The declared emergency state according to the Royal Decree 8/2020 from the 17th of March 2020 will have a serious economic impact on Spanish companies. In order to reduce the impact it is recommended to suspend totally or partially the employment contracts with the employees for a determined period. This procedure is called ERTE in Spain. The circumstance under which the ERTE would be taken into consideration are economical, productive, organisational or technical. In addition to the previous mentioned circumstances, force majeure is a reason to initiate the ERTE as it is the case currently with the sanitary emergency as a consequence of the COVID-19 pandemic.
The approval of an ERTE application will take place only when there is a direct correlation between the reduction of the companies’ activity and the emergency state due to the COVID-19 which must be proven by a detailed report. Such application will be processed by the competent authorities within 5 working days.
So what are the consequences of an ERTE? The company must inform the employee of the suspension of his employment contract or the reduction of the working time and communicate him the starting date. The employee will remain in the social security and is entitled to get his job back once the ERTE is finished.
The salary payments will be suspended or adapted to the reduced working hours, depending on the type of the ERTE. Furthermore the employee receives redundancy payment from the government, regardless of the length of the financial contribution of the employee.
We are delighted to advise your company in all aspects during these difficult times and support you especially with the application procedure of an ERTE.
Rechtsanwalt & Abogado
Dr. Frühbeck Abogados
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