Full explanation of ERTES in verse and effortlessly!

If García Lorca had lived in our times (and was a salaried worker, of course 😏 ), he would surely have dedicated one of his poems to the ERTE.

And no wonder, since this mechanism has been the lifeline for countless companies that have experienced a significant reduction in their activity.

However, as with poems, interpreting certain elements requires dedication and will. Appvizer now puts all its observation skills at the service of companies and offers them vital information:

• What are ERTEs and who pays for them?
• how they contribute to regulating labour costs,
• what are the types of ERTE and the exemptions that exist.

ERTE, I love you ERTE!

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What is an ERTE and what does it mean for the company?

The Expediente de Regulación Temporal de Empleo (ERTE) is a temporary measure used by companies when they suffer an adverse economic situation or have to adjust their operations for structural reasons.

To be eligible for this measure, the company must be able to justify reasons:

• Force majeure (such as those arising from the health crisis);
• organisational, technical or economic reasons.

Therefore, when for any of these reasons the company cannot continue to guarantee its workers the continuity of its activity, taking advantage of an ERTE means a significant cost saving.

What does ERTE mean for workers?

Now, on the workers' side, this measure or mechanism can have two types of consequences:

• The reduction of their working hours,
• the temporary suspension of their contract.

This means, therefore, that the employment relationship does not cease and the parties must continue to fulfil their obligations. In the case of the workers, for example, the obligation to pay social security contributions.

Who pays for ERTEs in Spain?

Let us now address one of the most common doubts raised by the issue, which is who pays for the ERTEs.

Since the mechanism began to be applied, when there was a suspension of contract with an ERTE, the worker received the benefit from the State (through the State Public Employment Service - SEPE), which could be completed by the company. However, the company was not obliged to guarantee the full salary.

At the end of 2021, however, the Government's proposal to implement a new mechanism to replace ERTEs was unveiled, whereby companies would allegedly be obliged to supplement the benefit up to 100% of the payroll.

How much is paid in an ERTE?

In order to calculate what the worker will receive, the company and the SEPE, which will pay, take into account the regulatory base (average of the last six months of work):

For ERTE due to force majeure, it was determined that it would be possible to receive benefits without first having to pay contributions for one year. In addition, workers received the benefit without using up unemployment time.

With the advent of the new Temporary Redundancy Proceedings, workers with temporary suspension of contract can only receive a maximum benefit of 1,302 euros per month.

Exemption from Social Security contributions - ERTE

Companies that apply an ERTE benefit from certain exemptions that relieve them from the burden of social security contributions, although as mentioned above, workers are obliged to continue paying their social security contributions.

This exoneration mechanism, at the time of its implementation in 2020, depended on the situation of the company and its size, as follows:

Subsequently, full ERTEs became partial ERTEs and, therefore, the applicable exemptions were those defined for the latter.

Other frequently asked questions about ERTEs

ERE and ERTE: what is the difference?

The ERE corresponds to an Expediente de Regulación de Empleo. Unlike the ERTE, this is not temporary and companies will use it as an alternative to avoid taking the decision to carry out a collective dismissal.

Therefore, in order to be able to apply it, the company must prove the existence of situations of economic, technical, organisational or productive difficulty.

What about holidays and special payments?

Depending on the situation that gave rise to the ERTE, the conditions vary:

• Reduction of the working day: you are entitled to holidays, which will be paid in proportion to the working day worked during the year.
• Temporary suspension of the contract: no holiday benefits or extra pay will be paid.

Do ERTEs have a maximum or minimum duration?

No. The term of the ERTE to be agreed with the competent authority will be equivalent to the period required for the situation that gave rise to it to stabilise. In other words, it will affect the company and come to an end, once the exceptional circumstances arise and cease to exist respectively.

Is it common for companies to use ERTE?

Yes. In Spain, nowadays, more than a few companies have adopted this resource as a formula to face a difficult situation. Some groups or business chains have considered implementing the measure partially or totally, depending on the specific situation in which they found themselves.

Among the list of companies included in the ERTE are the following:

• Iberia,
• Norvegian,
• the Alsea Group,
• Burger King,
• Volkswagen,
• Seat,
• Nissan,
• Pikolin.

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To sum up...

• Temporary Redundancy Proceedings (ERTE) are a measure that companies can take in the event of an economic or structural situation.
• ERTEs mean cost savings for the company by reducing working hours or temporarily suspending employment contracts. This, in the end, avoids a situation of mass redundancies.
• Since the employment relationship is maintained, during an ERTE the employee must fulfil his/her obligations and continue to pay social security contributions.
• These contributions are deducted from the unemployment benefit paid by the SEPE (6.35% of the contribution base).
• Generally speaking, during the ERTE, a worker ends up receiving the special unemployment benefit as a salary.
• Several companies have applied the ERTE measure to their workforces, either partially or totally.