Short-Term Work – Info for Employers

Not only employees are suffering from constant changes to their everyday life and labor laws because of the Corona crisis – employers also have to deal with these changes when it comes to short-term work (Kurzarbeit). Employers are overwhelmed with this on top of the countless other pressing issues they’ve experienced since the onset of the pandemic: the near standstill of the economy, the slump in gross domestic product, and issues with overseas supply chains are just a few of them. In this article, we will provide employers with necessary insight to the temporary regulations to labor law that were put in effect until the end of 2021 due to the pandemic.

Entitlement to apply for short-term work

In order to avoid mass unemployment and provide support during the Corona crisis, the government temporarily (2020 & 2021) eased the requirements companies must meet to apply for short-term work. In March 2020, it was decided that only 10% of company employees must experience work loss (hours as per their work contract) in order for the company to apply for short-term work – before the crisis, one-third of all employees had to be affected. Low-income earners count towards the 10% even if they aren’t entitled to short-term work benefits (Kurzarbeitergeld), apprentices (Auszubildende), on the other hand, are not included.

The employment agency (Arbeitsagentur) examines three other factors before allowing short-term work:

• Operational requirements: at least one employee must be subject to social insurance contributions
• Personal requirements: short-term work benefits can only be granted to those who haven’t given notice/signed a termination agreement
• Notification to the agency: Employers must send an application to the employment agency in writing.

Note: During short-term work, your employees will have reduced hours, the amount should be agreed on between you and your employees and the agreement should be put in writing.

Other changes in labor law due to Corona

Some additional temporary changes to short-term work according to the Short-Term Work Benefits Ordinance (Kurzarbeitergeldverordnung) include:

• Temporary workers are permitted to receive short-term work benefits during 2020
• Employers can receive a refund for the social security contributions that they pay alone while their employees are on short-term work (until the end of 2020)
• Companies no longer have to build up minus hours to avoid short-term work
• The entitlement period for those already on short-term work before the onset of the pandemic has been extended from 12 to 21 months

Am I eligible for short-term work?

The first step in applying for short-term work is to inform the affected employees and an agreement with the workers council (Betriebsrat) must be met if one exists in the company – if not, the affected employees must agree individually. Notice periods and individual work contracts must be observed, so stay informed about the current status of labor law for your employees. After this is completed, you can submit a written application for short-term work to the Employment Agency and if all requirements are met, short-term work will begin. If short-term work continues after the initial period, the employer pays the employees their short-term work benefits and then apply for a reimbursement from the Employment Agency. This application must be received within three months after the payroll period ends.

As soon as employers decide to discontinue short-term work, a final settlement examination is carried out by the Employment Agency. Under certain circumstances, this can lead to payment corrections – but this is not the norm, as the government’s primary goal is to provide employers with the best possible assistance during the Corona crisis to help stabilize the economy.

More information about short-term work eligibility for your employees:

• Your employees no longer have to take or forgo vacation before being eligible for short-term work because of the change in labor law.
• You are only eligible for short-term work if at least 10% of your employees are affected by work loss. In addition, working hours must be reduced by at least 10%.
• The temporary regulations increased the benefits received from the fourth and seventh months on short-term work. 60% of lost net wages are received for the first 3 months (67% for parents), 70% for the next three months (77% for parents), and 80% from the 7th month on (87% for parents).