The Spanish Government proposes a new mechanism to replace ERTEs

The Spanish Government has presented to the social agents the design it proposes for the call ‘RED Mechanism for Flexibility and Stabilization of Employment’, which will allow companies to reduce the working day for a time or suspend the contracts of their workers, as in thefiles for temporary employment regulation (ERTE), but with special conditions and provided that certain circumstances arise.

Both the employers (CEOE and Cepyme) and the unions UGT and CCOO have already advanced that they reject the mechanism of the new ERTEs.

The proposal of the Executive of Pedro Sánchez implies the creating a fund to pay for these new ERTEs, in the style of the Pension Reserve Fund.

The management of the RED Fund will correspond to Public Service of State Employment (SEPE) and will be nourished by the surplus of income from unemployment social contributions both at the contributory and welfare level, from contributions from the General State Budgets, and from resources from European Union financing instruments aimed at fulfilling the objective and purposes of the Fund.

The RED Mechanism can be activated in two cases: for structural reasons, that is, when organizational, technical or structural productive changes take place in a certain sector or new work and production methods are introduced that generate losses of competitiveness associated with the maintenance of the workforce; and for cyclical reasons, that is, when there are economic causes derived from a general situation that makes it advisable to activate additional stabilization mechanisms.

The RED Mechanism may have a maximum duration of twelve months in case of agreement in the consultation period and six months in the event that the RED Mechanism is authorized by the labor authority when there is no agreement. In the event of the RED Mechanism for structural reasons, a maximum of two extensions of six months each may be requested.