Cost of temporary incapacity for work of companies in Spain
Temporary incapacity for work is a term used in Spain to describe the situation in which a worker is temporarily unable to perform his or her job due to illness or injury. Also known as medical leave, sick leave or sick leave, this condition can be caused by a variety of factors, such as accidents at work, common or chronic illnesses.
Different types of temporary incapacity for work
Temporary incapacity for work is a situation in which the worker is temporarily unable to perform his or her usual duties due to an illness or accident. Within this context, there are two main types of sick leave:
- Sick leave due to common illness.
- Sick leave due to an accident at work.
Sick leave in Spain
Sick leave due to common illness refers to a situation in which the worker has contracted an illness that prevents him/her from working for a certain period of time. The estimated duration of this temporary incapacity may vary depending on the type and severity of the illness, as well as the individual recovery process. In general, sick leave due to common illness usually has an estimated duration ranging from a few days to several weeks, although it can extend up to 18 months.
Sick leave due to an accident at work
Sick leave due to an accident at work occurs when the worker suffers a mishap or injury while performing his or her work duties. The estimated duration of this temporary incapacity also depends on the type and severity of the accident, as well as the individual recovery process. In some more severe cases, sick leave due to an accident at work can be extended for 12 months, which can be extended for a further 6 months.
Who pays for a worker's temporary incapacity for work?
Delegated payment
Temporary incapacity is paid by the employer by means of delegated payment.
This means that the employer pays the benefit in advance, but then gets the money back when the contributions are paid, so that the same amount is deducted as the amount that was paid in advance to pay the benefit.
As an exception, the employer can request that the benefit payment be taken over by the managing body. In other words, it can stop advancing the benefit under the delegated payment scheme. To do so, it must have fewer than ten workers and have been paying a TD benefit to one of them for more than six months [OM 25-11-1966, art. 16].
Sick leave due to illness or common contingencies.
Workers in a situation of temporary incapacity (TI) are entitled to a benefit. If the TI derives from common contingencies (that is, from an illness that is not work-related) or from a non-occupational accident:
- The first three days of temporary incapacity are not paid, unless the collective agreement makes it compulsory to supplement the benefit. If this is the case, the company pays the supplement in full.
- The company pays the benefit from the 4th to the 15th day [LGSS, art. 173].
- From the 16th day onwards, the benefit is paid by the social security. However, it is the employer who advances the money to the worker under the delegated payment system [LGSS, art. 102; Order 25-11-1966]; in other words, he pays the incapacity for work benefit in the payroll and then recovers it from the contributions.
Sick leave due to occupational accident or occupational contingencies.
If the temporary incapacity derives from occupational contingencies (caused by an accident at work, such as a fall during the working day), the managing body or mutual insurance company pays the benefit from the day after the accident. In this case, the company does not have to pay the benefit (it advances the money as a delegated payment, but then recovers it in contributions), although it does pay the salary on the day of the sick leave [LGSS, art. 173].
Eligibility for temporary incapacity benefit
In order to be entitled to the TD benefit derived from common contingencies, the worker must have paid contributions for 180 days within the previous five years.
In the case of an accident -whether or not at work- and occupational disease, no prior contribution period is required [LGSS, art. 172].
If the employer fails to pay the TD benefit
If the company does not pay the work incapacity benefit under the delegated payment system, it will be fined between 751 and 7,501 euros, depending on the seriousness [LISOS, arts. 7.10 and 8.1] .
Amount of temporary incapacity benefit
Common contingencies.
The benefit for temporary incapacity due to common contingencies is 60% of the regulatory base from the 4th to the 20th day of sick leave, and 75% from the 21st day [RD 53/1980; D 3158/1966, art. 2] . The regulatory base is calculated by dividing the contribution base of the previous month by the number of days of contribution [D 1646/1972, art. 13] .
For part-time workers, the regulatory base is the result of dividing the bases of the last three months by the calendar days of that period [LGSS, art. 248.1.c] .
Professional contingencies.
If the TD derives from occupational contingencies, the percentage applicable to the regulatory base is 75% [D 3158/1966, art. 2] . The regulatory base of the benefit is also calculated by dividing the contribution base of the previous month by the days contributed, but the average of the contributions for overtime of the previous 12 months is added [D 1646/1972, art. 13.4; LGSS, art. 147.2.e] .
