Make the ERTES more flexible: one of the government’s economic measures against COVID-19

During these last few days, we have heard the term “ERTE” many times. The current situation is forcing many companies to take exceptional measures due to the standstill caused by the coronavirus crisis. Among them, those who cannot continue with their work, have no income and cannot face the current economic situation, are announcing ERES and ERTES. But…what are the differences between these two?

The declaration of the alarm state last Saturday has affected to a greater or lesser degree most of the companies. In order to minimize the impact of the layoffs or reductions in working hours being implemented in many companies affected by COVID-19, both the employers and the unions have asked the Government for extraordinary measures. “The State is going to assume this shock, it is going to assume as a whole the shock represented by the dry spell of the Spanish economy” this is how the President of the Government summed up the presentation of the Royal Decree which includes economic measures approved in the Council of Ministers that will help to alleviate this crisis.

These measures are aimed at encouraging companies, instead of laying off their workers, to choose to carry out temporary employment regulation (ERTE) proceedings, by means of force majeure, in the face of a fall in activity (closure of

retail establishments, a fall in demand or a drop in production are some of the consequences).

In addition, to make this figure more attractive to employers, the Government will reduce the employer’s social security contributions for workers affected by the ERTE, to limit the cost of their salaries as much as possible.

The Government has also decreed that while the ERTE lasts, workers have the right to receive unemployment benefits, whether or not they have paid the 360 days of contributions required in general to be able to access this benefit. In this case, the regulatory base for unemployment benefit will be the average of the worker’s contribution base over the last 180 days.

But, what’s an ERTE?

The Temporary Employment Regulation File, better known as ERTE, is one of the solutions that some companies are putting on the table to tackle the economic crisis that is causing them the rapid spread of the Covid-19 coronavirus.

This is a temporary authorisation for a company through which it can suspend one or several employment contracts for a certain period of time. This is a temporary authorization for a company to suspend one or more employment contracts for a certain period of time, so that it can dispense with paying its employees for a period of time. Thus, people affected by an ERTE continue to be linked to the company but, in general, they are not paid, do not generate the right to extra pay or holidays during the time they are away from their job.

What is the difference between ERE and ERTE?

The main distinction between an ERE and an ERTE has to do with the duration of its consequences. In the case of the first one, they are definitive, while in the second case they are punctual or temporary.

The main difference is established in their own acronyms:

· ERE stands for Expediente de Regulación de Empleo (Employment Regulation File). The consequences are irrevocable.

· ERTE, on the other hand, is a Temporary Employment Regulation Record, established for a limited period.

Both measures are included in the Royal Decree Law 3/2012 to try to solve economic, technical, organizational or production situations of companies.

Both the ERE and the ERTE are regulated within the Workers Statute. The first one causes effective and firm dismissals in all cases. On the other hand, in the second case, it is not a matter of de facto dismissals, but of temporary suspensions of part or all of the staff.

The ERE is mainly applied when the company ceases its activity completely, although this can also be done if the closure is not made, while the company that applies an ERTE can continue in activity.

An ERE can occur when economic, technical, organisational or productive causes are justified, as well as causes of force majeure, i.e. the dissolution of the company. However, even if there is no legal cause, this circumstance can occur by paying a compensation equivalent to an unfair dismissal.

How do you process an ERTE?

The first step is the creation of a negotiation table where the company and the employees are represented, since the company must communicate to its workers “in

an irrefutable manner” its intention to initiate an ERTE. From the official communication, the workers have 15 days to constitute a negotiating committee.

The negotiation committee must establish a calendar of meetings, as there must be at least two. Minutes must be taken of each meeting and then signed by all those present.

If an agreement is finally reached, once all the consultations have been carried out, the company must notify the employees and the labour authority of the decision to suspend or reduce contracts within 15 days.

However, this does not have to be the end of the procedure, as the workers could claim the company’s decision in court during the 20 working days following the ERTE’s notification. If the judge decides that the Temporary Employment Regulation File is not valid, the company must readmit the workers to their posts and pay the difference in salary not paid during the days in which they have been affected by this procedure

When a worker suffers an ERTE, he generally maintains his active status, but in the case of the ERE, he becomes unemployed. The ERTE can mean the reduction of a working day or temporary periods of leave, but it does not result in unemployment. The duration of the ERTE is not established either, it is decided by the company and the employees, but the law does not contemplate it.

Is there a compensation in case of ERE or ERTE?

If the company opts for an ERTE, the worker would not be compensated as such, although he may benefit from a percentage payment, on an hourly basis, of unemployment benefit.

In an ERTE, compensation does exist, an amount that is negotiated between workers and representatives. In addition, the worker is entitled to full unemployment benefit. The minimum is 20 days per year worked.

Regarding the application for unemployment benefit, since the SEPE offices are closed because of confinement, telephone assistance is maintained, in addition to the possibility of processing the application electronically. When the crisis is over, since this is a temporary measure, companies are obliged to reinstate all the workers affected.

Sources:  VozPopuliEl CorreoCincoDíasEl ComercioEl ConfidencialEl Economista

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