Collective Redundancy (ERE): Legal Certainty at Every Stage of the Procedure

The collective redundancy proceeding (ERE — Expediente de Regulación de Empleo) is the procedure under Article 51 of the Workers' Statute (Royal Legislative Decree 2/2015) for the collective termination of employment contracts on economic, technical, organisational or production grounds. Royal Decree 1483/2012 governs the applicable procedure and required documentation. Three numerical thresholds determine when it applies: 10 terminations in companies with fewer than 100 employees, 10% of the workforce in companies of 100 to 299 employees, and 30 terminations in companies of 300 or more. The statutory compensation is 20 days' pay per year of service, capped at 12 monthly payments. Non-compliance with the formal requirements can result in the ERE being declared null and void and the obligation of immediate reinstatement of the affected workers.

A well-managed ERE is, above all, a procedure that demands advance planning, solid documentation and good-faith negotiation. Companies that commence a collective redundancy proceeding without specialist advice make errors in the documentation of grounds or in observing the consultation period time limits that can turn a viable procedure into a null ERE. Nullity is not merely a legal setback: it requires the reinstatement of all affected workers with payment of processing wages, which can be more costly than any improved compensation that might have been agreed.

Thresholds and types of grounds: the preliminary decision that conditions everything

Before initiating any internal communication, the company must determine whether the intended terminations exceed the thresholds of Article 51 ET. If they do not, the applicable procedure is the objective dismissal under Article 52(c) ET, with fewer formal requirements but the same compensation. Choosing the wrong procedure is one of the most common and most costly errors: initiating an objective dismissal when an ERE should have been used generates the same nullity as a defective ERE.

Economic grounds require establishing current or forecast losses, or a sustained decline in revenues or ordinary sales over three consecutive quarters compared to the same quarters of the previous year. Technical, organisational or production grounds require justifying the specific changes that make the workforce reduction necessary. The documentation establishing each type of ground is different and must be prepared with technical precision before commencing the procedure.

The consultation period: negotiation, documentation and time limits

The consultation period is the core of the ERE procedure. It has a maximum duration of 30 calendar days for companies with 50 or more employees, reduced to 15 days for smaller companies. During this time, the company and the workers’ representatives negotiate in good faith on the selection criteria for those affected, measures to mitigate the consequences and, if possible, the scope of the proceeding itself.

The employees’ negotiating committee is constituted differently depending on whether the company has organised trade union representation (works council or worker delegates) or not. In the latter case, the workers themselves can elect an ad hoc committee or assign representation to the most representative trade unions in the sector.

The company is obliged to provide all justifying documentation before the start of the consultation period and to hold periodic meetings. RD 1483/2012 establishes the minimum content of the documentation according to the type of grounds invoked. Incomplete documentation or documentation provided late can found a subsequent challenge to the ERE.

Compensation, social plan and execution

The statutory compensation in an ERE is 20 days’ pay per year of service, with a maximum of 12 monthly payments. This may be improved by agreement during the consultation period. The negotiation typically also covers social plan measures: retraining for outplacement, early retirement, voluntary working-time reductions, and, where the ERE affects 50 or more workers, the mandatory external outplacement plan (Art. 51.10 ET) with a minimum duration of six months, fully funded by the company.

Once the consultation period has concluded — with or without an agreement — the ERE execution requires simultaneous notification to the competent labour authority and individual notification to each affected worker with a minimum 15 days’ notice. The payment of compensation must be made on the effective date of termination and fully documented to withstand any subsequent claim.

Coordination with the tax and corporate track

In restructurings involving groups of companies or mergers and acquisitions, the ERE must be coordinated with the fiscal and corporate strategy of the group. The existence of a group of companies can affect the calculation of the thresholds, liability for compensation and information obligations. Our commercial law and criminal compliance teams work in coordination with the employment law team to ensure that the restructuring does not generate additional contingencies in other areas.

Nullity and challenge risks

Trade unions and affected workers can challenge the ERE before the Social Courts within 20 business days of the notification of termination. The most common grounds for challenge are: insufficiency of the supporting documentation for the grounds, non-compliance with the consultation period (number of meetings, content of the negotiation), failure to notify the labour authority, and fraud of law where the ERE is found to have been used to terminate contracts whose actual reason is disciplinary or in retaliation for trade union activity.

A declaration of nullity requires immediate reinstatement with payment of processing wages, while a declaration of unlawfulness requires the company to choose between reinstatement and compensation of 33 days per year of service (45 days for the period before 12 February 2012), with the corresponding additional financial impact.

Regulatory framework

• Workers’ Statute, Art. 51 (Royal Legislative Decree 2/2015 of 23 October)
• RD 1483/2012 — Collective dismissal procedure and documentation requirements
• Social Court Procedure Act (LRJS), Law 36/2011
• RDL 32/2021 — 2021 Labour Reform

This service is part of our employment law advisory practice.