Coronavirus pandemic: Current status of short-time working arrangements

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In response to companies facing financial difficulties as a result of the coronavirus pandemic, the German government has decided to facilitate access to short-time working benefits.

The coronavirus pandemic poses major challenges for the economy and the labour market. As a result of the pandemic, many companies are currently suffering substantial declines in revenue and find themselves in a difficult economic situation. In order to preserve jobs in the affected companies and to avoid layoffs, the German government has decided to facilitate access to short-time working benefits for a limited period until 31 December 2020.

FACILITATIONS PROVIDED BY THE DECREE ON SHORT-TIME ALLOWANCES (KURZARBEITERGELDVERORDNUNG, KUGV)

The regulations on short-time working that have been in force up to now have been modified as follows:

• Short-time work can already be applied for if at least 10 percent of the employees are affected by a loss of work. The previous threshold was 30 percent of the workforce.
• Even in companies that make use of agreements regarding fluctuations in working hours, no accumulation of negative time balances (“minus hours”) to avoid short-time working is required.
• Short-time allowances are also available for temporary contract workers.
• The social security contributions normally borne by the employer for lost working hours of its employees will be refunded by the Federal Employment Agency in a lump sum upon application. The lump sum is based on a social insurance lump sum of 20 percent of the assessment salary less the amount for the promotion of employment.

GENERAL REQUIREMENTS

In all other respects, the general conditions for receiving short-time working benefits remain in force:

According to these, short-time work must first be permissible under labour law on the basis of a collective or individual contractual agreement; it is not possible to introduce short-time work by virtue of the employer‘s right to issue directives.

In addition, there must have been a temporary and unavoidable loss of working hours with loss of remuneration due to economic reasons or an unavoidable event, whereby the loss of remuneration for the employees concerned must amount to at least 10 percent of the respective gross monthly salary. In order to satisfy the criterion of unavoidability, as a rule, working time credits and claims for outstanding holiday entitlements from the previous year must have been used up beforehand. For a limited period of time until 31 December 2020, if employees have individual holiday wishes/plans, the Federal Employment Agency will refrain from introducing holiday leave from the current holiday year in order to avoid short-time work.

In addition, at least one employee must be employed subject to social security contributions in the company or part of the company concerned, and the employees affected by short-time work must meet the personal requirements. The latter are not fulfilled, for example, if the employment relationship has already been terminated or been terminated by a termination agreement.

Finally, the loss of work must have been reported to the Federal Employment Agency. It should be noted here that short-time working benefits are paid at the earliest from the calendar month in which the notification of the loss of work was received by the Federal Employment Agency.

Our colleagues at Nölle & Stoevesandt will be happy to answer any questions you may have.