What is an ERTE?

An ERTE is a labour procedure that allows a company to suspend or reduce, for a specific time, the contractual relationship with its workers.

Before the state of alarm caused by COVID-19, the ERTE had been regulated by Royal Decree 1483/2012 of October 29, which approved the regulation of procedures for collective dismissal and suspension of contracts and reduction of days, derived from the final nineteenth provision, section 2, of Law 3/2012, of July 6, on urgent measures for the reform of the labour market, from Royal Decree-Law 3/2012, of February 10.

As far as ERTE is concerned, the norm refers to the procedures for suspending contracts and reducing working hours for economic, technical, organizational and production reasons, on the one hand, and to them when they derive from force majeure.

The essential difference is that while the latter, the procedures derived from force majeure, are intended to obtain a pronouncement from the labour authority consisting of verifying the constitutive fact is considered administrative procedures; the former does not pursue a response from that authority.

ERTE characteristics by type

1) ERTE for economic, technical, organizational and production reasons (ETOP):

• Economic causes are determined when the company’s results involve a negative economic situation, losses, or has a persistent decrease in the level of income or sales. It is understood that the decrease is persistent if the level of income or sales is lower compared to the same period of the previous year for three consecutive quarters.

They will also incur economic causes when the company’s forecasts determine the invalidity of the same in the immediate future if a plan is not carried out that allows it to overcome the crisis in which it finds itself.

• It is understood that they are technical and organizational causes when specific changes occur: changes in the means, changes in production instruments, changes in systems and working methods.
• It is understood that they are productive causes when there are circumstantial changes in the demand for products or services.

2) ERTE due to force majeure:

• Force majeure occurs when exceptional and temporary circumstances occur caused by events outside the company’s activity, generating an inevitable or unpredictable situation: floods, fires, earthquakes, pandemics, etc.

How does ERTE affect workers?

The affectation can be of two types:

• Reduction of the current working day from a minimum of 10% to a maximum of 70%. The affected person may request unemployment benefit for the percentage of the working day inactive due to this reduction.
• Total suspension of the employment contract during the period of application of the ERTE. During this period, the affected persons may request unemployment benefit for 100% of their working day.

What advantages does an ERTE have for workers, and what obligations do companies acquire?

The main advantage for workers affected by an ERTE is that, despite the exceptional circumstances, they are assured of continuity in the company when it can return to normality before the ERTE.

Companies, for their part, by availing themselves of the ERTE, abide by the legal commitment to reinstate their workers to their jobs once the crisis period and the causes that led to the ERTE have ended.

What about the remuneration of working at ERTE?

Workers in ERTE will be entitled or not, depending on the time contributed and type of ERTE, to receive an unemployment benefit equivalent to 70% of their regulatory base obtained by dividing the previous six months by 180 first six months. After those six months and until the application of the ERTE ends, its benefit will be 50% of the same regulatory base.

In ERTEs for economic, technical, organizational or production reasons (ETOP), the worker will receive unemployment benefit if they meet the contribution required to access it. The benefit that he consumes during this period will be deducted from the total period of unemployment benefit to which he was entitled in the event of termination of the contract at the employer’s request.

Otherwise, you do not meet the contribution requirements. You could access an unemployment benefit, the duration and amount of which will depend on the number of days worked in the last six years, and whether you have family responsibilities.

On the contrary, in ERTE’s due to force majeure, the worker may access the benefit of whether or not he has enough contribution for it. This time will not deduct from the total period of benefit to which the worker is entitled.

ERTE after COVID-19, how has it affected companies?

The COVID-19 pandemic has harmed the Spanish economy. In this sense, Royal Decree-Law 8/2020 of March 17, on urgent measures, tried to respond to these exceptional economic circumstances, adding to the measures adopted at the community level.

This Royal Decree-Law, in its chapter II, establishes the measures adopted in matters of temporary suspension of contracts and temporary reduction of working hours (ERTEs) mainly aimed at reducing the costs incurred by companies in cases of force majeure.

Until now, only in cases in which force majeure derives from natural catastrophic events that entailed the total or partial destruction of the company or workplace, preventing the continuity of the activity, the employer could be exempted from the payment of contributions to Social Security. However, one of the novelties incorporated in this Royal Decree-Law is the exemption to companies from the payment of 75% of the business contribution to Social Security, such exemption reaching 100% of the quota in the case of companies with less than 50 workers, as long as they agree to keep their jobs.

