Legislation adopted on procedure applicable to RED Mechanism for Employment Stability and Flexibility

Royal Decree 4/20222 of March, 2022 adopting urgent measures to support the agricultural sector as a result of the drought, provides for the creation of the RED Fund for Employment Stability and Flexibility contemplated in article 47 bis.6 of the Workers’ Statute which is aimed at meeting future funding needs arising from the RED Mechanism in respect of social security benefits and exemptions, including the costs associated with training.

It also contains rules on transitional coverage of funding out of the RED Fund until it has been provided with a sufficient amount to meet its financial needs.

Furthermore, it defines the procedure applicable to the RED Mechanism (employment stability and flexibility tool which, after it has been activated by the Council of Ministers, will allow companies to apply for measures consisting of reduced working hours and suspension of employment contracts).

Until its implementing regulations are approved, chapter II and chapter III of the Regulations on collective layoffs and reduced working hours (Real Decree 1483/2012) will apply in addition to the following specific provisions insofar as they are not incompatible with the provisions in article 47 bis.

The particular elements not applicable are article 17 (commencement of the procedure), article 18 (documentation), article 19 (notification of the start of the procedure to the labor authorities) and article 22 (Labor Inspector’s Report), or the working-hour reduction percentages in article 16.2 of Royal Decree 1483/2012.

The following specific provisions will apply additionally:

• Each worker may only be included in either a reduced working hours measure or a suspension of contracts measure, and a combination of the two will not be allowed.
• The employer must give verifiable notification to the workers or to their representatives of its intention to start the procedure for the purposes of creating the representative committee under article 41.4 of the Workers’ Statute.
• When the representative committee has been created or the period for doing so has ended, the employer must send notification of the start of the consultation period, which must be accompanied by the following documents:
           
  • Documents evidencing that the temporary, cyclical or sectoral scenario, described in the relevant decision to activate the RED Mechanism, exist at the company.
  • Period within which the measures will be implemented.
  • Identification of the workers included in the procedure and who will be affected by it.
  • Type of measure to be implemented with respect to each included worker and the maximum percentage reduction of working hours or the maximum number of days in which suspension of the contract will be implemented.
  • In cases involving sectoral scenarios, a reskilling plan for the included workers is also needed.
• The application for working-hour reduction or contract suspension measures must be filed by the employer with the labor authorities simultaneously with the notification of commencement of the consultation period.
• To be admitted, applications will have to fulfill any requirements determined in the activation decision by the Council of Ministers.
• The employer’s final notification to the labor authorities, regardless of whether the consultation period ended with agreement, must include at least the following contents:
                 
  • Individuals, professional groups, jobs and pay levels that will be included, determining in each case whether the measure is a reduction of daily, weekly, monthly or annual working hours, or a suspension of contract.
  • Effective date, which may be before the date of the final notification to the labor authorities, although never before the activation date.
  • Period in which the measures will be implemented within the limit determined in the activation decision.
  • Maximum reduction percentage relating to daily, weekly or monthly working hours for each of the individuals, professional groups, jobs or pay levels that will be included, as well as the maximum number of days in which suspension of the contract will be implemented in each case.
  • In cases involving sectoral scenarios, a definitive reskilling plan which may include the training initiatives referred to in additional provision twenty-five of the Workers’ Statute.

Lastly, the royal decree contains specific provisions on the welfare coverage of workers until the implementing provisions referred to in paragraph 2 of additional provision 41 of the Social Security General Law are adopted (welfare coverage under RED Mechanisms).