When a company in Spain goes through difficulties or needs to restructure, labor law offers two tools with almost identical names and radically different consequences: the ERTE, which temporarily suspends or reduces contracts to ride out the storm without destroying jobs, and the ERE, which terminates contracts permanently when the adjustment is structural. Confusing them isn’t an academic nuance: one costs contributions and management for a few months, the other costs severance of at least 20 days per year and a full collective procedure.
This guide explains, with the rules in force in 2026 after the 2021 labor reform (which redesigned ERTEs precisely so companies would use them before resorting to dismissals), what each figure is, what causes justify each procedure, how they are processed step by step, what the worker collects during an ERTE, what obligations and prohibitions the employer takes on, and how much a termination ERE really costs. It’s written for the foreign employer and the entrepreneur with a workforce in Spain who needs to understand their options before the situation decides for them.
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What Is an ERE and What Is an ERTE?
Both are employment regulation procedures, that is, collective procedures for adjusting the workforce for business reasons. The difference lies in the effect on the contract:
- ERTE (Temporary Employment Regulation Procedure): regulated in Articles 47 and 47 bis of the Workers’ Statute, it suspends employment contracts or reduces working hours by between 10% and 70%, temporarily. The employment relationship stays alive: the worker keeps their position, their seniority, and their right to return, and meanwhile accesses unemployment benefit. There’s no severance because there’s no termination.
- ERE (collective dismissal): regulated in Article 51 of the Statute, it terminates the contracts of a significant number of workers permanently for economic, technical, organizational, or production reasons. It generates a minimum severance of 20 days’ salary per year worked and requires a reinforced consultation procedure.
The system’s philosophy after the 2021 reform is explicit: the ERTE is the preferred instrument of internal flexibility (which is why it was made cheaper and faster), and the ERE the last resort. For the employer, the decision between one and the other is the decision between paying time or paying exits.
Key Differences Between ERE and ERTE
| Aspect | ERTE | ERE |
|---|---|---|
| Effect on the contract. | Suspension or reduction of hours (10%-70%). | Permanent termination. |
| Severance. | No. | Minimum 20 days/year, cap of 12 months’ pay. |
| Workforce thresholds. | None: applies to any number of affected workers. | Yes: 10 / 10% / 30 workers in 90 days by size. |
| Consultation period. | Maximum 15 days (7 in companies with fewer than 50). | Maximum 30 days (15 in companies with fewer than 50). |
| Worker’s income. | Unemployment benefit (70%/60% of the base). | Severance + ordinary unemployment. |
| Return to the position. | Yes, with a right to return. | No. |
| Main cost to the company. | Employer contributions (with possible exemptions). | Severance and social plan. |
A nuance that surprises many employers: the ERTE has no minimum thresholds of affected workers. A company with 8 workers can process an ERTE for 2 of them; on the other hand, if it’s going to terminate contracts for business reasons below the ERE thresholds, the route is the individual objective dismissal of Article 52, which we analyze alongside the rest of the terminations in our guide on dismissal costs in Spain.
Causes That Justify Each Procedure
The causes are essentially the same for both procedures; what changes is their intensity and time horizon:
- Economic causes: a negative economic situation, current or foreseen losses, or a persistent drop in revenue or sales. For the ERE, the law presumes persistence with three consecutive quarters of decline compared to the same quarters of the previous year; for the ERTE, an evidenced short-term situation is enough.
- Technical causes: changes in the means or instruments of production.
- Organizational causes: changes in the systems and methods of work or in the way production is organized.
- Production causes: changes in the demand for products or services. A temporary drop in orders is the textbook ERTE; the structural loss of a market is ERE territory.
- Force majeure (ERTE only, with nuances): external, unforeseeable, and unavoidable events (fire, flood, disaster) and, since the 2021 reform, temporary force majeure due to impediments or limitations on activity decided by the public authority, the figure that channeled the pandemic ERTEs and became a permanent part of Article 47.
- RED Mechanism (Article 47 bis): the third route, activatable only by a decision of the Council of Ministers, in its cyclical modality (a general macroeconomic crisis, up to one year) and sectoral modality (sectors in transformation that require reskilling, one year with two six-month extensions).
The coherence rule the courts watch for: the measure must be proportional to the cause. Using a short-term cause to terminate, or chaining ERTEs to paper over a structural problem, is the classic recipe for a successful challenge.
Processing an ERTE
Since 2012, ERTEs for business reasons don’t require administrative authorization: the decision is the company’s after negotiating. The circuit of the ETOP ERTE (economic, technical, organizational, or production):
- Step 1: opening notice. The company notifies the workers’ representatives and the labor authority of its intention to start the procedure, with the documentation justifying the cause and the criteria for affecting workers.
