ERTE, ERE and Suspension of Contracts for Coronavirus

ERTE coronavirus

At GD Legal we can help you process temporary redundancy (ERTE), redundancy (ERE) and suspend contracts by force majeure, as well as advise you on other alternatives to maintain the activity of your business and adjust it to the exceptional circumstances caused by the Coronavirus.

Companies have legal mechanisms to carry out collective or individual dismissals for legal causes whether they be economic, productive, organizational or technical.

However, in the face of the crisis caused by the coronavirus, many companies are considering processing temporary redundancy (ERTE) and/or collective dismissals, due to the decrease in production and work activity.

In other cases, mandatory closure of certain companies has been decreed for reasons of force majeure

ERTE

During the period of the current situation, labor relations involving both employment and wages will be suspended or working hours will be reduced.

It will be applied regardless of the number of workers in the company and the number affected by the suspension.

It does not generate any right to compensation for the worker, although the worker will have the right to collect unemployment benefit.

ERE 

Unlike ERTE, an ERE involves the worker leaving the company permanently. 

Furthermore, the size of the company is important: it must affect 10% of workers in companies with less than 100 workers, 10% of employees in those with between 100 and 300 employees or 30 in those that have more than 300 people on staff for a period of 90 days.

ERE does involve compensation, which will be negotiated with the worker or with the legal representatives, and is a minimum of 20 days per year worked with the limit of 12 monthly payments.

Suspension of contracts by force majeure

In the cases in which COVID-19 does not allow a certain business to open, that business will take measures to suspend employment and salary. Force majeure will need to be verified by the labor authority.

Less severe alternatives

In addition to ERTE or ERE, the company has the option of other less severe legal mechanisms with regards to workers:

  • Voluntary agreements with the worker that have a wide margin of action.
  • Other flexibility measures, reduction of working hours with the possibility of recovering them at a later time, unpaid leave, paid leave, vacations, etc. 
  • Application of irregular work hours.
  • Possibility of applying substantial modifications to work on an individual basis.

Contact our lawyers and ask us about your particular case with no obligation. We can help you.

 

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