The following explanations are of course neither to be understood as conclusive nor as generally valid. In particular, a different assessment may be required on the basis of the applicable employment contract, company and collective bargaining regulations as well as personal, company and other circumstances.
Basic information on short-time work
1.What is meant by short-time work?
Short-time work is understood to be a temporary reduction in regular working hours for the entire company or individual areas due to the lack of work.
Arrangement of short-time work
2. Can the employer order short-time work unilaterally? Under what conditions?
The employer has a right to unilaterally order short-time work only if a corresponding power
- in the applicable collective agreement
- in a company agreement or
- in the contract of employment
is regulated.
If this is not the case, a separate agreement must be reached with each employee who is to go into short-time work. If a works council exists, a works agreement on short-time work must be concluded with it. The introduction of short-time work is subject to the mandatory codetermination, sec. 87, para. 1, No. 3, Works Constitution Act (Betriebsverfassungsgesetz – BetrVG). In the public sector, the staff council regularly has no right of co-determination, however, the statement on short-time work pursuant to sec. 99, para. 1, Sentence 2, Social Security Code III (Sozialgesetzbuch Drittes Buch – SGB III), which must be submitted with the notification of the lack of work, must be considered here.
3. What measures should be taken in advance?
As a rule, it is advisable to first examine the current as well as the anticipated need for employment for the employees working in the company (separately according to divisions/departments) for the upcoming weeks and months and to evaluate these on the basis of criteria that are as objective as possible.
It should also be assessed whether it is possible to bridge the periods of absence from work with vacation and the reduction of time credits.
Grant of short-time work allowance
4. For which employees can short-time work allowance be applied for?
The personal requirements for claiming short-time work allowance are met if, after the employee has started to work
- continues an employment subject to compulsory insurance, takes up employment for compelling reasons or begins employment following the termination of his vocational training,
- the employment relationship has not been terminated or dissolved by a termination agreement, and
- there is no exclusion from short-time work allowance.
A “compulsory commencement of employment subject to compulsory insurance” will normally also be assumed if an employment contract was concluded before the beginning of the period of lack of work, but only starts to run during the period of absence from work.
Short-time work allowance is excluded for employees,
- who have completed the year of age required for the regular old-age pension within the meaning of the statutory pension insurance, from the beginning of the following month,
- who claim a pension due to full reduction in earning capacity or a comparable benefit from a foreign benefit provider,
- who are in marginal employment within the meaning of sec. 8 Social Security Code IV (“minijobbers”),
- who are in paid employment on a professional basis.
With retroactive effect from March 1, 2020, temporary employees could also be entitled to short-time work allowance. To do so, the Federal Government would have to exercise the regulatory powers granted to it by the Act on the Temporary Crisis-Related Improvement of the Regulations for Short-time work Allowance adopted on 13 March 2020 and issue a corresponding ordinance (this is generally expected).
5. For which companies can short-time work allowance be applied for?
Short-time work allowance is possible in all companies in which at least one person is employed subject to social insurance contributions.
6. What are the essential requirements for receiving short-time work allowance?
According to sec. 96, para. 1, Social Security Code III, short-time work allowance can essentially be applied for under the following conditions:
a) Presence of a substantial lack of work, whereby the lack of working hours must be due to economic causes or to an unavoidable event,
b) Temporary absence from work, i.e. it must be foreseeable that the transition to full-time work can be expected again in the foreseeable future,
c) Inevitability of the lack of work, i.e. the employer must have taken all reasonable precautions in his company to prevent the occurrence of the lack of work. In accordance with the law passed on 13 March 2020 on the temporary improvement of the regulations for short-time work allowance due to the crisis, the build-up of negative working time credits (in companies with working time accounts) is no longer necessary in whole or in part – unlike before.
d) The lack of work must be at least as extensive as the minimum described in sec. 96, para. 1, No. 4, Social Security Code III. Up to now, this minimum level has only been reached if in the respective calendar month at least one third of the persons actually employed in the enterprise or department of the enterprise are each absent from work for more than 10% of their monthly gross remuneration. According to the law passed on 13 March 2020, the Federal Government can reduce the quorum of employees in the company who must be affected by the lack of work to 10% by statutory order (this is generally expected).
7. How much is short-time work allowance granted? Does the employer have a subsidy obligation? Who bears the social security contributions?
