The objective of the royal decree is to develop article 47 bis of the Workers' Statute, which deals with the RED Mechanism for Flexibility and Employment Stabilization. This mechanism allows companies to request measures such as reduction of working hours and suspension of employment contracts.

This instrument has been designed to preserve employment in situations of cyclical or sectoral crises. It is consolidated as a structural tool that replaces the temporary employment regulation files (ERTE), which demonstrated their effectiveness during the pandemic by providing a certain job stability for many workers.

This royal decree consists of thirty articles, distributed in four chapters, a single additional provision, three transitional provisions, a single repealing provision and six final provisions.

It has come into force the day following its publication in the Official State Gazette, that is, July 13, 2023.

The RED Mechanism, contained in Royal Decree-Law 32/2021 on urgent measures for labor reform, employment stability and the transformation of the labor market, is regulated in its entirety by this royal decree. This regulatory development highlights the benefits in Social Security contributions for companies, as well as training actions and the commitment to maintain employment, which are linked to contribution exemptions.

The regulations establish that the labor authority competent to evaluate the requirements to request aid will be the Labor and Social Security Inspection. Furthermore, the royal decree describes the procedure that must be followed for this, ensuring the participation of the social partners. A financing fund will also be established for the social protection of people covered by the mechanism, as well as the exemption of companies.

In summary, the legal framework of the RED Mechanism is exhaustively developed, including the procedure for companies to apply measures such as the reduction of working hours or the suspension of contracts, the management of said measures, the governance of the mechanism and its guarantees (worker protection, benefits in Social Security contributions, training actions, commitment to maintain employment, limits on overtime, hiring and outsourcing), and the rules related to Social Security.