Short-time work 2020 - changes in the wake of the coronavirus crisis
In times like the ongoing coronavirus crisis, many companies are faced with a lack of orders and reduced demand. One solution currently being considered to overcome the unexpected economic challenges is short-time working. But what does short-time work mean and what changes have been made in the wake of the coronavirus crisis? Find out in our blog post!
What is short-time working?
Short-time working is a concept that is used in the world of work when companies have more manpower available than they need at short notice. During short-time working, the working hours of all or some of a company's employees are reduced due to a loss of work or reduced demand for labor. Short-time work is therefore a deliberate reduction in working hours in which less than the contractually agreed working hours are worked.
Short-time working allowance is an unemployment insurance benefit which, according to the law, can be paid for a maximum period of 12 months. In the event of a particularly tense situation on the labor market, short-time work can be extended to up to 24 months. If short-time working is interrupted for longer than 3 months, the period of entitlement to short-time working allowance is renewed. This means that if the employer has to reduce working hours again, the employee is once again entitled to short-time working allowance. During short-time work, employees receive less pay and a compensatory short-time allowance, which is initially paid to the employee by the employer. The employer can apply to the employment agency for reimbursement of the short-time working allowance. The short-time working allowance is tax-free, but social security contributions usually have to be paid on the short-time working allowance.
Reasons for short-time working
The main reasons for short-time working are fluctuations in the order situation or seasonal fluctuations. In the past, short-time working allowance was used by companies in the construction industry, for example, but also in the manufacturing sector. Short-time work is invariably due to economic reasons, for example a poor order situation or an unavoidable event such as major damage to the company due to natural disasters, etc. In order to be recognized as short-time work, the loss of working hours must be of a temporary nature and reported to the employment agency. Employees in an employment relationship subject to compulsory insurance are covered. If the loss of work is foreseeable or customary in the industry, or could have been avoided by measures such as an early adjustment of working hours or the use of vacation days, the responsible employment agency may refuse to reimburse the short-time working allowance.
Implementation of short-time work
The employee initially receives the short-time working allowance from the employee. The employee can subsequently claim reimbursement from the Federal Employment Agency.
The short-time working allowance is applied for as follows:
Companies applying for short-time working must first notify the employees in writing of the loss of working hours or the reduction in working hours. This is done via the employment agency in the district in which the company is based. The necessary forms for registering short-time work are provided by the Federal Employment Agency.
The Federal Employment Agency decides whether the conditions for reimbursement of the short-time working allowance are met.
The company determines the short-time working allowance and pays it to the affected employees.
A written application for reimbursement is then submitted to the Employment Agency.
The company concerned must submit the application for short-time working to the Employment Agency within 3 months
Short-time work in 2020 - effects of the corona crisis
Due to the current developments and the economic losses caused by the spread of the coronavirus, new regulations on short-time work have been adopted in Germany and the conditions have been changed. The aim of the measures is to ensure that employees in Germany receive financial support during the coronavirus crisis and that redundancies and the resulting unemployment are avoided as far as possible. In future, even more companies will be able to switch to short-time working. The German Bundestag has unanimously passed a law to facilitate short-time working allowances. The bill enables more companies than before to offer short-time work and to apply for the corresponding benefits from the Federal Employment Agency since April. The adopted law states that companies can already switch to short-time working and use short-time working benefits if only 10 percent of employees are affected by the loss of work. Before the new regulation, one third of employees were affected. Any social security contributions incurred are also to be reimbursed in full by the Federal Employment Agency. The amount of short-time working allowance will also be changed as a result of the coronavirus crisis: Depending on the period of entitlement, childless employees will now receive 80% of their regular salary instead of 60%, while employees with children will now receive 87% instead of 67%. During the first three months, the previous short-time working allowance rates will initially apply. From the 4th month of short-time working, 70 or 77 percent of the loss of earnings would be paid, and from the 7th month onwards, 80 or 87 percent. The increase comes into effect if at least 50 percent of regular working hours are not worked. If a company is closed in connection with the current coronavirus pandemic, temporary workers and trainees can now also receive short-time working benefits. In the case of trainees, their remuneration must continue to be paid in full for at least six weeks in advance.