- Step 2: forming the negotiating committee. Within a maximum of 5 days. If the company has no legal worker representation, the workforce elects an ad hoc committee of up to 3 members (or the sector’s representative unions form it), so that the absence of a works council doesn’t block the procedure.
- Step 3: consultation period. Maximum 15 days, reduced to 7 days in companies with fewer than 50 workers, one of the streamlining measures of the 2021 reform. The parties negotiate in good faith over the causes, scope, duration, and accompanying measures. The labor authority requests a report from the Labor Inspectorate.
- Step 4: decision and notice. With or without an agreement, the company notifies its decision to the representatives and the labor authority, and files the collective benefit application for the affected workers with the SEPE.
- Express extension: if the ERTE falls short, the 2021 reform allows extending it with a mini consultation period of just 5 days, notifying the extension to the labor authority.
The force majeure ERTE follows a different scheme: the company asks the labor authority to confirm the force majeure, which must be resolved within 5 days (positive silence), with effect from the triggering event. During any ERTE, the company is subject to three express prohibitions: it cannot work overtime, outsource the affected activity, or arrange new hires for tasks the suspended workers could perform, except for justified training or upskilling exceptions. Breaching them is a punishable violation and ammunition to challenge the procedure.
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Negotiating with the Workers’ Representatives
The consultation period is the legal heart of both procedures, and where they’re won or lost. Three practical keys:
- Real good-faith negotiation: case law annuls procedures where the company came in with the decision already made, without providing sufficient documentation or without moving from its initial position. Consulting isn’t informing: it’s negotiating with a genuine intent to reach an agreement, leaving a documentary trail of proposals and counterproposals in the minutes.
- Complete documentation from minute one: an explanatory memorandum, accounts, technical reports, criteria for designating affected workers. Insufficient documentation is the most frequent cause of voidness.
- The agreement shields you: closing the consultation period with an agreement of the majority of the representation presumes the existence of the causes and drastically reduces the risk of a collective challenge. Paying a bit more in accompanying measures in exchange for a signature is usually the best investment of the procedure. The role of the representatives and of collective bargaining in the company is explained in our guide on collective bargaining agreements in Spain.
The criteria for selecting affected workers deserve their own mention: they must be objective, non-discriminatory, and respect the priority of retention of the workers’ legal representatives (and of the groups the agreement or the accord protects). Affecting a pregnant worker or one with reduced hours without reinforced justification is inviting individual voidness, with the consequences we saw when covering void dismissal. The general framework of rights is in our guide on labor law, rights, and protections in Spain.
Worker Benefits During the ERTE
While the contract is suspended (or for the reduced-hours portion), the worker accesses contributory unemployment benefit, which the company applies for collectively with the SEPE. The numbers in 2026:
- Amount: 70% of the regulatory base (the average of the contribution bases of the last 180 days) during the first 180 days of benefit, and 60% from day 181 on.
- Caps: maximum of 1,225 € a month with no dependent children and 1,575 € with children; minimums of 560 € and 749 € respectively.
- In a reduction of hours: the worker collects the salary from the company for the hours actually worked and the benefit for the reduced portion, in proportion.
- Voluntary top-up: nothing prevents (and consultation agreements frequently stipulate) the company topping up the benefit to a percentage of the salary.
- RED Mechanism: it has its own specific benefit, of 70% of the regulatory base throughout its duration, with no qualifying period required and without consuming the worker’s future unemployment.
The worker’s status during the ERTE has more protective pieces: they keep accruing seniority, retain the right to return to their position on the same conditions, have priority access to training actions, and can generate entitlement to benefits as if they were active in several respects. For the company, the flip side: during the suspension it keeps its obligation to pay the employer contribution, though with exemptions if conditions are met: 20% in ETOP ERTEs conditional on training actions for the affected workers, and much higher percentages (up to 90%) in impediment-based force majeure and in the RED Mechanism brackets. The exemptions carry a 6-month job-maintenance commitment after resumption: dismissing within that period requires returning the exempted contributions of the affected worker.
The Termination ERE: Process and Costs
When the adjustment is structural, the collective dismissal of Article 51 is the required route if, within 90 days, terminations for business reasons reach the thresholds: 10 workers in companies with fewer than 100, 10% between 100 and 300, or 30 workers from 300 up (also if the entire workforce is terminated in closures of more than 5 workers). Splitting terminations into batches to dodge the thresholds leads to the voidness of the later ones. The procedure mirrors the ERTE’s with greater intensity: notice with reinforced documentation (a memorandum, audited accounts, a relocation plan), a consultation period of 30 days (15 in companies with fewer than 50), a report from the Inspectorate, and a final decision notified to the labor authority and to the affected workers individually, with a letter and the severance made available.
The realistic budget for an ERE includes quite a bit more than the 20 days per year (cap of 12 months’ pay) of minimum severance:
- Negotiated improvements: consultation agreements usually raise the severance (25-35 days or additional flat amounts) in exchange for industrial peace and a signature.
