The fundamental difference: suspending is not terminating
The ERTE (temporary employment regulation procedure) keeps the employment relationship alive. The worker receives unemployment benefit for the part not worked and the company retains its workforce for when activity recovers. The ERE (collective dismissal under article 51 of the Workers' Statute) terminates contracts: the relationship ends with severance and final settlement.
That distinction explains everything else: the ERTE pays no severance, the ERE does. That is why the law and case law impose a preference for the ERTE: collective dismissal is only permissible when suspension or reduction of working hours is not enough to overcome the situation.
Quick comparison
The table summarises the differences that most affect the decision and the cost.
Key points
- - Effect: ERTE suspends or reduces working hours; ERE terminates contracts.
- - Severance: ERTE none (SEPE benefit); ERE 20 days per year capped at 12 monthly payments.
- - Grounds: both are based on economic, technical, organisational or production grounds; the ERTE adds force majeure and the RED Mechanism.
- - Consultation periods: ERTE 15 days (7 if the workforce is under 50); ERE 15 days (30 if there are 50 or more workers).
- - Thresholds: the ERTE has none; the ERE only exists from 10 workers or 10% of the workforce depending on size.
- - Role of the labour authority: in the ERTE it is notified; in the ERE it is notified and monitored; in force majeure it verifies the cause within five days.
- - Cost for the company: ERTE contribution exemptions and salary only for hours worked; ERE severance plus final settlements and possible litigation.
When each applies
The ERTE fits temporary crises: a fall in orders expected to reverse, an administrative closure, a flood, a cyclical sectoral crisis. The horizon and the cause matter: if the situation is structural (a product line being discontinued, digitalisation making roles obsolete, a plant closing), the ERTE only delays the problem.
The hybrid case is common: the company opens an ERTE and, if the crisis becomes entrenched, converts the termination into an ERE with its own consultation period. The prior ERTE does not prejudge the cause; what cannot be done is keeping workers on ERTE receiving benefit while they continue working, that is fraud and the Labour Inspectorate pursues it.
Compared costs
In an ERTE, the bulk of the benefit is paid by the SEPE (70% of the regulatory base during the first 180 days and 60% thereafter), and the company benefits from contribution exemptions of between 20% and 90% depending on the type of procedure, tied to training and to the commitment to maintain employment for six months.
In an ERE, the company pays 20 days' salary per year worked with a cap of 12 monthly payments, the full severance settlement and, if the dismissal is challenged and declared unfair, the compensation rises to 33 days per year with a cap of 24 monthly payments plus costs. In an ERE due to force majeure, the compensation is paid by FOGASA.
A practical rule: if the problem can be solved within months, ERTE; if the role no longer has a future, ERE. The intermediate option, the ERTE working-time reduction, is preferable to total suspension when viable.
Mistakes that turn restructuring into litigation
Jumping straight to an ERE without justifying why internal flexibility was not sufficient is the fast track to an unfair dismissal ruling, with 33 days per year plus procedural wages. The same happens with paper consultations: without real negotiation and without documentation of the causes, the judge will declare the dismissal without cause.
On the ERTE side, the typical mistake is fictitious use: a workforce that keeps working in fraud of benefits. The consequence is the repayment of the exemptions with interest and financial penalties for each person affected.
