Short time work and thus salary reductions are a way of facing the decrease of activity or the complete closedown of business. However, employers cannot implement short-time work unilaterally. Either employees give their consent to short-time work or a collective agreement (collective bargaining agreement with the trade unions or a works agreement with the works council) exists, that allows the implementation of short-time work. If a works council exists, its involvement is mandatory.
If no such collective agreement exists and the employee refuses to give his/her consent to short-time work, a dismissal with the option of altered conditions of employment (i.e. with short-time work) based on operational reasons could be possible under specific circumstances. This is the only, but difficult way to implement short-time work without consent or agreement. However, it seems to be easier to appeal to the employees’ understanding and responsibility.
In case of short-time work, employers can apply for a short-time work allowance with the unemployment agency. The allowance has recently been adapted due to Corona-crisis. Normally, it compensates for 67% (with child) or 60% (without child) of the net pay lost as a result of the short-time work and can be paid for up to twelve months. By the end of 2020 the allowance increases to 77% (with child) and 70% (without child) as of the fourth month of short-time work and 87% (with child) and 80% (without child) as of the seventh month of short-time work.
The duration of the allowance can be extended up to 21 months for employees who have already worked short-time in 2019.
The prerequisites for a short-time work allowance are:
Significant work absences
- Based on economic reasons or an unavoidable event
- Temporary and unavoidable
- At least 10 % of the staff is affected by short-time work and each of them loses at least 10% of their income (the thresholds have been lowered for the Corona crisis)
- at least one employee is employed
- it is possible to implement short-time work only in specific departments of the company
- Employment is fully subject to social security
No allowance for
- so-called “Mini-Jobber” with a monthly gross salary of EUR 450 or lower
- employees on sick leave for longer than 6 weeks receiving sick payment from the health insurance
- employees whose employment is terminated
Further improvements of the short-time work allowance during Corona crisis are:
- social security contributions are reimbursed completely by the unemployment agency
- short-time work allowance can also be granted to temporary workers
- in case a company provides flexible working hours and provides a working time account, employees are not obliged to take “minus hours” on the account to avoid short-time work
Employers can apply online via https://www.arbeitsagentur.de/eservices-unternehmen.
Foreign companies can apply for short-time work allowance as long as the employees in Germany are subject to German social security and if the activity in Germany can be deemed as an “operation” within the meaning of the provision on short-time work.
Companies can fill the gap between the full time salary and the short-time work allowance voluntarily without any effect on the short-time allowance.
By the end of 2020, the rules on the deduction of short-time allowance due to an extra income have been liberated. It is now possible for employees receiving short-time allowance, to work in a second employment and achieve additional income without deductions of the short-time allowance, as long as the additional income plus short-time allowance do not exceed 100% of the normal full time income.