One of the most notable new features of the so-called "labor reform" is the RED Mechanism for Flexibility and Employment Stabilization, which has been referred to as "the new ERTE".
We would like to inform you about a current issue, namely the new Employment Flexibility and Stabilization Network Mechanism, which seeks to replace the ERTEs introduced in the 2022 Labor Reform.
If there's one thing almost everyone agrees on lately, it's the immense usefulness of temporary layoff schemes (ERTEs), which have helped both workers and companies. That's why they've become a strategic element for the future.
One of the most notable new features of the so-called "labor reform" (Royal Decree-Law 32/2021) is the RED Mechanism for Flexibility and Stabilization of Employment, which has been referred to as "the new ERTE".
However, Royal Decree-Law 32/2021, the legislation that brought the "labor reform" to the Official State Gazette (BOE), does not include the RED Mechanism for Employment Flexibility and Stabilization as a substitute for the ERTE (Temporary Layoff Plan). This is a new internal flexibility measure that will coexist with the ERTE regulated in Article 47 of the Workers' Statute, which is the ERTE that existed before the pandemic, and whose regulations are also being modified.
In summary:
There are now two types of internal flexibility measures, as an alternative and priority formula to the termination of employment contracts:
- The temporary employment regulation file - article 47 of the Workers' Statute - which allows the reduction of working hours or suspension of the contract for economic, technical, organizational or production reasons or derived from force majeure.
- And the new RED Mechanism for Flexibility and Stabilization of Employment - article 47 bis, which is incorporated into said legal text - specially regulated to address the exceptional needs of a macroeconomic or sectoral nature that justify the adoption of adjustment and temporary protection measures, as well as public investments, after a declaration of such circumstance by agreement of the Council of Ministers.
In other words, a specific ERTE (Temporary Layoff Plan) model for situations like the current pandemic is being incorporated into the Workers' Statute. To help you understand the duplication, the RED mechanism would be equivalent to the ERTE of Royal Decree-Law 8/2020, but already included in the regulations to address any crisis situation that may arise in the future.
So much so that the General Social Security Law already contemplates the uniform regulation of employer contributions in the different cases of temporary reduction of working hours or temporary suspension of the employment contract (articles 47 or 47 bis of the consolidated text of the Workers' Statute Law) and also establishes the benefits in the Social Security contribution applicable to the temporary employment regulation files regulated in article 47 of the consolidated text of the Workers' Statute Law, as well as those applicable in relation to the new RED Mechanisms of Flexibility and Stabilization of Employment referred to in article 47 bis of the same consolidated text.
What is the RED Mechanism for Employment Flexibility and Stabilization?
This is a new figure that is regulated in the new Art. 47 bis of the Workers' Statute and is defined as an instrument of flexibility and stabilization of employment that must be activated by the Council of Ministers and that will allow companies to request measures of reduction of working hours and suspension of employment contracts in certain cases and with the following specialities.
- Modalities of the RED Mechanism
Two options are planned:
- Cyclical: When a general macroeconomic situation is observed that advises the adoption of additional stabilization instruments with a maximum duration of one year.
- Sectoral: When in a certain sector/s of activity permanent changes are observed that generate needs for retraining and professional transition, with a maximum initial duration of one year and the possibility of two extensions of six months each.
- Procedure
The RED Mechanism for Flexibility and Stabilization of Employment will be activated by the Council of Ministers.
In the sectoral modality, the most representative trade union and business organizations at the state level may request the convening of a tripartite commission to analyze the need to activate this measure in a specific sector.
Once the RED Mechanism is activated, companies can request a reduction in working hours or the suspension of contracts from the competent labor authority. Simultaneously, the workers' legal representatives will be notified. In the sector-specific approach, a retraining plan must be included.
The procedure will be processed in accordance with the provisions of article 47.5 of the ET (ERTE due to force majeure), after a consultation period in the terms regulated in 47.3 of the ET (ERTE ETOP), with a series of particularities.
The labor authority must forward the company's request to the Labor Inspectorate and obtain the mandatory report from the latter on the concurrence of the requirements, which will be issued within the non-extendable period of seven days from the notification of commencement by the company to the labor authority.
The consultation period may end:
- With agreement: the labor authority will authorize the application of the mechanism.
- Without agreement: the labor authority will decide whether to accept or reject the request based on whether or not the cyclical or sectoral situation exists.
The labor authority must issue a decision within seven calendar days of the conclusion of the consultation period. If no express decision is issued within this period, the measures will be considered authorized.
- Common rules applicable to both modalities of the RED Mechanism
- The possibility of extension and the other measures common to all ERTEs provided for in article 47 ET will be applicable to both modalities of the RED Mechanism for Flexibility and Stabilization.
- The affected workers will be entitled to a specific benefit from the RED Mechanism.
- A RED Fund for Flexibility and Stabilization in Employment is established to meet future financing needs for benefits and exemptions from Social Security contributions and training costs.
- During the implementation of the measures, companies may develop training actions for the affected workers with the aim of improving professional skills and their employability.
You can contact this professional office for any questions or clarifications you may have.
Warm regards,
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A Àmbit Assessor, SL has 40 years dedicated to the tax, comptable and labor consultancy of the Pime.
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