ERTE for a company

What does the ERTE achieve?
The pandemic seems to be sufficiently widespread to require extraordinary containment measures in order to guarantee the company and employment in the aftermath of the pandemic. That said, a company can take, in the event of a health alert situation, a series of measures to mitigate the consequences of these exceptional cases.

We do not intend to alarm or cause fear with the spread of the Covid-19 virus, but to follow the indications published by the Ministry of Labor in the «Guide for action in the workplace in relation to the new Coronavirus».

The first forecasts indicate that, if the crisis continues, 10% of the small and medium-sized companies surveyed – 1,088 in total – are planning to resort to Temporary Layoffs, while 15% are considering the possibility of initiating partial stoppages of activity. This is a situation that could easily be reached, since 35% of this type of companies are registering a drop in sales or cancellation of bookings of between 10 and 15%.

It is necessary to differentiate the figure and separate it from the general approach of an ERE, or an ERTE, as a process generated only by adverse economic situations, of crisis, recession or accumulated drop in income. However, this can also be triggered by exceptional situations of force majeure:

Direct epidemiological causes, which generate a situation of absenteeism that makes the continuity of the service provided, or of production, impossible.
Due to the shortage or total lack of supply of elements or resources necessary for the development of the business activity as a consequence of the coronavirus affecting supplier or supplying companies.
Due to a decrease in the demand, the impossibility of rendering the services that constitute its object or an excess or accumulation of manufactured products, as a consequence of the decrease of the activity on the part of client companies.
What is an ERTE?

It is an Expedient of temporary regulation of employment) enables us to:

Suspend several work contracts for a determined period of time.
Or reduce for a period of time the working hours of some workers.

With it your companies will be able to reduce part of the loads in the period of inactivity. If we imagine an average wage cost of 2,000 € in a month of partial stoppages on half of a workforce of 16 workers, we will have:

2,000 € x 8 workers x 30 days = 16,000 € less burden to maintain the company and employment after the period of inactivity.

In addition, in order that this situation does not leave the workers unprotected, the Social Security and the Ministry of Labor have foreseen that there will be no consumption of unemployment during this period of suspension due to the causes derived from the Coronavirus.

The ERTE measure is regulated by the regulation of the procedures of collective dismissal, suspension of contracts and reduction of working hours, which establishes a procedure whose cause has to be established by the Labor Authority and after a report from the Labor Inspection, and any additional reports considered essential.