Suspensive effects of the Coronavirus (Covid-19) on Spain workforce:

ERTEs and shorter working hours

The Coronavirus is wreaking havoc on the Western economy, with unprecedented effects.

What does ERTE mean?

ERTE is the measure of suspension or reduction of contracts, due to the cutback of workload or other circumstances related to market fluctuations. In this case, due to the shocking effect of the Coronavirus.

ERTE means Record of Temporary Employment Regulation with reduction of working hours. These are the ideal measures that companies can adopt to try and re-float their businesses in the near future.

ERE (Statutory Lay-off proceedings) and dismissal processes.

ERTE is the best suspensive option to save a business in the event of interruptions or losses of activity caused by events originating outside the circle of the company. In addition, such events can make it impossible to continue providing services, temporarily and reversibly.

Pérez Parras Economists and Lawyers are specialists in Labour Law, and we advise companies and workers in labour relations crises. Contact us and we will advise you from our office in the centre of Malaga, and in Nerja.

Suspensive effects:

suspensive effectThe coronavirus or Covid-19 is causing many layoffs and ERTEs in Spain.

In which cases can a Temporary Employment Regulation Record (ERTE) be processed?

There are basically two cases in which an ERTE can be processed:

  1. by force majeure
  2. harm to the economic activity and productive infrastructure

1.- Force majeure

Due to events external to the company, occurring independently of the will of the company, which causes the impossibility of continuing to develop the employment contract, directly or indirectly. It is due to a catastrophic or unpredictable event that has such an impact, that it prevents the business from carrying out its activity in the most basic way.

The following circumstances are understood to be included in the concept of temporary force majeure leading to the loss of activity of the company:

  1. Governmental decisions or sanitary containment measures, such as:
  • suspension or cancellation of activities,
  • temporary closure of crowded public premises,
  • restrictions on public transportation,
  • the mobility of people and goods in  general.

For these purposes, all activities included in Royal Decree 463/2020, of March 14th, which declares the State of Alarm for the management of the health crisis situation caused by COVID-19, are considered to be affected by temporary force majeure.

  1. Urgent and extraordinary situations caused by the contagion of the workforce or the adoption of preventive isolation measures, which are duly accredited.
  2. Lack of supplies that seriously impede the normal development of the activity, or impose the suspension of certain work activities, provided that they come from exceptional measures decreed by the governmental authority or recommended by health authorities. Both cases occur in the case of the Covid-19.

What is interesting to learn about ERTE and force majeure?

  1. The effects of the temporary suspension or the reduction of working hours (ERTE temporary regime) shall be considered as starting from the date of the causal event, and which extend:
  2. during the period of time decreed by the competent Authority, or
  3. while serious and extraordinary circumstances persist, with the intensity described above.
  4. To carry out an ERTE, you must follow the procedure established by the Labour Authority. For this, you must have the prior authorisation of the Labour Authority, which must verify the existence of force majeure.
  5. After an ERTE is decreed, the company is still allowed to adopt, in addition, suspension measures derived from economic and productive causes, for the rest of the staff, and for a later period of time.

2.- Economic activity and productive infrastructure:

Companies can also adopt measures to suspend or reduce working hours for economic or productive reasons. This will allow adjusting the workforce by:

  • decrease in workload, or
  • changes in systems or working methods.

Are you adversely affected by suspensions?

Should you wish to consult our office of Economists & Lawyers in Malaga and Nerja, please do so through any of our communication channels. We are located right in the centre of Malaga and also in Nerja.

We will advise you on how to face the suspensive effects, and endure the economic and labour crisis that the situation created by the Coronavirus has generated.