The legislator's anticipatory response to risks of employment crises

the new employment flexibility and stabilisation mechanism (“mecanismo red”)

Abstract

The experience gained during COVID-19 crisis related to the suspension of contracts or reductions in working hours has led the legislator to establish, in a preventive manner, a specific system for future crisis. The “Mecanismo RED” (“net Mechanism”) is activated by a political decision, and it will enable employers to carry out temporary redundancies under more favourable conditions for them and for the employees, under certain circumstances that are described in this paper and shall be proven. This paper analyses both the aspects relating to the functioning of the Mechanism in its two modalities, cyclical and sectoral, and the procedures agreed in the companies during its validity. Thus, it includes an analysis of the legal regime of exemptions from social security contributions and of the specific benefits that will be paid in these cases, as well as the important role played by the training of the workers affected. Finally, the mechanisms for financing these measures are analysed, as well as the tools for monitoring their correct functioning.