What Is an ERTE and What Is an ERE?
When businesses face financial or operational challenges, they often turn to legal mechanisms to manage their workforce. In Spain, two such mechanisms are ERE and ERTE—tools that, despite their similar names, serve very different purposes.
An ERTE (Temporary Employment Regulation File) allows companies to temporarily suspend employment contracts or reduce working hours. The employment relationship is maintained, and employees are expected to return to work once the ERTE period ends.
An ERE (Employment Regulation File), by contrast, involves permanent collective dismissals. It terminates the employment relationship and requires companies to provide severance compensation.
At ALR Asesoría, based in Castelldefels and active since 1992, we have advised countless SMEs on the correct use of ERE and ERTE procedures, ensuring legal compliance and strategic alignment.
ERTE vs. ERE: A Clear and Practical Comparison
To understand the differences between ERE and ERTE, here’s a quick overview:
| Feature | ERTE (Temporary) | ERE (Permanent) |
|---|---|---|
| Nature | Temporary | Permanent |
| Employment relationship | Maintained | Terminated |
| Unemployment access | Yes, without a minimum contribution period | Yes, under standard requirements |
| Severance compensation | Not applicable | Minimum 20 days per worked year |
| Cost to company | Lower | Higher due to compensation |
This simple comparison helps clarify the core distinctions. At ALR, our first step is always to assess the company’s specific situation before recommending either an ere or erte approach.
Justified Causes for an ERTE: ETOP, Force Majeure, and Limitations
An ERTE may be justified by several causes:
- ETOP: Economic, technical, organizational, or production-related reasons.
- Force Majeure: Unforeseen events such as natural disasters or legal restrictions.
- Impediment or Limitation: Situations where administrative or health regulations affect operations.
During the pandemic, we at ALR assisted many businesses across Castelldefels, Gavà, and Viladecans with ERTE applications due to forced closures and activity limitations.
Legal Procedure: Step-by-Step Breakdown
ERTE Process
- Inform employee representatives.
- Notify labor authorities.
- Open consultation period.
- Implement the ERTE.
ERE Process
- Draft a detailed justification report.
- Conduct mandatory negotiations with employee reps.
- Notify the labor authority.
- Finalize and apply dismissals with severance payments.
At ALR, we handle the entire process—from documentation and strategy to negotiation and execution—ensuring full compliance with Spanish labor law.
Rights and Consequences for Employees and Employers
Under an ERTE, employees retain their jobs and are entitled to unemployment benefits. Their accumulated benefits remain intact, and they rejoin the company once the ERTE ends.
With an ERE, employees are permanently dismissed and receive compensation. Access to unemployment follows standard regulations.
From the company’s perspective, ere and erte decisions carry major legal and financial implications. That’s why we help our clients understand the full impact of each approach.
Impact on Compensation and Social Security Contributions
In an ERTE, companies may qualify for reduced or waived Social Security contributions. Employees continue accruing contributions as if fully employed.
In an ERE, the employment relationship ends, and no further contributions are made. Severance payments are legally mandated and can significantly increase company costs.
At ALR, our labor and accounting team runs financial simulations to compare both scenarios, offering clarity and helping our clients make data-driven decisions.
Real Cases and How ALR Takes Action
We don’t just talk theory. At ALR, we’ve been directly involved in managing numerous ere and erte cases across different industries.
ERTE Case: A retail shop in Castelldefels faced restricted hours due to COVID-19. We helped implement an ERTE for reduced hours, maintaining the full team until normal activity resumed.
ERE Case: A transport company in Sant Boi underwent restructuring. We led their ERE process, negotiating with unions and minimizing legal exposure.
Each client benefits from tailored legal, fiscal, and human resource support through every step of the process.
Advantages and Risks for SMEs and Local Businesses
ERE and ERTE procedures are more than legal formalities. They are strategic decisions with long-term consequences.
ERTE Advantages:
- Temporary flexibility
- Preserves workforce
- Government support and incentives
ERTE Risks:
- Complex paperwork
- Potential future audits
ERE Advantages:
- Definitive structural adjustment
- Suitable for permanent downsizing
ERE Risks:
- Higher financial costs
- Labor disputes if poorly executed
At ALR, we help SMEs weigh these variables carefully. Our job is to simplify the process and protect your business interests.
How ALR Asesoría Can Help You Navigate ERE and ERTE
Located in the heart of Castelldefels and with service points in Gavà, Viladecans, Cornellà, and Sant Boi, ALR offers comprehensive legal and business consulting.
Our team combines labor law expertise with in-depth knowledge of fiscal, accounting, and commercial strategy.
Whether you’re facing a temporary downturn or considering structural change, our team ensures your ere and erte procedures are legally sound and strategically aligned.
Thanks to our digital systems, we also provide national coverage. No matter your location, we make the process efficient and transparent.