Losses in compensation resulting from challenging economic developments or unexpected circumstances can be partially offset by short-time working compensation.

The benefits of the Federal Employment Agency (“Bundesagentur für Arbeit”) are calculated on the basis of the net loss of remuneration. Employees in short-time work generally receive 60% of the net salary (67% if at least one child lives in the household). For example, those who would only work 10 hours instead of their usual 40 hours would continue to receive 25% of their wages from the employer.

For the remaining 75%, employees would receive the compensation payment (60% from the remaining hours that cannot be paid by the employer) from the Bundesagentur für Arbeit. Benefits can be drawn for a maximum of 12 months.

Requirements

  • Loss of wages from more than 10% from at least 10% (usually 30%) of the employees
  • 10 % refund of social security contributions

How to apply for short-time work?

  • Before applying for short-time work, you should check your employment contracts if you have a clause included to fulfill the employment law requirements. If not, negotiate a new agreement.
  • Announcement: Approach your employees and inform them timely about short-time work (When you have a company up to 20 employees, you can do 1:1s, otherwise you can create a general announcement agreement and gets it signed by all the employees.). This does not have to be in writing but you need to be able to prove it afterwards (e.g. email, digital signature via DocuSign, or similar).
  • All vacation days must/ should be planned and over hours must be reduced.
  • “Allgemeines Gleichbehandlungsgesetz”: You have to treat all employees from one “Betrieb” the same way unless you have a valid reason. You can distinguish between employees from different department when they can be defined as separate “Betriebe”. This applies i.e. for the leadership team or departments with different equipments and business goals.
  • Notify Bundesagentur für Arbeit about loss of business and apply to get costs reimbursed (Kurzarbeitergeld, short KUG ) and apply for (“Anzeige”).
  • Due to an increased number of applications it takes a bit of time until Bundesagentur für Arbeit has checked all documents and decides if you are eligible. So far the process should be very unbureaucratic; however, how long it’ll take is not 100% clear (“unverzüglich”).
  • When you have applied for a certain duration and do not need the whole time (i.e. when clients are able to continue collaboration), the company is flexible and can go back to work, even on short notice.

The payment of the KUG is happening arrear; you have to hand in every month the exact working hours of each employee. The payment is happening via the employer – since the reimbursement is happening in arrear (which can take up to 4-6 months). PLEASE VERIFY YOUR LIQUIDITY!

How is short-time work compensation calculated?

The calculation is based on gross wages and also takes periodic bonus (monthly/ quarterly/ yearly), holiday payments and Christmas bonuses and any other regular repetition of certain standard practices on the part of the employer which give employees the confidence that a certain benefit is intended to be granted to them on a permanent basis (“betriebliche Übung” ) into consideration. Not included are one-time payments.

How do we have to calculate the salary when vacation days are taken during KUG?

Vacation can also be taken during short-time working. It is often even desired by the Federal Employment Agency, as it may be possible to avoid short-time working, especially during company holidays. Holiday payments is to be granted by the employer at the usual level. If, for example, an employee has taken vacation in the 3rd week of a calendar month for which there is an entitlement to KUG, then she/he receives the full amount of the holiday payment for the duration of the holiday.

Despite short-time working, the holiday payment is calculated on the basis of the full pay is in the last 13 weeks. If the employees have not used or planned all their vacation days, they may be required to do so. All vacation days from the previous year have to be taken from the individuals before applying to KUG. Employees who have requested vacation days cannot cancel on short notice because of KUG.

If you have further questions to short-time work, please contact Marie (marie@doneberlin.com) or Janet (janet@doneberlin.com).