The Expediente de Regulación de Trabajo (ERE in Spain) is a mechanism leading to permanent termination of the employment contract when companies are in difficult economic or financial circumstances. It is known as collective dismissal and is regulated by the law with the same name.
Collective dismissal is based on the set of concurring economic, technical, organisational and production causes (colloquially abbreviated as ETOP causes) relating to the existence of problems in the company’s functioning.
When a company has fewer than six workers, it must terminate the working relationship according to the rules of objective dismissal. On the contrary, it must use the collective dismissal mechanism if the dismissal affects, within a period of 90 days, (i) more than nine workers, if the company has a workforce of between ten and 99 workers; (ii) to a percentage not less than 10 per cent, if the company employs between 100 and 300 workers; or (iii) more than 29 if the company’s workforce is more than 300 workers.
If the company carries out a collective dismissal or redundancy, it must abide by the legal rules because these are mandatory and cannot even be altered by collective agreement. If these procedures are not followed, the redundancies shall be invalid, as shall the ETOP dismissals in greater numbers than allowed.
There are two possibilities for redundancies: (i) the entire workforce is made redundant so that the business activity ceases; (ii) collective dismissal of part of the workforce so that, in principle, the company’s activity continues.
On the other hand, the Expediente de Regulación Temporal de Empleo (ERTE) dismissal mechanism has a fixed duration whereby the worker’s work activity is suspended or the working day. These mechanisms can be used for two reasons: (i) due to temporary force majeure; (ii) due to economic, technical, organisational and production causes, as well as the ERIs above.
In all these cases, the labour authority has an important function, checking the causes and fulfilment of the requirements.
Specialised advice in this area is essential to ensure that the company fulfils the requirements to use the dismissal mechanism in question. Otherwise, the company may be adversely affected if it does not comply with the rules governing these procedures; on the other hand, workers can also be harmed if their rights are not respected.
We, therefore, advise you to obtain specialised advice in these matters and our firm is in a position to provide it.