Complete explanation of ERTES in verse and effortlessly!
If García Lorca had lived in our times (and was a salaried employee, 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 capacity at the service of companies and offers them vital information:
- What ERTEs are and who pays for them,
- how they contribute to regulating labor costs,
- what are the types of ERTE and the exemptions that exist.
ERTE que te quiero ERTE!
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 operation for structural reasons.
In order to be eligible for this measure, the company must be able to justify causes:
- Force majeure (such as those resulting from the health crisis);
- organizational, technical or economic reasons.
Thus, when for any of these reasons the company can no longer guarantee the continuity of its activity to its workers, an ERTE can provide a significant cost saving.
What does the ERTE mean for the workers?
Now, on the side of the workers, this measure or mechanism can entail two types of consequences:
- The reduction of their working day,
- the temporary suspension of their contract.
This means, therefore, that the employment relationship does not cease and the parties must continue to comply with 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 subject and that is the question of who is responsible for the payment of ERTEs.
Since the mechanism began to be applied, when there was a suspension of contract with an ERTE, the worker collected 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 the ERTEs was made public, with which 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):
| Type of ERTE | Obligation to pay and amounts | |
| Company | SEPE | |
| Reduction of working hours | Proportional part of the worker's salary for the hours worked. | - First six months: 70% of the regulatory base. - From the seventh month: 50% of the regulatory base. |
| Suspension of the work contract | - First six months: 70% of the regulatory base. - As from the seventh month: 50% of the regulatory base. |
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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 consuming unemployment time.
With the advent of the new Temporary Labor Force Adjustment Plans, workers with temporary suspension of their contract can only receive a maximum subsidy of 1,302 euros per month.
Exemption from Social Security contributions - ERTE
The companies that apply an ERTE benefit from certain exonerations that free them from the burden of social security contributions, although as mentioned above, the workers are obliged to continue paying their social security contributions.
Such exonerations mechanism, at the time of its application in 2020, depended on the situation in which the company was, as well as its size, thus:
| Exonerations | ||
| Company status | Company size | |
| No. of employees < 50 | No. of workers ≥ 50 | |
| ERTE due to partial force majeure | - 60% of the social security contributions of the workers who returned to their activities; - 35% for workers who continue to be suspended. |
- 40% for workers who have resumed their activities; - 25% for those who continue to be suspended. |
| ERTE for total force majeure | 70%, 60% and 35% in July, August and September respectively. | 50%, 40% and 25% in July, August and September, respectively. |
Subsequently, total 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 applied, the company must prove the existence of difficult situations at an economic, technical, organizational or productive level.
What happens to vacation and bonus payments?
Depending on the situation that gave rise to the ERTE, the conditions vary:
- Reduction of working hours: you are entitled to vacation, which will be paid in proportion to the working hours worked during the year.
- Temporary suspension of the contract: no vacation benefits or extra pay will be received.
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 stabilize. In other words, it will affect the company and will come to an end once the exceptional circumstances arise and cease to exist respectively.
Is it common for companies to use the ERTE?
Yes. In Spain today, more than a few companies have adopted this remedy as a formula for dealing with 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.
To sum up...
- Temporary Labor Force Adjustment Plans (ERTE) are a measure to which companies can resort in the event of facing 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 layoffs.
- Since the employment relationship is maintained, during an ERTE the worker must comply with 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).
- In general, 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.
Article translated from Spanish