ERTE vs ERE in Spain: Differences, Pay, and Your Rights

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In the dynamic Spanish labor market, the acronyms ERE and ERTE often generate deep anxiety and confusion for both employees and employers. Although they share three letters, the difference between these two measures is vast: one temporarily suspends or reduces the employment relationship, while the other terminates it permanently. Understanding the legal framework governing these procedures, knowing exactly how much you will be paid in each scenario, and knowing the deadlines to react is essential to protecting your financial and labor rights in Spain.

What is an ERTE and what is an ERE? Definitions and Legal Framework

To understand the substantial difference between both mechanisms, we must look to our primary labor regulation: the Real Decreto Legislativo 2/2015, de 23 de octubre, por el que se aprueba el texto refundido de la Ley del Estatuto de los Trabajadores (hereinafter, Estatuto de los Trabajadores or ET / Workers' Statute).

The ERTE: Temporary Employment Regulation File

The ERTE is mainly regulated by *Article 47 of the Estatuto de los Trabajadores. It is an internal flexibility measure that allows a company, on a temporary basis, to suspend employment contracts or reduce ordinary working hours (by between 10% and 70%*).

The grounds that enable a company to apply for an ERTE are:

• ETOP causes: Economic, Technical, Organizational, or Production-related reasons.
• Force Majeure: Catastrophic, unpredictable, or unavoidable events (as occurred on a massive scale during the COVID-19 pandemic or during natural disasters).

The key to the ERTE: The employment bond is not broken. The employee still belongs to the company but stops rendering services (or works fewer hours) and, therefore, stops receiving their usual salary (or receives the proportional part), moving on to collect an unemployment benefit.

The ERE: Employment Regulation File (Collective Dismissal)

The ERE, formally called collective dismissal (despido colectivo), is regulated by *Article 51 of the Estatuto de los Trabajadores. Unlike the ERTE, the ERE is an external flexibility measure aimed at the permanent termination* of employment relationships.

For a dismissal to be considered "collective" and legally required to be processed as an ERE, contract terminations due to ETOP causes must affect, within a period of 90 days, at least:

• 10 workers in companies with fewer than 100 employees.
• 10% of the workforce in companies employing between 100 and 300 employees.
• 30 workers in companies employing more than 300 employees.
• The entire workforce, provided that the number of affected workers is greater than 5, when the ERE occurs as a consequence of the complete cessation of business activity.

Key Differences Between ERTE and ERE

| Concept | ERTE (Art. 47 ET) | ERE (Art. 51 ET) | | :--- | :--- | :--- | | Duration | Temporary (has an end date or depends on a transitory cause). | Permanent (termination of the contract). | | Severance Pay | No severance pay exists (the contract remains in force). | Legal minimum of 20 days' salary per year worked (maximum of 12 monthly payments). | | Unemployment Benefit Consumption | Yes, it consumes unemployment benefits (except for exceptional rescue measures approved by the Government). | Yes, it consumes unemployment benefits from the worker's accumulated pool. | | Social Security Status | The worker remains registered (de alta). The company maintains the obligation to pay contributions (with possible exemptions). | The worker is deregistered (de baja) and enters the legal status of unemployment. | | Consultation Period | Mandatory but shorter (maximum 15 days or 7 days in companies with fewer than 50 workers). | Mandatory and longer (maximum 30 days or 15 days in companies with fewer than 50 workers). |

What Do You Get Paid in an ERTE? Amounts, Limits, and the Role of the SEPE

When you are affected by an ERTE, you stop receiving your payslip from the company (in the case of total suspension) or you receive the proportional part corresponding to the hours worked (in the case of a reduction in working hours). The rest of your income will come from the contributory unemployment benefit managed by the Servicio Público de Empleo Estatal (SEPE - State Public Employment Service).

Calculating the Benefit in an ERTE

The amount you will collect is calculated based on the regulatory base (base reguladora) of your salary (the average of your contribution bases for professional contingencies over the last 180 days prior to the ERTE, excluding overtime).

• During the first 180 days (6 months) in the ERTE, you will receive 70% of your regulatory base.
• From day 181 onwards, you will continue to receive 70% of the regulatory base (thanks to the reform introduced by Real Decreto-ley 1/2023, which eliminated the historical drop to 50% that was previously applied).

