Editor’s note: This article was first published in March 2012 but describes the collective redundancy rules in force before Royal Decree-Law 3/2012 of 10 February 2012, which removed the requirement for prior authorisation by the labour authority except in cases of force majeure. Several of the regulations it lists have since been replaced or recast.
These days, more and more companies are starting an Expediente de Regulación de Empleo, popularly known as an ERE: a procedure to adjust the workforce, promoted by the employer, which the workers themselves can also initiate through their legal representatives if they believe the employer could cause them harm that would be impossible or difficult to repair.
The procedure is filed with the competent labour authority, which may be that of the autonomous community or the central government administration (Administración General del Estado), depending on the company’s circumstances.
Grounds for an ERE
It is granted on the following grounds:
- Collective dismissal for economic, technical, production or organisational reasons.
- Suspension or termination of the employment relationship due to force majeure.
- Suspension of the employment relationship or reduction of working hours for economic, organisational, technical or production reasons.
- Termination of the employment relationship because the employer has ceased to exist as a legal entity.
The ERE procedure
There are different forms, depending on the route used.
a) Initiated by the company, without force majeure: the company first files an application with the competent labour authority and then opens a period of consultation, in writing, with the workers’ representatives, if there are any. If there are none, the workers elect three representatives for the company. They will act as the go-betweens between the company and the workers.
The competent labour authority is notified and decides the case.
b) Initiated by the workers: the procedure is the same as above, but the other way round.
c) Force majeure: the company requests approval and supports it with the appropriate evidence. It then informs the workers’ representatives, and it is the labour authority that ultimately decides on the procedure.
Documentation
The paperwork needed to process an ERE starts with an application from the company to the competent labour authority, accompanied by the letter addressed to the workers’ representatives and the reasons for and manner of the procedure.
It must also include a detailed report on the company’s reasons and reliable evidence supporting the case, depending on whether the cause is economic, technical, organisational or production-related.
If employment contracts are terminated, it must include the agreement between both parties on severance pay, which will be at least 20 working days per year worked. In companies with fewer than 25 employees, 40% of the severance pay will be covered by the Wage Guarantee Fund (Fondo de Garantía Salarial, FOGASA).
In cases of force majeure, it is the labour authority that sets the severance pay for the terminated contracts, which will be paid by the Wage Guarantee Fund.
Which rules govern these procedures
The procedures are governed by the following regulations:
- Royal Legislative Decree 1/1995, articles 47, 49 and 51
- Royal Legislative Decree 2/1995
- Law 35/2002
- Law 22/2003
- Law 38/2007
- Royal Decree-Law 3/2009
- Law 27/2009
- Law 35/2010
- Royal Decree 777/2011
- Royal Decree 801/2011
Featured image: Luis García, CC BY-SA 3.0, via Wikimedia Commons.
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