The latest measure by the German legislature in response to the coronavirus pandemic has been to extend the special arrangements in place for short-time working allowance until June 30, 2022. This state subsidy – known as Kurzarbeitergeld in German – allows businesses experiencing economic difficulties to temporarily reduce their employees’ working hours in order to avoid redundancies, with the state making up for all or part of the lost wages. The extension means that businesses, many of which continue to experience difficulties due to the pandemic, are still able to take advantage of the streamlined application process.
It was back in the spring of 2020 that the legislature took action to simplify the process for accessing short-time working allowance as a way of supporting businesses during the crisis and protecting jobs. We at the commercial law firm MTR Rechtsanwälte can now report that the legislation extending the special arrangements for short-time working allowance and other benefits has itself been extended until June 30, 2022.
Employers should nonetheless tread carefully when it comes to social security contributions, the reimbursement of which came to an end on March 31, 2022.
The simplified requirements for short-time working allowance, on the other hand, continue to apply until June 30, 2022, including a key change requiring only ten percent of workers to be affected by lost working time. Prior to the outbreak of the coronavirus pandemic, one third of employees needed to be affected. Moreover, it remains the case that workers are not required to accumulate deficit hours in order to be eligible to receive short-time working allowance. The maximum period for which companies can receive short-time working allowance has also been extended from 24 to 28 months, until June 30, 2022 at the latest. The regulations equally apply to temporary employment agencies.
Where working hours have been reduced by at least 50 percent, workers will receive 70 percent – 77 percent in the case of parents – of their net wages as short-time working allowance from the fourth month of short-time work. This increases to 80 percent – or 87 percent with children – from the seventh month. Earnings from what are referred to in Germany as “mini-jobs” are not factored into short-time working allowance, regardless of when the worker started the job.
Furthermore, employers who provide their workers with opportunities for further professional training during the period of short-time work can, subject to certain conditions, expect to receive a 50 percent reimbursement for social security contributions until July 31, 2023.
In order for businesses to be eligible to apply for short-time working allowance, there needs to be a significant loss of work combined with a loss of earnings, and the loss of work must be temporary. Other regulations from collective agreements, employment contracts, or agreements with the works council may also need to be observed.
Our team of legal experts stands ready to answer any legal questions you may have in connection with COVID-19.