SEPE Maximum and Minimum Caps (2024 Data)

However, what you receive is not unlimited. The SEPE establishes monthly maximum and minimum caps depending on the worker's family responsibilities:

• Maximum limit (no children): €1,225.00 per month.
• Maximum limit (with 1 child): €1,400.00 per month.
• Maximum limit (with 2 or more children): €1,575.00 per month.
• Minimum limit (no children): €560.00 per month.
• Minimum limit (with children): €749.00 per month.

Note: If the ERTE is a reduction in working hours, these limits will be applied proportionally to the percentage of reduced working hours.

What Do You Get Paid in an ERE? Severance Pay and Unemployment

As a permanent dismissal, the ERE generates two fundamental financial rights for the worker: severance pay (indemnización por despido) and access to the unemployment benefit (paro).

1. Severance Pay in an ERE

The Estatuto de los Trabajadores sets a legal minimum that the company is obliged to pay. However, this amount can be improved during the negotiation period between the workers' representatives and the company.

• Legal minimum: 20 days of salary per year of service.
• Prorating: Periods of time shorter than a year are prorated by months.
• Maximum limit: The total amount of severance pay cannot exceed the equivalent of 12 monthly payments of salary.

The salary base used to calculate this severance pay is the worker's gross annual salary (including the proportional part of the extra payments, pagas extraordinarias) divided by 365 days.

2. Unemployment Benefit After an ERE

Once the contract is terminated, the worker enters the legal status of unemployment. They can apply for their accumulated contributory benefit:

• Duration: It will depend on the time contributed during the last 6 years prior to the dismissal (with a maximum of 2 years of benefit if contributions have been made for 2,160 days or more).
• Amount: Just like in the ERTE, you will receive 70% of the regulatory base for the entire duration of the benefit, subject to the same maximum and minimum caps mentioned in the previous section.

Practical Calculation Examples

To clearly visualize the financial impact of both measures, we will analyze two worker profiles with different salaries and family situations.

Example 1: Carlos, affected by a total suspension ERTE

Carlos works as a graphic designer at an advertising agency. He has no children. His average regulatory base for the last 180 days is €2,200 gross per month. The company is forced to carry out a total suspension ERTE on his contract for 3 months.

1. Theoretical calculation of 70%:

$$\text{€2,200} \times 0.70 = \text{€1,540}$$

1. Application of the legal limit: Since Carlos has no dependent children, the maximum monthly cap that SEPE can pay him in 2024 is €1,225.00.
2. Result: Carlos will not receive the theoretical €1,540. His actual monthly benefit during the ERTE will be exactly €1,225.00.

Example 2: Laura, affected by an ERE (Collective Dismissal)

Laura works as an administrative assistant for a clothing store chain that is closing down permanently. She has 2 dependent children. She has been working at the company for exactly 5 years (60 months) and her gross monthly salary (with prorated extra payments) is €1,800 (which is equivalent to a daily salary of €60).

1. Calculation of ERE severance pay (legal minimum):

• Severance days: 5 years $\times$ 20 days/year = 100 days of salary.
• Severance amount: 100 days $\times$ €60/day = €6,000.
• Checking the limit: The limit of 12 monthly payments would be €21,600 ($\text{€1,800} \times 12$). Since €6,000 is lower, Laura receives her €6,000 in full and exempt from personal income tax (IRPF).

1. Calculation of her unemployment benefit (paro):

• Her regulatory base is €1,800 per month.
• 70% of her regulatory base is €1,260.
• Checking the limits: Having 2 children, her maximum cap is €1,575.00. Since her €1,260 is below the cap, Laura will receive exactly €1,260 monthly in unemployment benefits.

Step-by-Step Practical Procedures

The administrative procedure for these files is complex and requires compliance with strict deadlines to avoid the nullity of the measures.

Step-by-Step in an ERTE

1. Communication of opening: The company formally communicates to the workers (or their union representatives) and the labor authority its intention to initiate an ERTE.
2. Consultation period: A negotiation table is opened for a maximum of 15 days (or 7 days if the company is small) to try to agree on measures to avoid the ERTE or reduce its impact.
3. Decision and notification: Once the period has ended (with or without agreement), the company notifies its final decision to the workers and the labor authority.
4. Processing unemployment benefits: Generally, the company itself submits the collective application for unemployment benefits to the SEPE on behalf of the workers. The employee does not have to apply individually, although they should monitor that the process is carried out correctly.

