ERTE Due to Force Majeure and COVID-19: Criteria from the General Directorate of Labor

IMPORTANT: This article analyzes the guidelines issued by the General Directorate of Labor on March 19, 2020, in the context of the state of emergency and the extraordinary regulations adopted during the COVID-19 health crisis. Currently, any matter relating to ERTE, contract suspensions, reduced working hours, force majeure, or economic, technical, organizational, and production-related causes must be reviewed in accordance with the specific case, current case law, and Article 47 of the Workers’ Statute, and Article 47 bis of the Workers’ Statute, the Royal Decree 1483/2012, dated October 29 , and the regulations in force at the time of the proceedings.

This post sets forth, for informational and historical purposes, the guidelines issued by the General Directorate of Labor on March 19, 2020, in the context of the state of emergency and the extraordinary measures adopted in response to COVID-19. Its content should be read in light of the regulatory context in which it was published.

For your information, we are publishing the guidelines issued by the General Directorate of Labor to provide guidance regarding ERTEs and force majeure resulting from the state of emergency and the coronavirus:

“Considering this to be a matter of common interest for all labor authorities, the following criterion from this General Directorate on the referenced matter is hereby conveyed:

1. 1. Concept of suspension or reduction of working hours due to force majeure and economic, technical, productive, and organizational reasons. (Articles 45 and 47 of the Workers’ Statute)

We refer, in general, to measures for the suspension or reduction of working hours, Articles 45 and 47 of the Workers’ Statute, when objective reasons justify the temporary suspension of contracts with exemption from reciprocal obligations to work and pay wages, while preserving basic labor rights.

These measures can be adopted by companies:

1. 1. As internal flexibility or adjustment measures in the face of a negative economic situation, a reduction in workload, or other circumstances related to market fluctuations.
   2. As measures resulting from interruptions or loss of activity caused by events occurring outside the company’s sphere that make it temporarily and reversibly impossible to continue providing services.
   3. Temporary Force Majeure. 2.1 Definition.

Force majeure is characterized by being an event external to the company’s sphere, objective in nature and independent of its will regarding the consequences it entails for the provision of work, with a disconnection between the damaging event and the company’s area of activity.

Force majeure results in the impossibility of fulfilling the content of the employment contract, either directly or indirectly, by affecting the catastrophic, extraordinary, or unforeseeable event in such a way that it prevents the company from maintaining the basic services that constitute its purpose.

In accordance with Article 22.1 of Royal Decree-Law 8/2020, of March 17, suspensions and reductions of working hours directly caused by activity losses due to Covid-19, and specifically those due to the following situations, are considered to arise from temporary force majeure with the effects provided in Article 47.3, which refers to Article 51.7, both of the Workers’ Statute:

1. 1. The declaration of the state of alarm by Royal Decree 463/2020, of March 14. In these cases, the company must prove that the impossibility of continuing to provide services—totally or partially—is caused by the various containment measures included in Royal Decree 463/2020, of March 14.

For these purposes, all activities included in Article 10 and the annex of the aforementioned royal decree are considered affected, to the extent provided in the preceding paragraph, by temporary force majeure.

1. 1. Decisions related to Covid-19 adopted by the competent authorities of Public Administrations.

Such decisions are understood to be ratified by the first final provision of Royal Decree 463/2020, of March 14, and produce the effects provided therein.

In this case, the documentation provided by the company must include the specific governmental decision, its effects, publication, and scope of content, to establish the causal link between it and the requested measure.

1. 1. Those due to urgent and extraordinary situations caused by staff contagion or the adoption of duly accredited preventive isolation measures.

In the case of health decisions—contagion and isolation—it will be necessary to provide accreditation of these and the specific number of affected individuals.

1. 19. Suspension or cancellation of activities, temporary closure of public venues, restrictions on public transport and, in general, on the mobility of people and/or goods, lack of supplies that severely impede the continuation of activity as a direct consequence of Covid-19.

In such cases, the causal link between the company’s loss of activity and the objective situations described as a consequence of Covid-19 must be proven.

2.2 Temporary Regime

The duration of suspension or reduction of working hours measures is limited to the duration of the temporary force majeure that caused them.

Thus, all activity losses caused by the stated reasons are understood to be included from the moment the triggering event or circumstance described as force majeure occurred, in accordance with Article 22.1 of Royal Decree-Law 8/2020, on urgent measures against Covid-19.

