
 Determine whether there are bonus and reductions based on the employment type and the
general health condition of the employee. Three months seniority has no any financial
impact on the payroll
 A base salary of € 1,500 means that this is the monthly minimum pay

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 Collective bargaining: € 50 is a contribution made to collective bargaining unions to
ensure that employee’s salary is reasonable.
 2 extra-ordinary 6months accrual pay and receives them on 06/30 and 12/31 of each year
for an amount equal to the base salary means that the employer will compensate the
employee with an amount equivalent to the base pay for after every 6 months of working
in the company.
 He has a disability of 37% and is single without children means that the government will
provide a relief of 3,500 Euros to Marta’s payroll every year. This will reduce the cost of
operation for Marta
 Has made two overtime hours that month at a rate of € 15/h. This means that the
employee gross income will go up by € 30 in the current month.
For the Visual Designer
 2 months seniority has no financial impact on the payroll
 The contract being temporary means that there is a fixed employment duration, but no
direct financial impact to the business
 Base salary: € 1,950 represents the monthly payment for the employee
 Collective bargaining: € 100 is the amounts payable to the collective bargaining unions.
 Productivity: € 6 / day means that if the designer exceeds expectation, he/she will be
entitled to a pay rise of € 6 every day
 Accrual payments are received on a monthly basis and as a result, the monthly payroll
has to accommodate this aspect.

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 With a 9-year old son and the wife working and earning, over 1500/year, the visual
designer has no access to reliefs paid to persons with a small baby and non-working
spouse.
The payroll for administrative assistant
Description Amount
s
Salary 1500
overtime 30
1530
Bonus from government
Bonus per month (291.67)
Taxable amount 1,821.67
Tax @ (19%) 346.12
contribution to social
security @ 32.5%
487.5
Total payroll cost 2,309.17
Question3
The severance rate is for 45 days for every year worked.
The number of severance days = 3/2*
45
67.5
Additional vocational days 10
Total number of days 77.5
Assuming that there are 22 days worked every month, the severance pay
will be
Severance pay (67.5/22)
*1500
4,602
Vocational days (10/22)
*1500
682
Overtime 6hs @ 15 90
5,374.09

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The severance pays in the United Kingdom is different compared to the one offered by Spain in
that Spain cater the for redundancy of employees arising from fair contamination of a contract
while UK do not. On the other hand, the severance pay In the UK requires a compensation of 20
days for each year worked while in Spain, 45 days for number of years worked are compensated.

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Reference
1. Spain - Article 27 | European Blind Union [Internet]. Euroblind.org. 2020 [cited 27 March
2020]. Available from: http://www.euroblind.org/convention/article-27/spain#2)
2. Work contracts in Spain - types of employee contracts in Spain [Internet].
Strongabogados.com. 2020 [cited 27 March 2020]. Available from:
https://www.strongabogados.com/work-contracts.php
3. Guide to Employment law in Spain - Spanish Living [Internet]. Spanish Living. 2020 [cited 27
March 2020]. Available from: https://www.spanish-living.com/employment-law-in-spain/
4. Honeyball S, Pearce D. Contract, Employment and the Contract of Employment. Industrial
Law Journal. 2006;35(1):30-55.