New mechanisms of internal flexibility in companies to avoid dismissal entered the Spanish labour market playing field

Posted on 3rd January, 2022

Estimated reading time 3 minutes

On 30 December 2021 Spain introduced new labour market flexibility to avoid dismissals and meet the needs of businesses during the Covid-19 pandemic. By making these flexibility measures more accessible to companies outside of events like Covid-19, it is possible to reduce the cost of business in times of crisis. This means that dismissals and redundancies can hopefully be avoided.

When can the new measures apply?

The new laws formalise these arrangements so that companies may invoke them where there are economic, technical, organizational and/or production reasons (ETOP) or where force majeure provisions apply.

What are these flexibility measures?

The measures are: (1) a temporary employment adjustment (Expedientes de Regulación de Empleo”), known in Spain as "ERTEs") and (2) an employment flexibility and stabilisation mechanism (known in Spain as “RED”).

What do the new measures do?

Companies that provide training activities to employees included in the ERTE scheme are entitled to deductions from social security contributions and credit for financing.  The aim of the measures is to improve the professional skills of affected employees and enhance their employability. These mechanisms also allow companies to seek to reduce working hours and the suspension of employment contracts in certain cases. The new law also introduces a streamlined application procedure to expedite access to the new measures.

What action is required?

For more detailed information on accessing the news flexibility measures please contact our member firm contact who will be pleased to help you (see below).

Relevant Law and Ruling

  • Royal Decree-Law 32/2021, 28 December, on urgent measures for labour reform, the guarantee of employment stability and the transformation of the labour market
  • Art. 47 and 47 bis of the Workers' Statute

Find out more

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