A guide to choosing between ERTE and ERE for your company in 2026
Last reviewed: July 2026
Area: Labour law
Who this is for: companies and SMEs weighing a workforce adjustment
When a company goes through a drop in activity, a production stoppage or economic difficulties, the same question keeps coming up: should we adjust the workforce temporarily, or make a definitive decision? Confusion between an ERTE (temporary layoff procedure) and an ERE (collective redundancy procedure) is common, and it is not a minor nuance: it involves different legal options, different costs and very different consequences for both the company and the employees.
The risk of choosing wrong is not only financial. An ERTE that is poorly framed when the underlying cause is actually structural can end up, months later, in a forced ERE and on worse terms. Conversely, starting an ERE when the difficulty is merely cyclical can mean avoidable severance payments and a loss of talent the company will need to recover once the situation normalises.
In this guide we explain what each measure is, how they differ, which grounds justify each one, how they are processed, and what a company should assess before starting the procedure. By the end, you should be able to identify which instrument fits your situation and what legal steps it involves.
There is no one-size-fits-all answer: the choice depends on whether the company’s difficulty is temporary or permanent, how well that cause can be evidenced, and how much time there is to act. That is why it helps to start by understanding what each instrument is before comparing their differences.
What an ERTE is and what an ERE is
The ERTE: temporary suspension or reduction of the contract
An ERTE is a measure that temporarily suspends or reduces working hours. During its term, the employment contract is not terminated: the employee keeps their link with the company, even if they do not work (full suspension) or work reduced hours (reduced working time). Once the cause behind the ERTE disappears, the employment relationship resumes on the previous terms.
The ERE: definitive termination of the contracts
An ERE, on the other hand, involves the definitive termination of the affected employment contracts. It is what is commonly known as a collective redundancy. There is no possible reinstatement once it has been carried out, unless the company decides to hire again in the future, which legally would be a different employment relationship.
This is the fundamental difference between the two, and it drives everything else: an ERTE is designed to get through a temporary difficulty without losing the team; an ERE is designed to permanently adjust the workforce.
Legal basis: article 47 versus article 51 of the Workers’ Statute
An ERTE is regulated under article 47 of the Workers’ Statute, which covers the suspension of contracts and the reduction of working hours for economic, technical, organisational, production or force majeure causes. An ERE, in turn, is regulated under article 51 of the same law, specifically dedicated to collective redundancy.
This split in the regulations is not accidental: the legislator wanted to give companies an intermediate route — the ERTE — that allows them to temporarily adjust activity without going straight to job termination, reserving collective redundancy for cases where the cause permanently affects the viability of the position.
Knowing the applicable legal framework well matters, because it sets out different formal requirements (documentation, deadlines, competent bodies) that, if not observed, can result in the procedure being declared null.
Key differences between them
This table summarises the main differences between ERTE and ERE:
| Aspect | ERTE | ERE |
|---|---|---|
| Nature | Temporary suspension or reduction of the contract. | Definitive termination of the contract (collective redundancy). |
| Legal basis | Article 47 of the Workers’ Statute. | Article 51 of the Workers’ Statute. |
| Grounds | Force majeure or ETOP causes, of a temporary nature. | Economic, technical, organisational or production causes, of a structural nature. |
| Financial effect on employee | Unemployment benefit, no severance. | Severance of 20 days’ pay per year worked, up to 12 monthly payments. |
| Reinstatement | Automatic once the cause ends. | Does not exist: requires new hiring. |
Financial consequence for the employee
In an ERTE, affected employees do not receive severance, because the contract remains in force. However, they can access unemployment benefit during the suspension or reduced-hours period, managed by the State Public Employment Service, even if they lack the minimum contribution period required in other circumstances. In addition, under certain conditions set by current regulations, part of the benefit consumed can be reinstated, and the company may benefit from partial exemptions on social security contributions depending on the type of ERTE applied.
In an ERE, employees whose contract is terminated are entitled to severance of 20 days’ salary per year worked, up to a maximum of 12 monthly payments, unless an improved figure is agreed in the procedure itself or set by collective bargaining agreement. This financial difference is, in many cases, the factor that weighs most heavily on the company’s decision, especially when weighing the cost of keeping the workforce against the cost of letting it go.
