Suspension ERTEs and ERTEs for Working Hours Reduction
There are two kinds of Temporary Employment Regulation Files (ERTE) that have been authorized by force majeure as a result of the coronavirus crisis: suspension ERTEs and ERTEs of working hours reduction. According to government data, there are almost four million workers affected by an ERTE.
The rules for calculating how much is charged in the special unemployment benefit that the government has launched are different in each of them.
- Suspension ERTEs are those in which the employee’s work activity ceases completely. The employment relationship is totally suspended and neither the worker has the obligation to work nor the company to pay them. While the suspension period lasts, the worker will be at home and the State Public Employment Service (SEPE, the former INEM) will be in charge of paying them.
- ERTEs for Working Hours Reduction are those in which the worker continues to provide their services to the company, but does so in fewer hours than usual. In this way, the company will continue to pay the worker for the hours they work and the rest, which have been reduced, will be paid by the SEPE.
Below we explain the rules for calculating the receivable amounts, according to current regulations. They are an indisputable minimum that all ERTEs must respect, but nothing prevents companies from voluntarily improving these amounts for their employees.
How much is collected with a Suspension ERTE due to the coronavirus?
Collected Unemployment Benefit (Paro) percentage
The workers affected by a Suspension ERTE, once the Employment Service has recognized the benefit, will receive 70% of the regulatory base, which is calculated taking as reference the average of the contribution bases of the last 6 months where contributions were paid (180 days) and if there are none, of the period of time immediately prior to the date on which the ERTE occurs.
This percentage (70%) is the one that is charged during the first six months of unemployment due to ERTE. As of the seventh, 50% would be charged, but it does not enter into the forecasts that the State of Alarm and the duration of the ERTE will be extended to 6 months.
To explain it very simply, it can be said that during the ERTE the worker will receive approximately 70% of his previous gross salary, but taking into account that there is a minimum and a maximum amount that can be collected.
It must be remembered that in the ERTE due to the coronavirus, unlike the normal ERTE, the worker is not mandated to have any type of requirement like having accumulated minimum periods of prior contribution; to be able to collect this benefit is enough to have been registered for only one day before the ERTE.
A practical example of calculating the benefit of an ERTE
Pedro is a cook in a restaurant, full-time. Due to the health crisis, the government forces the closure of the hotel industry and the restaurant company makes a Suspension ERTE for all its employees.
If we take the contribution bases of the last 180 days (which appear on each payroll as “contribution for professional contingencies” or “Work Accident and Occupational Illness base”) and calculate the average, we have, for example, 1,200 euros. We multiply 1,200 euros X 6 months = 7,200 euros and divide by 180. 7,200 euros/ 180 days = 40 euros per day of regulatory base. This is the average of what Pedro has received daily in his payroll for the last 6 months.
And what he will receive from the unemployment benefit will be 70% of that amount (daily regulatory base), that is, Pedro’s unemployment benefit will be 28 euros a day (40 euros X 0.7), which SEPE will pay him in a monthly payroll monthly in arrears.
What will be received according to the SEPE resolutions?
In the resolutions that the SEPE sends informing of the payment of the benefit, it always expresses it like this: daily regulatory base of 40 euros. Stretch 70%. This means that Pedro will receive unemployment benefits of 28 euros a day, and 840 euros a month. €56.40 will be deducted from the indicated gross amount as the mandatory contribution of the worker to the Social Security contribution and, where appropriate, the corresponding personal income tax withholding in accordance with current tax regulations. We see that with the ERTE Pedro has gone from collecting 1,200 euros gross to 840 euros per month of unemployment. He has lost 30% of his salary.
Important: the rule of 70% of the regulatory base will not always give the final result of what the worker will receive, since there are some minimum limits (which guarantee that they will not receive less) and other maximums, which limit how much the worker can earn.
Minimum and maximum limits in the unemployment benefit
The minimum and maximum limits depend on whether the worker has children or not and on how many. These are the limits stated by the general regulations for unemployment benefits and are summarized in the following paragraphs, in which the amounts that appear are for workers who have totally suspended their work contract (100%) and who also had full-time contracts.
Minimum amount of the ERTE benefit (for fully suspended full-time contracts)
- Minimum amount of the contributory benefit without children: €527.24
- Minimum amount of the contributory benefit with one or more children: €705.18
Maximum amount of the ERTE benefit (for fully suspended full-time contracts)
- Maximum amount of the contributory benefit without children: €1,098.09
- Maximum amount of the contributory benefit with 1 child: €1,254.96
- Maximum amount of the contributory benefit with 2 or more children: €1,411.83
In the case of fully suspended part-time contracts, the previous maximum and minimum limits must be recalculated, applying to them the percentage that supposes the working day over the usual one for the company.
How much is collected with an ERTE for Working Hours Reduction due to the coronavirus?
We have already seen that the ERTE due to coronavirus does not have to be a total suspension, but that the company can agree that as a consequence of this health and economic emergency, the reduction of the working day of employees occurs, either by working fewer hours a day or working fewer days per month.
In this situation, the company will continue to pay the worker for the part of the day that they actually continue to work on and the Employment Service will take charge of paying the part that has been reduced.
Regarding the part of the working day that has been reduced with the ERTE and for which no work is done, the SEPE will pay 70% of the regulatory base. The company will continue to pay this employee the proportional part of the usual salary regarding the hours of work that are maintained.
The minimum and maximum limits of the unemployment benefit that we explained in the previous section, have to be adjusted in the case of ERTE for Working Hours Reduction, proportionally to that reduction.
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