It is true that when a worker takes sick leave, the company advances the money from the benefit, but then recovers it in contributions. However, are you aware that the company must continue to pay contributions and that this money is not recovered?
Social security contributions during incapacity for work
The company is still listed
In both cases.
During the situation of temporary incapacity (common or professional), the company must continue to pay Social Security contributions for the worker [RD 2064/1995, art. 68]. Even if the person’s contract is suspended and he/she does not provide services [ET, art. 45.1.c], the company will continue to assume the cost of the contributions.
Unlike the benefit, the amount of contributions is not recovered and is borne in full by the employer.
Contribution bases and types of contributions.
In these cases, the contribution base is that corresponding to the month prior to the month of sick leave [OM 74/2023, art. 6] and the general contribution rates are applied:
| Contingency | At the company’s expense | At the employee’s expense | Total |
| Common contingencies | 23,60% | 4,70% | 28,30% |
| Intergenerational Equity Mechanism (IEM) | 0,50% | 0,10% | 0,60% |
| Unemployment (permanent contracts) | 5,50% | 1,55% | 7,05% |
| Desempleo (contratos temporales) | 6,70% | 1,60% | 8,30% |
| FOGASA | 0,20% | – | 0,20% |
| Vocational training | 0,60% | 0,10% | 0,70% |
| Occupational contingencies | Depending on the activity of the company | ||
In short, in the event of temporary incapacity, the company assumes the following costs:
The cost of the benefit from the 4th to the 15th day of the benefit if the TI derives from common contingencies.- The cost of the possible supplement to the TD that may be established in the collective agreement.
The cost of contributions in accordance with the table above.
Example of an incapacity for work (IT)
Example 1 of a temporary incapacity
A worker has a gross salary of 1,800 euros and has been on sick leave for three months. See the costs to the company of the incapacity for work for those months:
| Concept | At the company’s expense | At the expense of Social Security |
| Benefit days 1.o a 3.o | 0 | 0 |
| Benefit days 4.o a 15.o | 504 | 0 |
| Benefit days 16.o a 30.o | 0 | 735 (210 + 525) |
| Second and third month benefit | 0 | 3.150 |
| Quotation cost | 2.104,20 (701,40 × 3 month) | 0 |
| Total cost | 2.608,20 | 3.885 |
The monthly contribution base of 2,100 euros (1,800 × 14/12) and the benefit during this period – to be paid by the employer – is 60%. The calculation is therefore as follows: 2,100 × 60%/30 days of contribution × 12 days of sick leave.
The calculation is similar, although in this case the benefit is 60% for five days (16th to 20th ) and 75% for the remaining days (21st to 30th ).
2,100 × 75% × 2 months.
Contribution base (2,100) × 33.40% (considering an accident rate of 3%, which corresponds to the chemical industry, and that you have a permanent contract).
Example 2 of a TI
If, in the case of the previous example, the collective agreement makes it compulsory to supplement the benefit up to 100% of the gross salary, the total cost would increase by 1,011 euros, reaching a total of 3,619.20 euros for the three months (2,608.20 + 1,011):
| Concept | At the company’s expense |
| First month’s allowance | 561 |
| Second and third month allowance | 450 |
| Total cost | 1.011 euros |
Worker’s gross salary minus amounts received as TI benefit: 1,800 – (504 + 735).
1,800 × 2 months – 3,150.
Allowances for temporary incapacity
Bonus for people over 62 years of age
Incentive for incapacity for work.
Without prejudice to what is indicated in the previous paragraphs, companies will have the right to a 75% reduction in the employer’s Social Security contributions for common contingencies while workers who are 62 years of age or older are in temporary incapacity for work [OM 74/2023, art. 6] .
Example 3 of an incentive for temporary incapacity
If the employee in the previous examples has already reached the age of 62, see below what the final cost to the company will be, as well as the reduction that can be applied to contributions:
| Concept | At the company’s expense |
| Benefit days 1.o a 3.o | 0 |
| Benefit days 4.o a 15.o | 504 |
| Benefit days 16.o a 30.o | 0 |
| Second and third month benefit | 0 |
| Business complement | 1.011 |
| Quotation cost | 2.104,20 (701,40 × 3 month) |
| Reduction of 75% | -1.115,10 (1) |
| Total cost | 2.504,10 |
2,100 × 23.60% × 75% × 3 months.
