The Collective Redundancy Procedure (Expediente de Regulación de Empleo, ERE) is a special procedure that a company may resort to in order to achieve the collective dismissal of employees or the collective suspension of employment relationships, in the face of a contingency or economic problems that threaten its collapse or operational continuity.
This procedure must be handled with proper expertise, since any incorrect or improper action may result in the company’s decision being challenged and declared not to be in accordance with the law before the social jurisdiction. In any event, at BBMabogados we have extensive experience in employment matters, so you can turn to our advice to achieve the best result.
What can be achieved with an ERE?
Essentially, an ERE can be used for collective dismissals, the suspension of employment contracts or the reduction of working hours, although in the strict sense it refers exclusively to the first case, which aims at the termination or extinction of the employment relationship.
COLLECTIVE DISMISSALS
This is the form of termination of the employment relationship by the will of the company, when economic, technical, production or organisational reasons arise. In this case, the ERE seeks to enable the company to overcome adverse economic conditions that would prevent its continuity, and to this end it is authorised to reduce its workforce or to suspend its contracts while the economic situation improves.
SUSPENSION OF CONTRACTS
It is also possible for the relationship simply to be suspended. This means that the employment relationship between the company and the employee remains in force, but there are no obligations on either party (attending work for the employee, paying the salary for the company). This suspension may apply to the whole workforce or only to part of it.
REDUCTION OF WORKING HOURS
Likewise, it may happen that the reasons set out above are relied on to request authorisation to reduce working hours, that is, to reduce the workload set for each employee and, therefore, to reduce proportionally the payment made by the company.
Requirements to apply for an ERE
This procedure seeks to enable a significant number of employees to be dismissed within a period of 90 days. That number of employees is determined by:
– 10 employees, in companies with fewer than 100 employees on their workforce.
– 10% of the employees in companies whose workforce is between 100 and 300 employees.
– 30 employees for companies with more than 300 employees.
JUSTIFYING THE REASONS
For its part, once the company has taken the decision to reduce its workforce, it must allege and justify the reason for the ERE. In this case, different requirements will apply according to each of the reasons.
ECONOMIC GROUNDS
To demonstrate that a reduction in the workforce is required on economic grounds, it is enough to show a persistent decrease, over three consecutive quarters, in the company’s revenue, or that it reflects a decline in relation to the immediately preceding period.
Likewise, projections may be presented on current revenue and on how it will decrease as a result of the economic conditions the company is facing.
TECHNICAL REASONS
This is the typical case in which a new technology or production system starts to make certain staff unnecessary, since their functions may become automated. In this case, the ERE will seek to reduce the workforce, given that their labour would prove unnecessary in light of the new production systems.
ORGANISATIONAL GROUNDS
Likewise, the need to reduce staff may also be linked to changes in the company’s structure (corporate mergers or a change of business sector); in such cases, the new organisation may require modifying or reducing the existing jobs.
Procedure to apply for an ERE
When the company’s management has decided to start an ERE, it must notify the opening of the consultation period to the workers’ representatives and, simultaneously, notify the labour authority, providing the documentation that substantiates the grounds alleged. That is, it is not enough simply to allege a ground; in any event, it must be duly proven.
For its part, the company must carry out the consultation period with the workers’ union or with the representatives of those workers. This stage involves a negotiation between the parties, with a view to reaching an agreement on the number of dismissals and the conditions under which they will be carried out. The labour authority does not authorise the ERE: it merely receives the notification and ensures that the consultation period is effective.
Once the consultation period is concluded, whether or not there is agreement, the company notifies its final decision to the workers’ representatives and to the labour authority. Since the 2012 labour reform, administrative authorisation is no longer required to carry out the collective dismissal; the company’s decision may only be challenged through the courts, before the social jurisdiction.
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