European Foundation
for the Improvement of
Living and Working Conditions

The tripartite EU agency providing knowledge to assist
in the development of better social, employment and
work-related policies

EU PolicyWatch

Database of national-level policy measures

Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure ES-2022-12/2964 – measures in Spain

RED Mechanism for Employment Flexibility and Stabilisation

Mecanismo RED de Flexibilidad y Estabilización del Empleo

Country Spain , applies nationwide
Time period Open ended, started on 15 March 2022
Context Restructuring Support Instruments
Type Legislations or other statutory regulations
Category Employment protection and retention
– Income support for people in employment (e.g., short-time work)
Author Jessica Durán (IKEI) and Eurofound
Measure added 31 October 2022 (updated 03 November 2022)

Background information

Royal Decree-Law 4/2022, of 15 March, approves the procedure and the constitution of the RED Fund for the application of Temporary Redundancy Proceedings (ERTE); this deploys article 47 bis of the Workers' Statute, the result of the agreement on labour reform. The measure aims to allow companies belonging to sectors that have undergone structural and permanent changes to adopt transition and retraining measures. In this way, companies are encouraged to use flexibility to overcome situations of structural difficulty, derived from changes that are expressly described as permanent, and not to take measures based on the dismissal of workers.

The RED Fund has also been approved to meet the budgetary needs of this mechanism.

Content of measure

The RED Mechanism is a measure of flexibility and stabilisation of employment and is activated by the Council of Ministers for a sector of the economy or for a specific time cycle. In other words, this type of ERTE (Temporary Redundancy Proceeding) can have a cyclical or sectoral dimension, and must be activated by the Council of Ministers, after informing the most representative organisations.

Therefore, two types of ERTE RED are established: cyclical, which will provide companies with a stable framework in the event of a temporary or cyclical fall in demand due to macroeconomic causes, in order to avoid immediate dismissals following the 'shock', and sectoral, which will provide support for the retraining of workers in companies and sectors in transition that require permanent changes.

In the case of cyclical REDs, firms will be able to suspend part of their workforce for up to one year instead of laying them off. During this period of suspension, incentives will be provided for the training of workers, and exemptions from social security contributions are established. With regard to sectoral REDs, these will have to be accompanied by a retraining plan. To avoid traditional employment adjustment, the company can activate this mechanism for a maximum period of one year (six months, with the possibility of extending for a further six months), and facilitate the transfer of its workers to another company by means of their retraining. To this end, the host company will also receive a 50% bonus for six months.

This new regulation, which is the result of the labour reform agreed with the social partners, implements new internal flexibility mechanisms in companies to avoid redundancies, revising the current ERTE (Temporary Redundancy Proceeding) model.

The measures that can be authorised to the company are the temporary suspension of the work contract or the reduction of the working day of the workers.

During these measures, workers will receive social protection.

During the application of the RED Mechanism, each worker may only be affected by a reduction in working time or a suspension of his/her contract (it is not possible to apply both at the same time). To start the process, the company must send a request to the corresponding labour authority, as well as inform the legal representation of the workers. The company's management must inform the workers or their representatives of its intention to initiate the RED Mechanism process. Once the workers' representative committee has been set up (or once the deadline for this has passed), the company will send the notification of the start of the consultation period.

In the case of the sectoral mechanism, the company must present a retraining plan for the people affected (training actions).

Use of measure

Unknown

Target groups

Workers Businesses Citizens
Applies to all workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Social partners jointly
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Agreed (outcome) incl. social partner initiative Agreed (outcome) incl. social partner initiative
Form Consultation through tripartite or bipartite social dialogue bodies Consultation through tripartite or bipartite social dialogue bodies

Social partners' role in the implementation, monitoring and assessment phase:

  • Social partners jointly
  • Main level of involvement: Peak or cross-sectoral level

Involvement

In December 2021, the Government, the trade unions CCOO (Comisiones Obreras) and UGT (Unión General de Trabajadores) and the employers' organisations CEOE (Confederación Española de Organizaciones Empresariales) and CEPYME (Confederación Española de PYMEs) reached an agreement on the structural reform of the labour market in Spain. As a result of this negotiation and this agreement, the RED mechanism was born, to address cyclical or sectoral crises with negotiated internal flexibility, training and retraining of workers, and avoiding dismissals.

Views and reactions

The trade unions UGT and CCOO are very satisfied with the agreement reached in December 2021, after more than nine months of negotiations (since March 2021), which includes internal flexibility measures as alternatives to dismissals, through the RED Mechanism. This mechanism reduces redundancies by enabling temporary working time adjustment formulas. Business representatives (CEOE and CEPYME) are also satisfied with this mechanism, especially because of the discounts on social security contributions included for companies.

Sources

Citation

Eurofound (2022), RED Mechanism for Employment Flexibility and Stabilisation, measure ES-2022-12/2964 (measures in Spain), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/ES-2022-12_2964.html

Share

Eurofound publications based on EU PolicyWatch

30 January 2023

 

Measures to lessen the impact of the inflation and energy crisis on citizens

Governments across the EU continue to implement policies to support citizens and businesses in the face of rising food and energy prices caused by the COVID-19 crisis and intensified by the war in Ukraine. This article summarises the policy responses as reported in Eurofound's EU PolicyWatch database from January to September 2022.

Article

12 September 2022

 

First responses to cushion the impact of inflation on citizens

Although the worldwide pandemic situation had already disrupted supply chains and triggered increases in energy and food prices in 2021, the situation deteriorated in 2022 with the Russian invasion of Ukraine.

Article

12 September 2022

 

Policies to support EU companies affected by the war in Ukraine

This article summarises the first policy responses that governments across the EU have started to implement to support companies affected by the rising prices, and those with commercial ties to Ukraine, Russia or Belarus.

Article

5 July 2022

 

Policies to support refugees from Ukraine

This article summarises the first policy responses of EU Member States, including those of the social partners and other civil society actors, enabling refugees to exercise their rights under the Temporary Protection Directive.

Article

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.