ERE — Collective Redundancy in Spain

What Is an ERE in Spain?

An ERE (Expediente de Regulación de Empleo) is the Spanish legal framework for collective redundancies, collective suspensions of employment, and collective reductions in working hours. Established primarily by Articles 47 and 51 of the Estatuto de los Trabajadores (Workers’ Statute), an ERE imposes strict procedural, negotiation, and notification requirements on employers who need to restructure their workforce.

The term “ERE” in everyday Spanish usage typically refers specifically to a collective dismissal (extinción), distinguishing it from an ERTE, which covers temporary suspensions. However, the statutory concept encompasses both collective dismissals and temporary measures.

When Is an ERE Required?

A company must follow the collective redundancy procedure when, within 90 days, the dismissals reach the following thresholds:

Dismissals below these thresholds may be handled as individual or plural despidos objetivos under Article 52 ET, with a shorter procedure but identical grounds.

Legal Grounds for an ERE

An ERE must be justified on one of four statutory grounds:

• Economic (económicas): Actual or anticipated losses, persistent decline in revenues or sales (defined as three consecutive quarters below same period of prior year).
• Technical (técnicas): Changes in the means of production.
• Organisational (organizativas): Changes in work systems or organisational methods.
• Productive (productivas): Changes in demand for products or services.

Spanish courts have moved away from requiring companies to demonstrate insolvency; demonstrating economic rationality is sufficient.

The ERE Procedure Step by Step

1. Opening Communication (Comunicación de Apertura)

The employer opens the procedure by simultaneously notifying:

• The legal representatives of workers (works council or trade union delegates)
• The labour authority (autoridad laboral — SEPE or the autonomous community)

The opening communication must include a detailed explanatory memorandum (memoria explicativa) covering the causes, number and classification of affected workers, criteria for selection, proposed measures to mitigate the impact (redeployment, voluntary redundancy, early retirement), and the proposed timeline.

2. Consultation Period (Período de Consultas)

The consultation period is the core of the ERE procedure:

• Duration: A minimum of 30 calendar days (15 days for companies with fewer than 50 employees).
• Purpose: Genuine negotiation with the aim of reaching an agreement (acuerdo). The parties must negotiate in good faith, but an agreement is not legally required.
• Content: Measures to avoid or reduce redundancies, attenuate consequences (early retirement, training, outplacement), social plan (plan social) for companies with 50+ affected workers.

During consultation, the employer may not execute any dismissals. Parties may request the involvement of the SMAC (mediation and conciliation service) or a mediator.

3. Outcome: Agreement or Decision

• With agreement: The employer notifies the labour authority and may proceed. The agreed terms are binding.
• Without agreement: The employer issues its own decision (decisión empresarial), which must comply with the statutory minimum severance and respects any protective measures negotiated.

4. Individual Notification

Each affected worker receives individual written notice with:

• Effective date (minimum 15 days after notification)
• Severance pay placed at their disposal
• Statement of the company’s decision and grounds

Severance Rights in a Collective ERE

Workers dismissed through a collective ERE are entitled to statutory severance of 20 days’ salary per year of service, capped at 12 months’ salary. This is the legal minimum; agreements reached during consultation frequently provide enhanced terms (30, 33, or 45 days per year, uncapped).

The severance must be paid simultaneously with the dismissal letter, or placed in a notarial deposit if disputed.

Priority Rules: Who Must Be Retained

Spanish law establishes retention priority (prioridad de permanencia) for:

• Workers’ legal representatives (works council members, trade union delegates)
• Workers with recognised disabilities of 33% or more
• Other groups as agreed in the applicable collective bargaining agreement

Selection criteria for redundancy must be objective and non-discriminatory. Age alone is not a valid criterion in isolation.

Judicial Review and Collective Challenges

Workers and their representatives may challenge an ERE through the courts. Key outcomes:

• Collective challenge (impugnación colectiva): The works council or union may challenge the entire ERE at the Audiencia Nacional (for national-scope procedures) or the Tribunal Superior de Justicia of the autonomous community.
• Individual challenge: Each dismissed worker may challenge their individual dismissal within 20 working days.
• Null ERE (ERE nulo): If the consultation period was fraudulent, if the employer failed to provide required documentation, or if the dismissals are discriminatory, the court may declare the ERE null, obliging reinstatement of all workers with full back pay.
• Unfair ERE (ERE improcedente): If the grounds are insufficient, enhanced severance of 33 days per year (capped at 24 months) applies.

Special Protections

Certain worker categories enjoy special protection during collective redundancy:

• Pregnant workers and those on parental leave cannot be selected for redundancy except where the entire unit or department is closed.
• Workers close to retirement may have priority for early retirement schemes (prejubilación) negotiated in the social plan.
• Workers on long-term sick leave enjoy no absolute protection from ERE selection unless the illness is classified as disability.

Practical Considerations for Foreign Companies

International groups operating in Spain frequently underestimate the procedural complexity and negotiation dynamics of an ERE. Key points:

• The 30-day consultation is a minimum floor; complex cases routinely take 60–90 days.
• Works councils are well-advised and often engage external union lawyers. Expect genuine negotiation.
• Labour authority involvement means the process is quasi-public; management confidentiality is limited.
• Enhanced severance, outplacement, and early retirement arrangements are standard in practice, even where not legally required.
• FOGASA (the wage guarantee fund) pays severance up to a statutory cap if the company is insolvent; this does not substitute the employer’s obligation to pay.

Frequently Asked Questions

What is the difference between an ERE and an ERTE? An ERE permanently extinguishes employment contracts (collective dismissal). An ERTE temporarily suspends or reduces contracts, with workers returning to work once the cause ends. Both require a consultation period, but the ERE involves finality and severance payments.

Can a company in profit carry out an ERE? Yes. Profitability is not the legal standard. The test is whether the measure is justified for economic, technical, organisational, or productive reasons — including anticipated future losses or necessary reorganisation to maintain competitiveness.

Is SEPE authorisation required? For collective dismissals (ERE extinción), SEPE authorisation is not required after the 2012 labour reform — the company may act on its own decision after completing the consultation period. Authorisation remains required only for force majeure EREs.

What happens if the company does not follow the procedure? Failure to follow the ERE procedure (e.g., bypassing the consultation period, insufficient documentation) renders the dismissals null (nulos), requiring reinstatement of all workers plus back pay for the entire period.

What support can BMC provide? We advise companies throughout the ERE process: drafting the opening documentation and explanatory memorandum, strategic support during the consultation period, coordination with labour lawyers, individual dismissal letter preparation, Social Security settlement, and post-ERE compliance.