The following information is intended to help you assess whether and how the introduction of short-time work is possible and useful in your company. The federal government has now made it easier to draw short-time benefits with a regulation. These changes apply retrospectively as of March 1, 2020.
First things first:
- Clarify the legal admissibility of introducing short-time work.
- Involve the works council, if available.
- Prepare the notification of lost work well to support a quick decision by the employment agency.
- Check the liquidity in your company.
What does short-time work mean for employees and employers?
Short-time work is the temporary reduction in regular working hours due to a substantial loss of work.
For employees, short-time working leads to a reduction in monthly wages. However, the salary drops less than working hours. Because in addition to the (reduced) salary, the employee receives a short-time allowance (KUG). The KUG is 60% of the difference between the original net salary and the reduced net salary. Employees with children receive 67% of the salary difference as a KUG (Sections 105, 106 SGB III).
- Example: An employee (tax bracket 1, without children) regularly earns gross EUR 2,500.00. This results in a regular net wage of approx. EUR 1,699.00 In short-time work (50%) the employee earns EUR 1,250.00 gross, which would be EUR 985.00 net. The difference between the two net wages is EUR 714.00. The KUG amounts to 60% of this net wage difference, thus around EUR 428.00. In this example, the employee in short-time work thus receives EUR 1,413.00 net (and thus EUR 286.00 net less than before).
- Attention: When calculating the KUG, the social insurance fee must be taken into account, ie only income up to the contribution ceiling of the pension insurance!
Short-time work is an opportunity for employers to reduce financial burdens. In principle, the employer continues to pay the salary, including the KUG, to the employee. However, the KUG is reimbursed by the employment agency.
In addition to the short-time allowance, the employer can also make subsidies to employees. In some cases, collective agreements or company agreements also oblige employers to make corresponding payments. This may also need to be checked and taken into account when planning.
With regard to social security contributions, the Federal Government has decided to make it easier. For the (reduced) remuneration, as before, the social security contributions are borne by employees and employers. The social security contributions for the KUG are now fully reimbursed by the employment agency.
What are the requirements for short-time work?
In order to introduce short-time work, a labor-law basis for the introduction is required, in addition, the requirements for applying for short-time work must be met.
Labor law basis
In the employment contract, the parties agreed on working hours and the remuneration to be paid for them. A one-sided change by the employer is therefore not possible.
The introduction of short-time work is only considered if one of the following conditions is met:
- Regulation in a collective agreement (if available)
- Regulation in a works agreement with the works council (if available)
- Regulation in the employment contract
- Attention: The jurisprudence places strict requirements on the admissibility of short-time clauses in the employment contract. If a court later found that the clause and thus the introduction of short-time work was inadmissible, the employee is entitled to full remuneration.
- Conclusion of an individual contractual agreement
- Notification of a change notice
Requirements for the granting of short-time work benefits
Various requirements must be met for a successful application for KUG (see Sections 96-98 SGB III). First of all, there must be a significant, temporary and unavoidable loss of work with loss of earnings.
The absence from work must affect at least 10% of the employees. Note that this does not depend on the company as a whole. The loss of work can also affect only one company or even just one company department. KUG can also be applied for for small units that have a certain degree of independence and have a partial / auxiliary purpose. You should therefore not check the requirements for the whole company, but for smaller work units.
If employees affected by the loss of work still have remaining leave entitlements from the previous year, these must be reduced regularly before KUG can be applied for.
KUG can also only be granted to employees who are subject to social security contributions and who are employed without notice.
How is KUG applied for?
The process is divided into two steps:
- The display of lost work and
- The application for payment of the KUG
The employer must report the loss of work in writing or electronically to the responsible employment agency. The job agency in which the company is based is responsible for this.
If there is a works council in your company, it must issue a statement, which must also be submitted.
The existence and the reasons for the absence from work must be substantiated in detail within the scope of this notification and made credible. We expect many companies to post ads to employment agencies in the coming weeks and months. It is therefore important for a quick decision to submit the advertisement as completely as possible.
The employment agency then issues a decision as to whether the conditions for granting KUG are met.
The employer has to apply for the payment of the KUG for the respective months. Please note that the employer must first calculate the KUG and social security contributions in advance and pay them to the employees. Sufficient financial capacity is therefore required to make these payments. A reimbursement is then made on request, which in turn takes some time. This preliminary run must also be included in the liquidity planning.
The KUG is granted at the earliest for the month of application and for up to 12 months. Interruptions are possible. In addition, the subscription period can also be extended to 24 months, but this requires a corresponding decision by the Federal Ministry of Labor.
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