What an ERTE is and what types exist
The ERTE (temporary employment regulation procedure) allows the company to temporarily suspend contracts or reduce the working hours of its employees, who then receive the SEPE unemployment benefit for the part not worked.
There are three routes: the ETOP ERTE for economic, technical, organisational or production reasons; the ERTE for force majeure, when an external and unavoidable cause prevents activity; and the RED Mechanism, activated by the Council of Ministers for cyclical or sectoral crises.
ETOP ERTE: grounds and consultation period
Economic grounds are evidenced by negative results, current or forecast losses, or a persistent fall in revenue (two consecutive quarters below the same quarter of the previous year). Technical, organisational and production grounds respond to changes in means of production, working methods or demand.
The procedure begins with notification to the labour authority and a consultation period with employee representatives: a maximum of 15 days, or 7 if the company has fewer than 50 staff.
The measure may be suspension of contracts or a reduction in working hours of between 10% and 70%, and the reform prioritises reduction over suspension when viable.
ERTE for force majeure
Force majeure covers exceptional situations: a flood, a fire, an imposed administrative closure or a declared health crisis. Here there is no consultation period: the company requests confirmation from the labour authority, which must decide within a maximum of five days.
This is the case with the best exemptions from Social Security contributions, subject to the commitment to maintain employment and to offer training to the affected people.
Unemployment benefit during the ERTE
The affected worker receives 70% of their regulatory base during the first 180 days and 60% from day 181, with the minimum and maximum limits set by law and updated with the IPREM. Anyone working part-time in a reduction ERTE receives their salary for the hours worked and the proportional benefit for the rest.
Time on ERTE maintains Social Security registration: it counts towards future benefits and retirement, although the contribution base may be lower than usual.
RED Mechanism: the sectoral ERTE
The RED Mechanism is activated by agreement of the Council of Ministers and companies in the affected sector may join it. It has two modalities: cyclical, for general macroeconomic crises with a maximum duration of one year, and sectoral, for sectors undergoing permanent changes, with an initial year extendable twice for six months.
Participating companies gain exemptions from contributions of between 20% and 90% depending on the type of procedure and the size of the company, always linked to training and to maintaining employment for six months after it ends.
Obligations during an ERTE
While an ERTE lasts, the company cannot do overtime, outsource activity or hire staff to replace the affected people, except in specified cases.
If the company benefits from exemptions, it undertakes to maintain employment for the following six months; failing to do so obliges it to repay the discounted contributions with surcharges and interest.
Affected people can challenge the measure individually, and the Labour Inspectorate monitors fictitious ERTEs, in which the workforce keeps working while collecting the benefit.
