The Spanish Government has approved the update to the minimum contribution bases for 2025, which will bring significant changes for both workers and businesses in Spain. This adjustment aims to ensure that Social Security contributions are proportional to actual income, thus strengthening the pension system and adapting to the current economic situation.
Below, we explain the details of these changes and how they will impact both workers and businesses throughout the new year.
What are the main changes?
- Increase in minimum contribution bases
The minimum contribution bases will increase for both employees and self-employed individuals, in order to better reflect workers’ actual income.- Employees: Workers earning the minimum interprofessional salary or similar salaries will see an increase in their contributions, as the minimum contribution base will be adjusted according to their new income. The increase will be applied based on the worker’s professional category and contribution group.
- Self-employed: For self-employed individuals, the changes will mainly affect those contributing based on the minimum base. Those with higher income levels will be able to adjust their base to the new scales set by the Government. While no significant impact is expected for self-employed individuals with lower income, those with larger businesses will need to adapt to the new conditions.
- Review of contributions for common contingencies
This adjustment will not only impact salaries but also contributions for common contingencies, which include sickness, non-work-related accidents, retirement, etc. The new minimum bases will also apply to these areas, increasing contributions for both workers and companies. - Impact on contribution groups
Workers in lower contribution groups (e.g., those receiving the minimum interprofessional salary) will experience an adjustment in their contribution bases, while those in higher groups, such as executives or specialised technicians, will not see significant changes. However, businesses will need to review their salary structures to comply with the new regulations and ensure that contributions are correct.
How will this affect businesses?
The increase in minimum contribution bases will have a direct impact on labour costs for businesses. Here are some of the key implications for organisations:
- Increase in labour costs
The primary impact for businesses will be the increase in labour costs, particularly for those with employees whose salaries are close to the minimum interprofessional salary or within low contribution groups. This adjustment will lead to a greater financial burden, as Social Security contributions will increase. Businesses will need to factor these changes into their 2025 budget, especially if they are already operating with tight labour costs.
This increase in contributions may be more evident in companies employing workers in sectors with lower wages, so it is advisable for these businesses to review their salary items and forecast social security cost increases.
- Review of salary policies
In response to the increase in minimum contribution bases, some companies may consider reviewing their salary policies to avoid additional burdens or discrepancies in costs. In some cases, it may be necessary to adjust employees’ salaries to align them with the new minimum contribution bases. This will not only help balance contributions but also allow businesses to maintain wage competitiveness within their sector.
Additionally, some businesses may choose to offer pay increases to their employees to mitigate the impact of this adjustment, which could have implications for talent retention and employee satisfaction.
- Adaptation of Spanish payroll systems and administrative management
Adapting to this new regulation will require updates to payroll systems and internal administrative procedures. Companies will need to ensure that their payroll systems are configured to reflect the new minimum contribution bases and calculate Social Security contributions accurately.
This adjustment will also involve reviewing internal administrative procedures to avoid errors in the settlement of contributions. Businesses will need to allocate resources and time for these modifications, which could affect their operations in the early months of the year.
- Adjustment of financial plans and profitability forecasts
As the increase in contributions will raise labour costs, businesses will need to adjust their financial plans to account for this impact. It is crucial for companies to analyse how these changes will affect their profitability and competitiveness in the market. Some businesses may be able to pass on some of this increase to the prices of their products or services, while others may need to optimise their processes to minimise the impact on their financial balance.
In summary, these changes will directly affect many companies, and it is crucial to be well-prepared. Each organisation must approach these adjustments proactively, ensuring they have the appropriate guidance to comply with the regulations and manage the implications of these changes efficiently.
At LEIALTA, we offer expert advice to help you adapt to these changes. Contact us to resolve any questions and ensure compliance with the new regulations. Our expert labour team will address all your concerns.
