If you run a small business in Spain, you probably already know that managing a business involves much more than just selling a good product or service. One of the biggest challenges (and headaches) is labor management, from poorly written contracts to Social Security issues. Mistakes in labor management can be costly. Very costly.
In this article, we’ll walk you through the most frequent mistakes small businesses make in their labor management—and how to avoid them with practical and legal solutions.
Top Labor Management Mistakes Small Businesses Make
1. Hiring without a contract (or with the wrong one)
Yes, it sounds obvious, but it still happens. Many small businesses hire employees without a formal contract or use generic templates that don’t comply with current labor laws—and this is one of the most serious labor management mistakes.
Why is this a serious mistake?
Because in case of a dispute, the business is left legally unprotected. Moreover, the Labor Inspectorate can impose fines.
Solution:
Use updated templates according to the Workers’ Statute and applicable collective agreements. Always document everything in writing.
2. Failing to properly record working hours
Since 2019, all companies are required to maintain a daily log of employees’ working hours. And no, an unsigned Excel sheet doesn’t cut it.
Consequence:
Fines can exceed €6,000 if no proper time tracking system is in place.
Solution:
Implement a reliable and easy-to-use system: digital apps, biometric clocks, or cloud platforms with time registration features.
3. Missing deadlines to report contracts or changes
All hiring or contract modifications must be reported to SEPE within the established deadlines.
Heads up: this also applies to terminations, extensions, and conversions.
Consequence:
Loss of benefits, fines, and trouble justifying changes to public institutions.
Solution:
Automate internal alerts or hire a labor consultant to manage these processes on time.
4. Applying the wrong collective agreement
Each sector has its own rules. Applying the wrong agreement can lead to claims for wage differences or unrecognized benefits.
Solution:
Verify the applicable agreement according to your company’s main activity and apply its conditions in full.
5. Poor handling of medical leave and absences
Some SMEs confuse different types of leave (temporary, work-related injury, maternity…) or simply fail to notify Social Security correctly.
Consequence:
Issues with contributions, fines, and friction within the team.
Solution:
Learn the exact procedures and deadlines. You can use templates and standardized internal processes.
6. Skipping specialized advice
In an effort to cut costs, many small businesses try to handle labor management internally without the necessary knowledge. Mistake.
Solution:
Invest in professional advice or use platforms like Legal Allies, which offer updated legal content, digital tools, and access to labor law experts.
Labor management is not something you want to improvise. Avoiding these common labor management mistakes can save you time, money, and a lot of headaches. If you’re an SME, having clear processes, legal support, and up-to-date tools isn’t just advisable—it’s vital.
At Legal Allies, we help you keep your business compliant with practical content, expert advice, and a legal bot that answers your questions 24/7 in your language. Because following the law has never been so easy (or so profitable).