For its part, the Royal Decree-Law of 7/2020, of March 12, incorporated the subsidized postponement of taxes, which complements and contributes to reducing the cost of maintenance of companies seriously affected by the stoppage of economic activity due to COVID-19, encouraging companies to maintain their human capital.

Other Royal Decree-Law published so far are, and their most significant exceptional measures are the following:

• Royal Decree-Law 8/2020, of March 17:
• Article 22.1 establishes the causes that justify the ERTE due to force majeure of an extraordinary nature and derived from the declaration of the state of alarm by Covid-19, which imply the suspension or cancellation of activities, general closure, of the mobility of people and/or goods, lack of supplies that seriously prevent continuing with the ordinary development of the activity, or in urgent and extraordinary situations due to contagion of the workforce or the adoption of preventive isolation measures decreed by the health authority, which are duly accredited. For companies that could not justify an ERTE due to force majeure and that had to process the ERTE for ETOP reasons, new deadlines with a shorter duration were established, both in the procedures to be executed and in the closing of the file by the authority labour.
• Article 24.1 establishes that the General Treasury of Social Security will exonerate companies from the payment of the business contribution to social security, as well as from what is related to fees for joint collection concepts. At the same time, the period of suspension of contracts lasts or reduction of working hours for personnel affected by an ERTE due to force majeure, approved by the labour authority.
• Royal Decree-Law 9/2020, of March 28:
• Article 2 establishes that the causes of force majeure and the economic, technical, organizational, and production reasons in which the measures of suspension of contracts and reduction of contracts are covered may not be understood as justifications for dismissal and termination of the contract days provided for in Royal Decree 8/2020.
• It establishes that the date of effects and duration of the ERE due to force majeure derived from the Covid-19 crisis will correspond to the period of application of the state of alarm by the government. Once the lifting of the state of alarm decreed by the government is decreed, the application of the ERTE will end due to force majeure.
• For the ERTE processed for ETOP causes, the application period does not have to coincide with the state of alarm but rather with the one proposed by the company and the workers’ negotiating committee.
• Royal Decree-Law 18/2020, of May 12:
  Extension of the ERTEs carried out by force majeure caused by the Covid-19 crisis until June 30, 2020, in addition to the extension of the extraordinary measures in terms of unemployment protection of affected workers, among others.
• Royal Decree-Law 24/2020, of June 26:
• Extension of ERTEs until September 30, 2020. New measures regarding ERTEs for economic, technical, organizational and productive reasons (ETOP)

And now what is the situation?

The persistence of the adverse effects on companies and employment caused by COVID – 19 requires maintaining the exceptional measures already provided for in Royal Decree-Law 8/2020, of March 17, specifically in its articles 22 and 23, relating to the suspensions and reductions of working hours due to force majeure and economic, technical, organizational and production causes, as well as the extraordinary measures related to them in terms of unemployment protection.

Royal Decree-Law 30/2020, of September 29, on social measures in defence of employment, includes the following criteria, among others:

• The temporary employment regulation files (ERTE) due to force majeure processed by article 22 of Decree-Law 8/2020, of March 17, which are in force as of September 30, are extended until January 31, 2021.
• It is foreseen the possibility that companies that are prevented or limited from the development of their activity in any of their work centres, as a result of new sanitary restrictions adopted as of October 1, 2020, process a temporary employment regulation file due to force majeure, the duration of which will be limited to the aforementioned new measures.
• The possibility is established that from September 30, 2020, and until January 31, 2021, ERTE will be started for economic, technical, organizational or production reasons linked to COVID-19 as established in article 23 of the Real Decree-Law 8/2020.
  The files that end during the validity of this Royal Decree-Law 30/2020, of September 29, may be extended, provided that an agreement is reached to do so during the consultation period.
• People affected by the ERTE regulated in articles 22 and 23 of Royal Decree-Law 8/2020, of March 17. Those who have been affected as of July 1, or are affected as of July 1 October 2020 by ERTEs due to force majeure derived from COVID 19 as a result of the adoption of new restrictions or containment measures, may receive or continue to receive until January 31, 2021, the unemployment benefit provided for in section 1 a) of Article 25 of Royal Decree-Law 8/2020, of March 17, even if they lack sufficient contributions to do so, provided that the start of the employment or corporate relationship was before March 18, 2020.
• Companies with workers affected by ERTEs processed by the provisions of articles 22 or 23 of Royal Decree-Law 8/2020, of March 17, which are in force as of September 30, 2020, must formulate a new collective request for benefits for unemployment before October 20, 2020.