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7 characteristics on collective dismissals

Labor Law
7 characteristics on collective dismissals

Unfortunately, economic cycles cause ups and downs at certain times due to an excess of personnel, the cost of which is impossible to maintain, so that many companies can continue to be profitable and competitive with respect to the competition.

Therefore, when in an unfavorable economic environment a company cannot continue to maintain the employment relationship with its workers, it must make an unpleasant decision, which is to terminate employment contracts.

This termination can occur through individual dismissals of any of the workers or collective dismissals, through the advice of lawyers specializing in labor law.

In this article, we will analyze the 7 essential points to know the collective dismissals, also known as ERE.

What is an ERE?

According to our lawyers, a collective dismissal or also called ERE, is a procedure by which various employment contracts are terminated for reasons related to economic, technical, organizational or production causes. Said extinction must occur for a minimum period of 90 days, affecting the following cases:

- Ten workers, in companies with less than one hundred workers.

- Ten percent of the number of workers in the company in those with between one hundred and three hundred workers.

- Thirty workers in companies with more than three hundred workers.

In smaller companies, it is worth considering the situation of collective dismissal or ERE, the termination of employment contracts that may affect the total workforce, when the number of workers exceeds five.

It should be remembered that collective dismissal is included in article 51 of the Workers Statute.

When can we understand that there are economic causes?

Our lawyers specialized in labor law understand that there are economic causes when an unfavorable economic situation in the company is appreciated, for example losses, decrease in the level of income for three consecutive quarters, compared to the quarters of the previous year.

When are there technical, organizational and productive causes to carry out an ERE?

Our attorneys appreciate the existence of technical causes when changes occur in the means of production. In the organizational causes it is necessary that changes take place in the modes of organization of production. And finally, productive causes, when there are changes in the demand for products.

What is the consultation period?

We must bear in mind that a collective dismissal or ERE will be accompanied by a period of consultations with the legal representatives of the workers and the lawyers specialized in labor law. This consultation period will deal with aspects such as the possibilities of avoiding or reducing collective dismissals, and the proposal of measures aimed at relocating workers.

How is a collective dismissal or ERE communicated?

The company, with the advice of the lawyers, must communicate to all the workers or, in default, their representatives, the agreement to initiate a collective dismissal procedure.

After communication, the period of consultation or negotiation between both parties should begin, in order to reach an agreement.

Once this period has elapsed, the result of the negotiation must be communicated to the competent labor authority. In the event that an agreement has been reached, a copy of the agreement must be notified. Otherwise, the final decision on collective dismissal must be communicated to the competent labor authority based on its conditions and decisive points.

ERE Types

We can differentiate between these different types of ERE:

- Reduction ERE: they occur when the working hours of the workers are reduced.

- Suspension ERE: workers stop working for a certain time.

- Termination ERE: the affected workers are dismissed. This type of ERE is what is known as collective dismissal.

What compensation corresponds to workers in case of an ERE?

In the cases that an ERE occurs, the compensation that corresponds to the workers will be the one agreed between both parties, and in default of the same, it will be equivalent to twenty days of salary per year worked, with a maximum of twelve monthly payments.

Contact us, and our lawyers specializing in labour law will study your specific case. 

At Forcam Abogados we have offices in BarcelonaMadrid and Reus.