One more week, we’re discussing the different types of dismissal that can occur within a company. To wrap up the types of dismissal classified by cause, this time we’ll focus on collective dismissal, better known in Spain as an ERE (Expediente de Regulación de Empleo).
What is an ERE?
Collective dismissal refers to the termination of multiple employment contracts by a company due to an objective and lawful cause. This type of dismissal is regulated under Article 51 of Royal Legislative Decree 2/2015, of October 23, which approves the revised text of the Spanish Workers’ Statute.
According to this article, a collective dismissal must be based on a technical, organizational, economic, or production-related cause:
- According to this article, a collective dismissal must be based on a technical, organizational, economic, or production-related cause:
- Organizational causes: when there are changes in staff working methods or in the way production is organized.
- Economic causes: when the company is persistently experiencing a negative economic situation, such as a steady decline in regular income or sales. To be considered persistent, the decline must occur over three consecutive quarters, with income or sales levels lower than those recorded in the same quarters of the previous year.
- Productive causes: when there are changes in the demand for the company’s products or services in the market.
How many employees must be affected for a redundancy plan (ERE) to be considered a collective dismissal?
For a company to carry out a redundancy plan (ERE) based on objective causes, it must affect within a 90-day period:
- At least ten employees in companies with fewer than one hundred workers.
- At least 10% of the workforce in companies with between one hundred and three hundred employees.
- At least thirty employees in companies with more than three hundred workers.
- The entire workforce when the dismissal is due to the total cessation of the company’s activity, provided the company has more than five employees.
What is the procedure for carrying out a collective dismissal (ERE)?
When carrying out a collective dismissal process, the company must first begin a consultation period with employee representatives. This consultation must not exceed thirty calendar days, or fifteen calendar days in the case of companies with fewer than fifty employees.
During this consultation, the parties must discuss ways to avoid or reduce the number of collective dismissals, or at least mitigate their impact through measures such as reassignment, professional retraining, or employment-related training programs.
The parties must negotiate in good faith and inform the Labor Authority, which will forward the information to the unemployment benefits agency. Additionally, the Labor Authority will request a report from the Labor and Social Security Inspectorate on how the consultation period was conducted and the terms in which the communication took place.
If, at the end of the consultation process, an agreement is reached between the employer and the workers’ representatives, the collective dismissal must be communicated under the terms established in that agreement. If no agreement is reached, the employer will decide which employment contracts will be terminated.
Following this decision, employees may take the case to court so that a judge can determine whether the dismissal was based on a lawful and objective cause. The judge will then classify the dismissal as fair (procedente), unfair (improcedente), or null (nulo). These classifications, based on the judge’s ruling, will be addressed in future articles.
How does the law protect an employee dismissed through an ERE (collective dismissal)?
In addition to being able to challenge the dismissal before a judge, an employee affected by a collective dismissal (ERE) is entitled to receive severance pay, unemployment benefits, and even outplacement services (external job placement assistance).
The minimum severance pay in these cases is 20 days’ salary per year of service, with a maximum of 12 monthly payments. For employment periods of less than one year, the amount is calculated on a pro rata basis. If an agreement is reached during the consultation period, the compensation may be improved beyond the legal minimum.
The complexity of a collective dismissal, whether you’re an employer or an employee, makes it advisable to seek professional guidance. At Vázquez y Manchón, we have extensive experience in labor law advisory services, and we strongly recommend consulting with us before proceeding with an ERE.
