This feature helps you stay compliant with Spanish labor law by automatically controlling flexible compensation limits for employees. In this article, you’ll learn how compliance limits work, how to monitor them, and how to manage affected employees efficiently.
Overview
Spanish regulations set legal limits on how much employees can receive through flexible compensation. This feature ensures compliance by automatically calculating each employee’s maximum allowed budget and preventing overspending.
It also provides visibility tools for HR teams, including a compliance status column and filtering options to quickly identify employees who have reached their limit.
When and why it should be used
Use this feature if:
- You manage employees in Spain with flexible compensation plans
- You want to avoid legal risks related to exceeding compensation limits
- You need real-time visibility into employee compliance status
- You want to eliminate manual tracking and reduce errors
How to use
- In your sidebar, go to Benefits
- Open the Employees tab
- Review the Compliance column
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Filter employees by compliance status: Use the preset filters to quickly identify:
- Employees who are frozen
- Employees who are still within their limits
- A warning banner will appear if the employee has already reached their legal threshold, including the date when the card will be restored
If an employee’s card is not working, check if the employee is marked as “Frozen” in the Compliance column. This means they have exceeded their legal limit.
If an employee appears incorrectly frozen, review their salary and total flexible compensation to ensure calculations are correct.
Tips and best practices
- Regularly review frozen employees to anticipate questions or adjustments
- Communicate clearly with employees about why their card may stop working
- Plan salary changes carefully, as increases may impact compliance limits
- Use filters proactively to monitor trends and avoid surprises
FAQ
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How is the flexible compensation limit calculated?
Factorial calculates the annual budget based on two legal constraints and applies the stricter one:- A maximum of 30% of the employee’s gross annual salary
- A minimum remaining salary equal to Spain’s annual minimum wage (SMI)
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What happens when an employee reaches their limit?
The employee becomes “frozen.” Their Benefits card spending is set to zero, and new transactions will be declined for the rest of the calendar year.
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When is the limit reset?
The limit resets automatically on January 1st of the next year.
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Can the freeze be lifted before the end of the year?
Yes. If the employee’s salary increases and their new limit exceeds their current spending, the freeze may be lifted.
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Do HR admins need to monitor this manually?
No. The system automatically calculates limits, enforces compliance, and provides visibility tools to manage employees efficiently.