Causes and process for each procedure
Grounds that justify an ERTE
An ERTE can be processed on two clearly distinct grounds:
- ERTE on force majeure grounds: when the cause is beyond the company’s control (a disaster, an administrative order, a supply disruption not attributable to the organisation). It requires the labour authority to confirm that force majeure exists.
- ETOP ERTE (economic, technical, organisational or production causes): when the company is going through a negative economic situation, changes in production resources, reorganisation of work systems, or shifts in demand for its products or services, provided the difficulty is foreseeably temporary.
Grounds that justify an ERE
An ERE, by contrast, is justified by causes of the same nature (economic, technical, organisational or production) but with a decisive nuance: they must be structural, not cyclical. In other words, the company must show that the difficulty is not temporary and that terminating positions is a proportionate measure to safeguard the business’s viability.
The line between “temporary” and “structural” is precisely where most uncertainty arises in practice, and where a prior legal analysis is worthwhile before deciding which procedure to start.
Procedure and timelines
The procedure also differs significantly. An ERTE on force majeure grounds requires the company to report the situation, with the labour authority confirming the cause — generally a faster process than an ERE. An ETOP ERTE, on the other hand, requires opening a consultation period with employee representatives (or an ad hoc committee if none exists), of limited duration, and reporting the procedure to the Ministry of Labour and Social Economy as the competent labour authority.
An ERE also requires a consultation period, but its minimum duration is longer, the required documentation is more extensive (explanatory report, accounts, a social accompaniment plan in certain cases), and the process tends to take longer, precisely because its effects are definitive and directly affect the professional continuity of the employees involved.
In both cases, failing to meet deadlines or provide the required documentation can taint the procedure and open the door to a legal challenge.
When an ERTE makes sense and when an ERE does
Once an ERTE ends, the workforce is reinstated on the previous terms, with no need for new selection processes or new contracts. This lets the company keep the knowledge, experience and training investment already made in its teams, which is especially valuable for anyone operating in sectors where skilled talent is hard to replace. That is why, when there is a reasonable expectation of recovery in the medium term, an ERTE tends to be the more efficient option, even from a purely business perspective.
In an ERE, the workforce is permanently reduced. If activity recovers in the future, the company will need to start new hiring processes, with the time and cost that involves, and with no guarantee of recovering the same level of in-house experience. That is why an ERE makes sense when the cause is clearly structural: when there is no reasonable expectation that activity will recover and keeping the current workforce would jeopardise the business’s viability in the medium term.
In practice, the decision usually comes down to one question: if the cause disappeared tomorrow, would the company need the same people to return to normal operations? If the answer is yes, an ERTE is usually the right route. If the answer is no, because the role no longer fits the new business model, an ERE is the coherent route, even if it means a higher severance cost in the short term.
Common mistakes when choosing or filing the measure
Both an ERTE and an ERE can be challenged if not processed correctly, and most of the problems stem from mistakes that come up again and again:
- Opening a consultation period that is not genuine or in good faith, treating it as a formality rather than an effective negotiation with employee representatives.
- Failing to sufficiently evidence the alleged cause, whether force majeure, an ETOP cause or the structural cause that justifies an ERE.
- Making formal errors in the notification to the labour authority or in the documentation required by the procedure.
- Choosing the wrong instrument from the outset: filing an ERTE when the cause is already structural, or starting an ERE directly when the difficulty is only cyclical.
If an ERTE procedure is declared void, the company may be required to reinstate the employees and pay the wages they failed to receive. For an ERE, judicial challenges are more frequent and their financial consequences more severe, since they can lead to the collective redundancy being declared unfair or void, with an obligation to reinstate employees or pay additional compensation. That is why the greater the impact of the measure, the greater the rigour required in preparing and processing it.
How GraciaCalbet can help you
At GraciaCalbet we have spent more than 45 years advising companies through labour restructuring processes, and we know the choice between ERTE and ERE is not just a legal one: it has a direct impact on the viability of the business and on the people who make it up. That is why we always start by analysing the real cause your company is facing, before proposing the most appropriate legal instrument.