The effects of contract suspension or reduction of working hours due to force majeure will extend for the duration and under the conditions in which the state of alarm declared by the Government remains in force, and any extensions or modifications thereof that may be agreed upon, or while the serious and extraordinary circumstances constituting force majeure persist.

2.3 Procedure and competent labor authority

If the interruption of activity is understood to be caused by force majeure, it will be necessary, in any case, to follow the established procedure, Articles 31 to 33 of Royal Decree 1483/2012, requiring prior authorization from the labor authority, which is responsible for verifying the existence of force majeure.

For these purposes, the following circumstances must be taken into account:

1. 31. The competent labor authority will be understood as that provided for these purposes in Article 25 of the Procedure Regulation approved by Royal Decree 1483/2012, of October 29, which also applies to cases of force majeure according to its Article 31.
   32. The established deadlines are not considered interrupted in accordance with the exception provided in number 4 of the third additional provision of Royal Decree 463/2020.
   33. In accordance with Article 22.2 and the sole transitional provision of Royal Decree-Law 8/2020, of March 17, the special provisions will not apply to files initiated or communicated before March 18, 2020.
   34. In all cases, companies requesting authorization must commit to maintaining employment for six months following the resumption of activity, sixth additional provision of Royal Decree-Law 8/2020.

2.4 Personal scope of the measures

The personal scope of suspension or reduction of working hours measures will be limited to those employment contracts directly linked to the loss of activity caused by force majeure. In other words, the measures to be applied (suspensions and/or reductions) must be proportionate to the volume of activity halted or impossible to carry out.

In the case of contract staff:

1. 1. When it affects the contracting company, they will be affected to the extent that the contracted activity is affected and if they are workers permanently or habitually assigned to the services and/or workplaces of the main company, and only to the extent that an alteration of what is established in the contract is proven.
   2. In the case of contracts providing services in the public sector, the provisions of Law 9/2017, of November 8, on Public Sector Contracts, as well as Article 34 of Royal Decree-Law 8/2020, of March 17, will be taken into account.
   3. Measures for suspension or reduction of working hours due to economic or productive reasons.

Apart from the situation provided in the previous section with the objective, causal, and temporary limitations foreseen, companies may adopt measures for the suspension or reduction of working hours based generally on economic reasons—negative economic situation in a broad sense—or on productive reasons, derived from the need to adjust staffing due to a decrease in workload and directly resulting from Covid-19 when other alternative adjustment measures were not possible, or if adopted, were insufficient.

In these cases, the procedural rules established for this purpose by the applicable regulations will be followed, with the specificities provided in Article 23 of Royal Decree-Law 8/2020, of March 17, and in accordance with the provisions of section 1 of the first transitional provision.”

Experts in ERTE, labor law, and collective proceedings

At IN DIEM Abogados, we provide legal advice to companies, employees, executives, and professionals on matters related to ERTE, contract suspensions, reduced work hours, mass layoffs, force majeure, economic, technical, organizational, or production-related grounds, and labor proceedings.

Our team handles cases that require a technical assessment of the business situation, employment documentation, the alleged cause of action, the rights of the individuals involved, and applicable regulations. In these types of proceedings, legal counsel helps anticipate risks, organize documentation, and develop an appropriate legal strategy.

• Advice to companies on temporary layoff procedures.
• Representation of workers affected by ERTE, reduced work hours, or contract suspension.
• Review of economic, technical, organizational, production-related, or force majeure causes.
• Challenging Labor Measures and Representation Before Labor Courts.
• Assistance with class-action lawsuits, terminations, substantial changes, and labor disputes.

If you need advice regarding an ERTE, a contract suspension, a reduction in working hours, or any other collective labor measure, please contact our team for an initial legal assessment.

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IN DIEM Abogados provides in-person, online, and emergency legal assistance from its offices in Madrid, Seville, Málaga, Marbella, Estepona, Las Palmas de Gran Canaria, Almería, and Huelva, serving clients throughout Spain.

The firm has a multidisciplinary team composed of specialized attorneys and professionals with experience in the judicial, tax, commercial, technology, criminal, civil, administrative, and labor law fields, which allows us to approach each matter from a technical, strategic, and practical perspective.

In addition, IN DIEM Abogados offers urgent assistance when the nature of the matter requires an immediate response or a quick initial assessment of the case.