- External relocation plan: mandatory when the ERE affects 50 or more workers, contracted with an authorized agency and with a minimum duration of 6 months.
- Special agreement with Social Security for affected workers aged 55 or over (in companies not in insolvency proceedings), borne by the employer until the early retirement age.
- Contribution to the Public Treasury in EREs of companies with more than 100 workers turning a profit that include workers aged 50 or over, a deterrent surcost that multinationals discover late.
- Residual litigation: individual challenges by workers disputing their inclusion, the criteria, or the calculation.
For small workforces and young companies, the strategic reading is clear: size the teams well, agree correct probationary periods, and use internal flexibility (ERTE, modifications, irregular distribution) before terminations. It’s part of the labor design we work on with companies in a growth phase in our legal advice for startups in Spain service, and it connects with the correct choice of arrangements from the start, which we review in the guide on permanent contracts and temporary contracts.
ERE and ERTE are the two faces of the same decision: adjusting the workforce by destroying jobs or by preserving them. The Spanish system, after the 2021 reform, deliberately makes the second option cheaper with express procedures, exemptions, and protected benefits, and makes the first more expensive with severance, social plans, and contributions. The employer who understands that architecture chooses the tool by strategy and not by inertia: an ERTE with training for crises with an expiry date, a well-negotiated ERE for adjustments with no return, and always with the consultation period treated as what it is, the moment where the validity of the whole procedure is decided.
At ILLAY Legal we advise companies and foreign employers on planning and processing ERTEs and collective dismissals through fully online service: analysis of the cause and the optimal route, documentation, negotiation with the workers’ representatives, and management before the labor authority, the SEPE, and Social Security. Tell us your situation and we’ll tell you exactly which tool suits you and how much each scenario will cost.
Frequently Asked Questions: ERE and ERTE in Spain
How long can an ERTE last?
The ETOP ERTE lasts as long as the procedure sets in coherence with the alleged cause: the law imposes no general maximum, but temporariness is of its essence, so the duration must be proportionate to the short-term situation that justifies it and can be extended with the abbreviated 5-day consultation process. The force majeure ERTE lasts as long as the confirmed cause persists. The cyclical RED Mechanism has a maximum of one year, and the sectoral one of a year with two six-month extensions. An ERTE that drags on with no recovery horizon is the natural (and legally expected) prelude to the ERE.
Can a foreign company carry out an ERTE in Spain?
Yes. Any employer with workers in Spain, including the foreign company without a permanent establishment registered as an employer, can process an ERTE or an ERE for its Spanish workforce, with the same causes, procedure, and effects as a local company. If there’s no legal worker representation (usual in small workforces), the consultation period is negotiated with the ad hoc committee elected by the workers themselves. The only practical particularity is operational: the procedure requires dealing in Spanish with the labor authority, the SEPE, and Social Security, and economic documentation adapted to the Spanish standard, so local support isn’t optional.
Can the company dismiss during or after an ERTE?
With important caveats. There’s no general prohibition on dismissing today like the one in the pandemic ERTEs, but three limits operate: if the company enjoyed contribution exemptions, it takes on the 6-month job-maintenance commitment from resumption, and breaching it requires returning the exempted contributions of the affected workers; dismissing for the same causes that motivated the ERTE, during or immediately after, faces a very demanding line of case law (the short-term cause that justified suspending hardly justifies terminating without an evidenced substantial change); and the workers affected by the ERTE keep their protection intact against dismissals that mask retaliation or discrimination, with voidness as the penalty.
What exactly does a worker collect in a reduced-hours ERTE?
Two payments in parallel: the company pays the salary corresponding to the hours they keep working, with their ordinary contribution, and the SEPE pays the partial unemployment benefit corresponding to the percentage of suspended hours (70% of the proportional part of their regulatory base, 60% from day 181 of benefit). Example: with a 50% reduction and a base of 2,000 €, they would collect around 1,000 € of salary plus around 700 € of benefit for the first six months. ERTE agreements frequently add an employer top-up that brings the total close to the usual salary.
What is the RED Mechanism and how does it differ from a normal ERTE?
It’s the instrument created by the 2021 reform (Article 47 bis of the Workers’ Statute) for crises that overwhelm the individual company: only the Council of Ministers can activate it, in the cyclical modality (a general macroeconomic situation that advises stabilizing employment) or the sectoral one (sectors in transformation with reskilling needs). Once the mechanism is activated, the companies within its scope can apply for their RED ERTEs with reinforced advantages: higher and decreasing contribution exemptions, a specific benefit for workers of 70% of the base throughout its validity, with no qualifying period and without consuming future unemployment, and financing tied to training. It’s, in essence, the pandemic ERTE model turned into a permanent tool awaiting activation.