7.1. Amount of the short-time work allowance
The short-time allowance is only granted for lost working hours. Accordingly, employees receive a pro-rata payment from their employer corresponding to the working hours reduced by short-time work.
In addition, employees receive the short-time work allowance. This amounts to 67% of the net remuneration difference for employees with children and 60% for employees without children. The net remuneration difference is the difference between the flat-rate net remuneration from planned remuneration (= contractual remuneration without reduced hours) and the flat-rate net remuneration from actual remuneration (= remuneration reduced proportionately as a result of reduced hours). The reduced hours compensation is also paid by the employer.
7.2. Voluntary nature of the employer’s contribution to the short-time work allowance
The employer is not obliged to pay a subsidy for short-time work. This applies in any case if nothing to the contrary is regulated in a collective agreement (collective agreement or works agreement). In most cases, the employer’s allowance is therefore a purely voluntary payment by the employer and can be paid at any amount. However, according to sec. 1 para. 1 no. 8 of the Social Security Compensation Directive (Sozialversicherungsentgeltverordnung – SeEV), only “employer’s contributions to short-time work allowance and seasonal short-time work allowance, provided that they do not exceed 80 percent of the difference between the target remuneration and the actual remuneration according to sec. 106 Social Security Code III are exempt from contributions. A subsidy exceeding this amount is – however, only with regard to the part exceeding 80 percent of the difference – subject to contributions.
7.3. Eligibility of social security contributions retroactively from 1 March, 2020
Previously, the employer had to pay the full social security contributions for the lost gross salary even during short-time work. According to the new legal regulation of 13 March 2020, the Federal Government can order by decree that the social security contributions be reimbursed in full and retroactively to 1 March 2020 by the Federal Employment Agency upon corresponding employer application (this regulation is also generally expected).
Application procedure
8. What applications must be submitted? What are the essential formalities to be observed? What deadlines must be observed?
The application procedure has two stages:
8.1 Display of work loss
The notification of the lack of work must be submitted to the Federal Employment Agency (Bundesagentur für Arbeit). The notification must be made in writing. The form “Anzeige über Arbeitsausfall (Kug 101)” (notification of absence from work) provided by the Federal Employment Agency shall be used for this purpose. The notification shall be submitted to the Federal Employment Agency in whose district the business is located. If there is an employee representative body, its opinion on short-time work must also be submitted.
8.2 Application for short-time allowance
The forms “Antrag auf Kurzarbeitergeld (Kug) – Leistungsantrag – und Kug-Abrechnungsliste (Kug 107 und Kug 108)” – “Application for short-time work allowance (Kug) – benefit application – and Kug settlement list (Kug 107 and Kug 108)” must be used for the application for short-time work allowance. The allowance application must be submitted to the employment agency in whose district the payroll accounting office responsible for the company is located.
It is possible to first display the lack of work and then submit an application for the granting of short-time work allowance.
In order for the employer to grant the short-time work allowance, he must provide credible evidence that he has suffered a significant temporary unavoidable lack of work. However, the operational and personal prerequisites for the granting of the short-time work allowance must be proven. For this purpose, the relevant documents – in particular the announcement of short-time work, agreement on the introduction of short-time work with the works council or the employees, notices of change, etc. – must be enclosed with the notification.
8.3 E-Services of the Federal Employment Agency
Alternatively, notification of the loss of working hours and application for short-time allowance can also be made electronically via the e-services of the Federal Employment Agency. Notification and application can also be made by the works council.
8.4 Deadlines
Notification of short-time work must be made at the latest on the last day of the month in which it first occurred. In this respect, the timely receipt of the notification by the Federal Employment Agency is decisive.
The request must be made within three months. The period begins at the end of the calendar month for which the short-time allowance is applied for. This is a cut-off period – i.e. if the application is not received by the Employment Agency within the deadline, benefits may be refused regardless of the reasons for the failure to meet the deadline.
Payment
9. How is the payment made? What in particular must the employer observe?
Payment is made within the framework of a simplified administrative procedure, i.e. the Federal Employment Agency makes a preliminary decision, which is announced with the notice of performance.
If the Federal Employment Agency approves short-time work allowance, the employer pays the contractual compensation for hours already worked. In addition, the employer must pay the employees the approved short-time allowance for the hours lost.
The employer must then apply in writing to the employment agency responsible for him/her within the above deadline for monthly reimbursement of the short-time allowance.
Munich, the 22.03.2020
Zirngibl Lawyers Partnership mbB
