The short-term compensation is a compensation for a temporary cut of working hours, which is paid by the employment agency (Bundesagentur für Arbeit).
It is frequently used by employers in times of economic crises in order to avoid redundancies and help carry the wage costs employers are facing. It also serves to enable companies to keep working even in case of weaker order situations.
For employers wishing to apply for short-time allowances, there is a two-step procedure in place.
In order to receive short-term compensation, the employer has to report the loss of working hours to the local employment agency. There is a form for this here.
This needs to be done as soon as possible, as the short time allowance can only be granted for the month in which the loss of working hours has been reported to the employment agency. Short time work in April 2020 must be reported by 30 April 2020 at the latest.
It is important to give as much detail as possible about the specific reason for the loss of working hours. Rather than just stating „because of the Corona virus“, employers should explain which factors specifically have lead to a loss of work.
The employment agency then decides immediately whether or not the conditions for short-term compensation are met (see below for the conditions), and notifies the employer.
The employer is obliged to calculate the amount of the short-time compensation and pay it to the employee. There are tables and calculating tools available on the website of the employment agency.
The employer then submits an application for reimbursement of the short-time compensation to the employment agency in which their payroll office is located. The earliest point at which this application can be submitted is the end of the calendar month in which there have been shortened working hours. They then have a period of three months to submit the application.
In general, the short-time compensation (Kurzarbeitergeld) can be granted if either the employer and the works council or the employer and each individual employee affected by the loss of working hours, have explicitly agreed to cut the working hours in the company in accordance with the provisions of labour law, and if the company is, in fact, affected by a substantial and inevitable loss of working hours.
The following conditions must be met:
The above mentioned conditions are relieved during the Corona crisis as follows:
Simply put:
In order to calculate the amount of the allowance, you have to first determine the difference in net remuneration between the so called „Soll-Entgelt“, i.e. the net pay (including in the event of illness or holiday) that the employee would have earned without the short time work, and the „Ist-Entgelt“, i.e. the amount the employee has earned for hours actually performed during the entitlement period.
This difference is called „Nettoentgelddifferenz“. The short-time compensation paid by the employment agency covers 60 % of the „Nettoentgeltdifferenz“, and 67 % if the employee has at least one child liable for maintenance.
An employer can not simply prescribe short-time work without a prior agreement with the works council or the employees. The employer always needs a cotnractual basis to arrange short-time work. This could be a clause in a collective labour agreement, an agreement with the employee representative body, or in the individual work contract between the employer and the employee. In all other cases, the employer has to negotiate a supplementary agreement with their employees. The agreement on short-time work must precede the introduction of short-time work, otherwise it is invalid.
This agreement should contain the reason for the loss of work, as well as the beginning and end of the short-time period and the amount of working hours that are being cut – as far as this is foreseeable. It should also leave the option to reduce the amount of working hours to zero („Kurzarbeit Null“) or call employees back to work in case the economic situation improves.
Short-time allowance does not apply to marginal part-time employees.
Marginally employed persons (450 €) are not entitled to short-time work benefits, as these are only paid to employees who are also subject to compulsory unemployment insurance. Employees working in minijobs (up to 450€/month) are not subject to compulsory insurance in the unemployment insurance and are therefore not entitled to short-time work benefits.
No, working hours can be cut individually for each employee, depending on how strongly individual departments/work areas are affected by the loss of working hours. Short-time work can also be limited to individual departments within the company. It is not permitted, however, to arbitrarily allocate short-time work differently or in a dicriminishing manner among employees.
If an employee becomes unfit for work while receiving short-time work compensation, his or her entitlement to short-time work compensation remains intact – for as long as he or she is also entitled to continued remuneration during sickness.
However, if the employee was already ill before the beginning of the short-time work period, then the employee’s entitlement to continued remuneration is reduced to the wage the employee would have earned, when taking into consideration the reduction of their working hours during the short-time period. They also receive sickness benefits in the amount of the short-time compensation benefits.
This, again, depends on whether the secondary employment is taken up before the short-time period or during the short-time period.
If the second job is taken up – even one day – before the beginning of the short-time arrangement, it has no effect on the entitlement to short-time compensation.
However, if the second employment begins during the short-time period, the income earned from the second job is credited against the short-time working allowance.
The Social Protection Package of 27 March 2020 (Act on Facilitated Access to Social Security and the Use and Protection of Social Services due to the Coronavirus SARS-CoV-2) temporarily relaxes this additional income regulation. From April 1 to October 31, 2020, the following special regulation will apply: Earnings from additional work in system-relevant areas newly taken up during short-time working will not be credited against the short-time working allowance. The only condition is that they may not exceed the level of pay they received before short-time work.