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CHKD

German Labor Law Possibilities with Corona Crisis- Short-time Work

zusammengestellt von: Ernst & Yung (Mitglied im CHKD Beraternetzwerk)

Short-time work- General questions

What is the content of short-time work?

  • Short-time work can be used to reduce the agreed working hours and subsequently the remuneration payments. In order tocompensate for the loss of remuneration, short-time work compensation (“Kurzarbeitergeld – KUG”) can be applied for.

What are the prerequisites for state support regarding short-time work compensation?

  • Considerable loss of working hours with loss of remuneration, which
    ➢ is based on economic reasons or an unavoidable event,
    ➢ is temporary and unavoidable, and
    ➢ results in a loss of work of at least 10% of the employees employed in the operation and a loss of earnings of more than 10% of
    the gross remuneration.

An epidemic with significant number of employees on sick leave in the company or effects on the supply chain and production is
regarded as such an unavoidable event. Moreover, closures by the authorities will can also be such an unavoidable event. The loss
of working hours has economic reasons if there is a decline in orders or demand due to the economic situation.

 

What does state support regarding short-time work compensation cover?

  • In principle 60% of the net loss of earnings in the entitlement period, 67% for employees with children
  • Net loss of earnings: Difference between net target remuneration (without short-time work) and actual net remuneration (with shorttime work)
  • Short-time work compensation cap: The maximum net target remuneration is the assessment ceiling from the unemployment
    insurance, EUR 6,900 gross (West) and EUR 6,450 gross (East) → If the actual net remuneration is even with reduced working hours
    still above the assessment ceiling, there will be no state support for short-time work compensation.

What are the main operational steps for receiving state support regarding short-time work compensation?

  • Create legal basis for short-time work
  • Order short-time work
  • Notification of loss of work to the employment agency
  • Short-time work compensation has to be paid at first by the employer
  • Reimbursement request of short-time work compensation to the employment agency
  • If necessary correction of short-time work compensation

Do overtime accounts have to be reduced as a matter of priority in order to receive state support for short-time work
compensation?

  • In general overtime accounts should be reduced to „zero“ before short-time work is introduced. Exceptions to this general
    rule must be reviewed on a case-by-case basis. Whether and how the employer can order the reduction unilaterally depends
    on the internal regulations. However, there is no accrual of negative working time balances (minus hours) necessary.

Step Plan and conditions for receiving short-time work compensation

1. Create legal basis for short-time work

  • Short-time work cannot be ordered by right of instruction, but requires a legal basis:

– collective bargaining agreement,
− works council agreement,
− individual agreement,
− Sec. 19 German Dismissal Protection Act (KSchG)

  •  If there is a works council and no applicable collective bargaining agreement or a collective bargaining agreement with an opening
    clause in favour of the works council and employer, the introduction of short-time work is subject to co-determination.
  • If no collective bargaining agreement is applicable and no works council → Individual agreement → If the employment contracts do not
    provide for the possibility of short-time work → Mutual amendment of the employment contracts

2. Order short-time work

 

  •  If the employment contracts do not yet order short-time work themselves, a separate order of short-time work is required.
  • In particular, the duration of short-time work (start and end) and the employees affected must be determined.
  •  The regular working time can be reduced to 0% through short-time work (so-called “short-time work zero“).

3. Notification of loss of work to the employment agency

 

  • Responsible office: In principle, the agency of the district. If the company is acting nationwide or wants to obtain short-time work
    compensation on a supra-regional basis, there are key customer advisors at the employment agency who assist in the coordination
    between the agencies.

 

  • Form: Written or electronic (fax or scanned application with signatures by e-mail → The employment agency provides samples for this purpose)

 

  • Content of the notification:
    − substantiation of the requirements for short-time work and
    − proof of the introduction of short-time work

 

  • Substantiation:
    − Detailed explanation
    ❖ Causes for loss of work (with comparative prove showing underutilization),
    ❖ Products/services,
    ❖ Main customer or main contractor,
    ❖ Information regarding the temporary nature of the loss of work
    − Short-time work schedule
  •  Proof of the introduction of short-time work → submission of the legal basis for the introduction of short-time work
  • The opinion of the works council must be attached to the notification.
  • After receiving the notification, the employment agency decides whether short-time work compensation will generally be granted.

4. Short-time work compensation has to be paid at first by the employer

 

  • The short-time work compensation must at first be paid by the employer for the missed hours.
  • The calculation of the short-time work compensation is also made by the employer himself.

5. Reimbursement request of short-time work compensation to the employment agency

 

  • Request by the employer to the employment agency for reimbursement of the short-time work compensation
  • Responsible office, see Step 3
  • Cut-off period: 3 months after the end of the respective accounting month in which short-time work compensation was applied for

6. If necessary correction of short-time work compensation

 

  • Final audit of the accounts by the employment agency after return to full-time work and, if necessary, correction of the short-time
    work compensation

Conditions for receiving short-time work compensation

  • Considerable loss of working hours with loss of remuneration,
    which

− is based on economic reasons or an unavoidable event, 

Examples: absence of deliveries due to the
coronavirus, temporary closure of an operation as a
protective measure imposed by the authorities− is temporary and unavoidable, and
New regulation: Negative working time accounts do
not have to be used.
− results in a loss of work of at least one third of the
employees employed in the operation and a loss of
earnings of more than 10% of the gross remuneration.
New regulation: It shall be sufficient if 10% of the
employees are affected instead of one third

 

  • Operational conditions
    − At least one employee employed at the operation

 

  • Personal conditions for employees
    − Continuation of employment subject to compulsory
    insurance
    − Non-terminated employment relationship
    − No exclusion from the short-time work compensation
    − New regulation: Temporary workers fall within the personal
    scope

 

  • Notification of loss of work to the employment agency

Duration

 

 Generally up to 12 months:

  • This period may be extended to 24 months by
    legislative decree of the Federal Ministry of Labour
    and Social Affairs.
  • If there is an interruption of at least one month, the
    subscription period shall be extended by the period of
    interruption.
  • If no short-time work compensation is paid for three
    months, the duration starts anew, but the
    prerequisites for obtaining short-time work
    compensation must also be newly substantiated or
    proven.
  • Start: Retroactive already as of 1 March 2020

Amount

 

  • In principle 60% of the net loss of earnings in the
    entitlement period, 67% for employees with children
  • Net loss of earnings: Difference between net target
    remuneration (without short-time work) and actual net
    remuneration (with short-time work)
    • Short-time work compensation cap: The maximum net target
    remuneration is the assessment ceiling from the
    unemployment insurance, EUR 6,900 gross (West) and EUR
    6,450 gross (East).

Social security contributions

 

  • Short-time work compensation does not constitute
    remuneration within the meaning of social insurance, but
    employers must pay social insurance contributions for
    fictively calculated remuneration.
  • New regulation: these social security contributions shall be
    fully reimbursed by the employment agency

Author:

SUN Yi