What a collective redundancy is and when it exists
Article 51 of the Workers' Statute considers a dismissal collective when, over a 90-day period, it affects at least 10 workers in companies with fewer than 100 employees, 10% of the workforce in companies with between 100 and 300, 30 workers in companies with more than 300, or the entire workforce when the company has more than 5 workers.
Below those thresholds there is no collective redundancy, but rather individual or plural objective dismissals, with a different procedure and the same compensation of 20 days per year worked.
Grounds: the same as for an ERTE
The grounds are the economic, technical, organisational and production grounds of article 51, the same as those justifying an ERTE: current or anticipated losses, a persistent fall in revenue (two consecutive quarters below the same quarter of the previous year), changes in the means of production, working methods or demand for services.
There is also collective redundancy due to force majeure, with a different procedure: the company requests verification from the labour authority, which must rule within five days, and there is no consultation period.
The company must provide the workers' representatives with a report justifying the grounds and the documentation supporting them; without that documentary basis, the dismissal is easier to challenge and to declare unfair.
Procedure: communication, consultations and deadlines
The procedure begins with notification of the start of the collective redundancy to the legal representatives of the workers and to the labour authority, accompanied by the documentation. A consultation period then opens, lasting a maximum of 15 calendar days in companies with fewer than 50 workers, or 30 in the rest.
If there are no legal representatives, the company must appoint a committee of up to three workers elected by the workforce (the so-called ad hoc committee, introduced with the 2021 reform), with which the consultation period must also be negotiated.
The labour authority does not authorise or approve the ERE: its role is one of control. At the end of the consultations, with or without agreement, the company communicates the final dismissal decision to the authority and the representatives, and the terminations take effect from that moment. Individual notice to the worker is 15 days.
Compensation and final settlement
The statutory compensation for collective redundancy is 20 days' salary per year worked, with a cap of 12 monthly payments, the same as for objective dismissal. It may be higher if agreed during the consultation period or if set by the applicable collective agreement.
In a collective redundancy due to force majeure, the company does not pay: the compensation of 20 days per year with a cap of 12 monthly payments is paid by FOGASA, the Wage Guarantee Fund.
The termination gives the right to full final settlement (outstanding salary, untaken holidays, proportional share of extra payments) and opens access to unemployment benefit, because termination through collective redundancy is a legal situation of unemployment.
Differences with the ERTE and priority of permanence
The ERTE suspends contracts or reduces working hours temporarily, without terminating the employment relationship; the ERE terminates contracts definitively. That is why the law requires internal flexibility to be preferred: collective redundancy can only be used when the ERTE or reduction in working hours is not enough to overcome the situation.
The company must respect the priority of permanence established by law or the collective agreement: legal representatives of the workers, and those agreed in the agreement, such as employees over a certain age or those with family responsibilities.
The worker can challenge the dismissal, individually or collectively, within the following 20 working days. If the judge declares the dismissal unfair, compensation rises to 33 days per year with a cap of 24 monthly payments, and if there is a breach of fundamental rights or grounds for nullity, reinstatement is mandatory.
