The crisis makes us all, in a matter of months, great experts in terms that were previously totally alien to us. The words ERE and Contest of Creditors appear as a common vocabulary in our conversations in the bar, restaurant and, of course, in the living room of our houses. They have burst into our lives with force and insistent tenacity.
Both the old well-known ERE (Employment Regulation File), governed by article 51 of the Workers Statute, and the most recent Bankruptcy, regulated by Bankruptcy Law 22/2003, of July 19, are legal institutions that they have a single objective: to save a complex situation in the company, in most cases, of an economic nature.
The Employment Regulation Files (ERE), also regulated by Royal Decree 43/1996, of January 19, try to facilitate the survival of a company that is going through a difficult and complex situation caused by economic, technical, organizational or of production that hinder the normal activity of the company.
From this point of view, the termination or suspension of labor relations is necessary to overcome this situation, which may be temporary, and thus guarantee the survival of the business. While we are observing many cases of temporary ERES, the most common is the extinction of labor relations through collective dismissal. And, it will always be collective when the terminations of contracts, in a period of 90 days, exceed the legal threshold of the number of affected, according to the size of the company.
If we consider only this legal institution, it is not necessary to urge a Bankruptcy of Creditors, although, on many occasions, it is the previous step that guarantees not reaching this point. In fact, on many occasions, the ERE is proposed as a way to avoid the Bankruptcy, saving the company from excess personnel expenses.
For its part, the Bankruptcy seeks to carry out a financial reorganization of a company that can no longer attend to regular payments to its creditors and, especially, it does so from a credit and financing point of view. Currently, it may be the company itself that voluntarily decides to enter bankruptcy to try to settle its 'differences' with creditors, although, normally, it is the debtors who, in the absence of payment, request to start the process.
However, in our minds, the mere mention of 'bankruptcy' makes us tremble as, immediately, a disused term like 'suspension of payments' comes to mind. This insolvency process (as it is usually known) is not necessarily aimed at closing the company, although this is a usual effect.
When starting an insolvency process, the first immediate consequence is that the direction and management of the company becomes the responsibility (of a personal nature) of the Bankruptcy Administrators, appointed by the Judge who understands the Bankruptcy, for a defined initial time and which can be extended to a longer period, upon request.
A second consequence to take into account is the fact that any debt prior to the insolvency proceedings start day is suspended in its immediate payment obligation and becomes part of an amount that will be paid later, totally or partially - or in kind, as the case may be.
Having said this, when we find these two institutions interacting with each other in a direct way, what we have in front of us is a modification of the labor nature of an ERE insofar as the scope of its decision is subtracted from the administrative sphere, passing to be judicial.
The truth is that, in an insolvency process, an agreement is sought between the company and debtors regarding the form of payment, the real situation of the company and, above all, its assets are evaluated. In other words, what we are trying to determine are what assets are available and what legal position they are in (mortgaged, leased…). The first approach is to try to reach an agreement so that the company can continue operating while it resolves its debts or, failing that, the company is liquidated.
In this environment, it is obvious that the human resources available in the company are its best asset but also its greatest liability for the expenses they generate.
Thus posed and from an HR point of view, a bankruptcy situation produces two big differences for employees. The first of these is that, if the company presents a bankruptcy procedure aimed at the liquidation of the company, until it is resolved by the competent authorities, legally the workers are not formally dismissed, so they must continue in their job..
And, the second difference to take into account is that, who has to resolve a bankruptcy procedure is not the competent labor authority, but a commercial judge. Any claim in this regard, both by the company and by the workers, should be addressed to the Commercial Court, including changes in working conditions.
However, based on the objective of continuity, while the insolvency process occurs, the company could continue to operate normally and all debts that occur, as a consequence of the normal development of the business, will be paid regularly, including wages.
And, as business development continues as usual, employees began to take into account in our lives concepts that were previously alien to us (agreement of creditors, debt relief, waiting for collections, suspension of the calculation of interest and executions, etc..) while we must continue working with the same commitment to the organization.
Now how do we do it? In a certain sense, if the process is well communicated and clarified and, above all, the decision has been made to maintain the payment of wages and social benefits until a possible termination of labor contracts, this is possible.
Human motivation is a difficult optimization factor. Many lines have been drawn up aimed at obtaining the maximum performance from the motivated and committed employee. In times of crisis, it has been proven on many occasions that small differences take a back seat and the essential becomes our priority.
And it is here that hygiene factors take on their importance: basic needs covered (wages) and security, both in the labor aspect (continuity in employment) and in their legal aspect (ERE with the right to immediate unemployment benefits). If both factors are kept alive, the rest is a long and difficult path, but one that can be assumed by the employee and, obviously, by the organization.
On the other hand, it is essential to have the Social Representation, which, in these cases, with the appropriate approach, is of great help as an ally in a crisis whose objective is not to obtain better financial results but to save the company from an imminent closure.
The management of a company, on many occasions, must make painful decisions such as starting a Bankruptcy on a voluntary basis, but this decision must be taken sufficiently in advance to avoid, necessarily, leading to a bankruptcy and liquidation process. of the organization.
As managers, we have a responsibility, not only with the customer who expects our products and services to continue to exist, but also with the suppliers who help us in our economic activity and with the employees who, day by day, enable this activity. Existing legal tools make it possible for us to save our business if we act on time.
Let us use them without fear and with determination, orienting ourselves towards the achievement and achievement of a single objective: the continuity of the Company.
