In a fast-track procedure, the German parliament passed the “Law on a temporary crisis-related improvement of the regulations for short-time working allowances” on 13 March 2020. On the basis of this law, the federal government has implemented considerable simplifications in the granting of short-time working allowances by means of a statutory ordinance retroactively as of 1 March 2020.
Relief for companies to avoid dismissals
As we already mentioned in our blog series, the coronavirus also holds considerable "health risks" for companies. The federal government has therefore launched a comprehensive package of measures, including liquidity support for affected companies.
Part of this package of measures also includes significant relief in short-time working allowances. Specifically, the law provides for the following temporary measures, which the federal government has implemented by statutory ordinance published on 27 March 2020:
- Until now, short-time working allowances required at least one third of the workers employed in the company to be affected by a loss of earnings. This threshold has been lowered to 10%.
- Deviating from pre-crisis laws, the use of negative working-time balances to avoid short-time work can be partially or completely waived.
- Social security contributions for employees who are receiving short-time working allowances can be partially or fully reimbursed. Previously, an employer had to bear the costs of these contributions alone, assuming the shares for both employees and the employer.
- Temporary agency workers (Leiharbeitnehmer) can also receive short-time working allowances.
Due to the crisis, short-time work should be prepared in good time
If companies want to introduce short-time work, they should start implementing it as soon as possible. For companies with works councils, co-determination rights pursuant to section 87 para. 1 No. 3 Works Constitution Act must be observed unless specific collective bargaining agreements apply.
In companies without works councils, short-time work can only be introduced if there is a corresponding provision in employment contracts or if employees agree individually. In many cases, the possibility of a dismissal with an option of altered conditions of employment will not be practicable, since implementation would come too late or lack social justification.
Notification of short-time working and submission of reimbursement claims
In addition, the employer must notify the responsible employment agency of the loss of work in writing. (Notification by fax or e-mail is sufficient; electronic notification via eServices is also possible).
The conditions for the receipt of short-time work allowances must be explained in detail and made credible. The coronavirus crisis has not changed this. Against the current background, however, credibility requirements are likely not to be the main focus of employment agencies when deciding on applications. After examining the requirements, the employment agency issues a notice of recognition. Short-time work allowances can then be granted at the earliest from the calendar month in which the competent employment agency received notification of the loss of work (section 99 para. 2 sentence 1 Social Security Code III).
Once the recognition notice has been issued, the employer can apply to the competent employment agency for reimbursement of the short-time working allowance on a monthly basis. To do this, it must submit a benefit application and attach a payroll list. A "collective application" for several months is not possible. The application must be submitted within a cut-off period of three months at the latest, otherwise the receipt of short-time work allowance is excluded. The period begins at the end of the month for which the application was made for the short-time work allowance. Since the calculation of short-time work allowance is quite complex in individual cases and the employer is responsible for calculating them, implementation issues should be dealt with at an early stage.
Economic relief by reducing personnel costs, not dismissals
Through short-time working allowances, employers temporarily receive economic relief by reducing personnel costs. In return, dismissals for operational reasons are, in principal, excluded for the duration of the period for which short-time working allowances are received, which is why short-time working is also attractive to employees. The financial losses suffered by employees can be further reduced if the employer tops-up the short-time working allowance with additional payments. Short-time working is therefore an attractive tool for employers and employees to mitigate the fallout of this crisis. Employers affected by loss of working hours who do not consider short-time work in the current situation could be making a serious mistake.
For more information on Germany's new regulations for short-time work, contact your regular CMS advisor or local CMS experts Björn Otto and Boris Alles.