Our labour team supports you throughout the whole process: from the initial assessment of whether the situation justifies an ERTE on force majeure grounds, an ETOP ERTE or, where appropriate, an ERE, through to preparing the documentation, negotiating with employee representatives, and communicating with the labour authority. We work to make sure the measure matches the real cause, is processed within the deadlines, and is not left exposed to a later challenge. You can find out more about how we work in our employment regulation proceedings service, or consult us directly through our contact form.
If you have already ruled out an ERTE because your company’s cause is structural, you can find out more about the collective redundancy procedure in our article on collective redundancy legal advice for companies, where we detail how that route is managed once an ERTE is no longer a suitable option. You can also check our other labour law services if your company needs support in other areas of workforce management.
Frequently Asked Questions (FAQs)
Can a company move from an ERTE to an ERE if the situation does not improve?+
Yes. This is a relatively common situation when a cause that was thought to be temporary turns out to be structural. If, during or after an ERTE, the company finds the difficulty is not being overcome, it can start an ERE following the procedure under article 51 of the Workers’ Statute, with its own consultation period and documentation. There is no automatic link between the two procedures: each must be justified independently, with an updated cause, so the situation should be reassessed legally before taking that step.
How long can an ERTE last?+
The duration of an ERTE depends on the alleged cause and on what is agreed during the consultation period or set out in the labour authority’s decision. An ERTE for ETOP causes is usually set for a specific, renewable period if the cause persists, while one based on force majeure lasts as long as the exceptional situation that triggered it continues. In any case, an ERTE is not designed to run indefinitely: if the cause becomes permanent, other routes, including an ERE, should be assessed.
What happens to employees’ wages during an ERTE?+
During a full suspension of the contract, the company does not pay wages, and the employee receives the corresponding unemployment benefit through the State Public Employment Service. During a reduction of working hours, the company pays the proportional wage for hours actually worked, and the employee receives unemployment benefit for the part of the working day not worked. The specific conditions for accessing the benefit and any contribution exemptions depend on the type of ERTE and the regulations in force at the time it is processed.
Is it mandatory to negotiate with employee representatives in an ERTE?+
In an ETOP ERTE, yes: the law requires opening a consultation period with the employees’ legal representatives or, where none exist, with an ad hoc representative committee. In an ERTE based on force majeure, there is no consultation period as such, although the company must notify the employee representatives of the procedure, since this route centres on the labour authority confirming the alleged cause, not on prior negotiation over its appropriateness.
What happens if an employee disagrees with the ERTE?+
An individual employee, or the workforce’s legal representatives on their behalf, can challenge the ERTE if they consider the alleged cause unjustified or the procedure not properly followed. The challenge is resolved through the labour courts, and if the procedure is declared void or unjustified, the company may have to reinstate the employee on their previous terms and pay the wages corresponding to the affected period. That is why it is important for the cause to be properly substantiated from the start of the procedure.
Can a small business process an ERTE without union representation?+
Yes. When the company has no legal employee representation, the law provides for the formation of an ad hoc representative committee, made up of the employees themselves or, where applicable, representatives from the sector’s most representative unions, to ensure there is a valid interlocutor during the consultation period. This requirement mainly applies to ETOP ERTEs, and its correct formation is one of the aspects most scrutinised in the event of a subsequent challenge.
What is the difference between an ERTE and a reduced working day for family reasons?+
They are completely different concepts, though they are sometimes confused. An ERTE is an exceptional measure affecting a group of employees for business reasons (force majeure or ETOP) and requires processing before the labour authority. Reduced working hours for family reasons is an individual employee right, regulated separately, which can be requested for family or caregiving reasons, independent of the company’s economic or production situation or of any collective procedure.
Does my company need legal advice to process an ERTE?+
It is not a legal requirement, but it is highly recommended. Correctly classifying the cause, preparing the supporting documentation, meeting the consultation-period deadlines and properly notifying the labour authority are technical aspects that, if handled poorly, can lead to the procedure being declared void and to unforeseen financial obligations for the company. Having specialised advice from the start reduces that risk and speeds up the process.
