A Collective Redundancy Procedure (ERE, for its Spanish acronym) is one of the labor terms that shows up most in economic news, but also one of the most often confused with other types of individual dismissal. This guide explains how a collective redundancy works from the perspective of an affected worker.
What a collective redundancy is
A collective redundancy (commonly called an ERE) is the termination of employment contracts for economic, technical, organizational, or production-related reasons, affecting, within a 90-day period, a minimum number of workers set according to the company's total headcount. Below those numerical thresholds, the termination is considered an individual or multiple objective dismissal, not a collective redundancy, even if the reasons cited are similar.
The reasons a company can cite
- Economic reasons: negative results, a persistent decline in revenue or sales.
- Technical reasons: changes in production means or tools.
- Organizational reasons: changes in staff work systems and methods.
- Production reasons: changes in demand for the products or services the company brings to market.
The consultation period: the key phase
Unlike an individual dismissal, an ERE mandatorily requires a consultation period with workers' legal representatives (the works council or, failing that, a specific negotiating committee), during which both the possibility of reducing the number of affected workers and the terms of the termination (severance pay, selection criteria, possible social support measures) are negotiated. This process can end with an agreement between the company and representatives, or without one, in which case the company can still proceed with the dismissals, though it's more exposed to legal challenges.
The legal minimum severance pay
The legal minimum severance for a collective redundancy on objective grounds is 20 days' salary per year worked, capped at 12 months' pay — the same amount that applies to an individual objective dismissal. However, it's very common for the consultation period negotiations to result in severance pay above that legal minimum, especially in EREs at large companies with the financial capacity to improve terms, as a way to facilitate departures and reduce conflict.
What happens if you disagree with your inclusion in the ERE
If you believe your inclusion in the ERE isn't justified, or that the selection criteria applied were discriminatory or arbitrary, you can challenge the decision individually, regardless of the outcome of the collective consultation period. The deadlines for challenging a dismissal are short, so it's worth acting quickly if you have doubts about the legality of your inclusion.
Compatibility with unemployment benefits
As with any dismissal on objective grounds, being included in an ERE grants access to unemployment benefits if the general prior-contribution requirements are met, regardless of the severance amount agreed.
Estimate your rough severance pay
Our severance pay calculator lets you make a rough estimate of the legal minimum severance you'd be entitled to based on your tenure and salary, as a reference before the final agreement from the consultation period is known.