Step-by-Step in an ERE

1. Notification of start: The company communicates to the legal representation of the workers (representación legal de los trabajadores - RLT) and the labor authority the start of the consultation period for the collective dismissal.
2. Mandatory consultation period: Mandatory negotiation of between 15 and 30 calendar days. Here, severance pay, external outplacement plans (mandatory in companies with more than 50 workers), and criteria for designating those to be dismissed are discussed.
3. Individual dismissal notification: After the period closes, the company individually notifies each affected worker via a dismissal letter (carta de despido), indicating the cause, the effective date, and making the severance pay available to them.
4. Registration as a job seeker: Unlike in an ERTE, in an ERE the worker must register as a job seeker (DARDE) at the Public Employment Service of their Autonomous Community and subsequently apply for the unemployment benefit at the SEPE within 15 business days following the effective date of the dismissal.

Mistakes You Must Avoid

• Signing the dismissal letter in an ERE as "agreeing" (conforme) if you do not agree: Always sign by writing "No conforme" (Not in agreement) in your own handwriting next to the actual date of receipt. This does not prevent you from collecting severance pay or unemployment benefits, but it reserves your right to challenge the dismissal in court if you detect irregularities.
• Letting the challenge deadline pass: The deadline to sue for null or unfair dismissal in an ERE is only 20 business days (excluding Saturdays, Sundays, and public holidays) from the effective date of the dismissal, according to the Ley Reguladora de la Jurisdicción Social (LRJS - Law Regulating Social Jurisdiction).
• Not checking the severance pay draft: Many companies try to include incorrect concepts or fail to calculate actual seniority (for example, omitting previous temporary contracts or periods worked through temporary employment agencies, ETTs). All time worked at the company must count towards the calculation of the severance pay.
• Working under the table during an ERTE: Performing any undeclared work activity while suspended by an ERTE is a very serious offense that can lead to the loss of the benefit, the obligation to return what was collected, and severe financial penalties.

Frequently Asked Questions (FAQ)

Can I be dismissed while on an ERTE?

Yes, but with very important caveats. Companies that implement ERTEs with exemptions on Social Security contributions are usually subject to a 6-month employment maintenance commitment. If they dismiss a worker before that period is up, the company may be forced to return all the exempted contributions for all affected workers. However, fair disciplinary dismissal, retirement, or resignation of the worker does not violate this commitment.

What happens if I am dismissed through an ERE while on medical leave (IT)?

Being on temporary disability (incapacidad temporal - IT / medical leave) does not immunize you against a collective dismissal. If the cause of the ERE is real, objective, and affects your job position, the dismissal will be legal. However, you will continue to receive the temporary disability benefit through the mutual insurance company (mutua) or Social Security until you are medically discharged, at which point you will begin to consume your unemployment benefit.

Am I entitled to a settlement (finiquito) in an ERTE?

No. Since the employment contract is not terminated but only suspended, *there is no right to a settlement (finiquito)*. However, if the ERTE is a total suspension, during that time you will not accrue vacation days or the proportional part of the extra payments (unless your collective agreement states otherwise).

Who pays my severance if the company declares bankruptcy during the ERE?

If the company is in a judicially declared state of insolvency or bankruptcy (concurso de acreedores) and cannot pay the ERE severance packages, the Fondo de Garantía Salarial (FOGASA) (Wage Guarantee Fund) will assume the payment of the severance, within the established legal limits (a maximum of 120 days of salary with a limit of twice the daily minimum wage, SMI).

In Summary

• The ERTE is a strictly temporary suspension or reduction of working hours measure regulated by Article 47 of the ET.
• The ERE involves collective dismissal and the permanent termination of the employment relationship under the protection of Article 51 of the ET.
• In an ERTE, no severance pay is received; in an ERE, you are entitled to a legal minimum of 20 days' pay per year worked with a limit of 12 monthly payments.
• In both situations, you receive 70% of your regulatory base from the SEPE, subject to the current maximum and minimum caps depending on family responsibilities.
• The deadlines to react to a dismissal in an ERE are extremely strict, with only 20 business days available to challenge the decision in court.

General legal information, not personalised legal advice. For your specific situation, ask your question for free at AbogadoAI — answers grounded in Spanish law (BOE), in English.

This is general information, not legal advice. Verify on the BOE or consult a lawyer for your specific case.