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Hands-on experience: Questions and answers on the short-time work allowance
6. April 2020
Here we share and answer the questions about short-time work compensation that our clients frequently ask in their daily work. These are questions and answers about short-time work compensation:
When can employers submit applications for short-time work?
You can do this in the event of a decrease in orders and the partial or total non-employment of your employees. You can also apply for short-time working allowance in the current situation retroactively from 1 March 2020 for the next 12 months.
What does short-time work mean financially for the employees?
Employees generally receive 60 percent of their net wages. If they have to care for children, they receive 67 percent of their net wages. The employer pre-finances the short-time allowance and receives it back from the relevant employment agencies.
What does short-time work mean for social security contributions?
As a result of the Corona crisis, employers are exempted from paying social security contributions on the short-time working allowance. They pay 80 percent of the social security contributions to the health insurance funds, but are subsequently reimbursed by the employment agency.
When applying for full short-time work compensation, no more personnel costs are incurred in the company. Salaries, wage tax and social security contributions are completely eliminated. It is important that the insurance protection of the employees remains in place during the period of time for which the short-time work compensation is paid.
What do employers have to pay attention to before they apply for short-time work benefits?
The implementation of the short-time working allowance requires a company agreement with the works council. If there is no works council, the employees must agree in writing. Without this consent, employers should check labour law measures, since no reduced hours compensation can be paid for employees who do not agree.
When are employers allowed to apply for short-time work compensation at all?
The current situation is that at least 10 percent of employees with at least 10 percent of their gross salary must be affected by short-time working. However, the employee should first reduce all overtime hours and take the remaining leave in 2019 in full before the employer applies for short-time compensation. This does not apply to vacation for the current year. The employee does not have to take this leave.
What happens to the holiday entitlement of an employee on short-time work?
In the event of short-time working, which affects the number of weekly working days, the holiday entitlement must be adjusted to the new work obligation. Where employees work only two days a week instead of six, i.e. only 33.3 percent, they are entitled to only one third of their vacation entitlement.
In the case of „zero short-time work“, i.e. the complete elimination of the obligation to work, there is also no holiday entitlement.
Can employees take leave during short-time work?
Yes, employers must grant leave pay at the normal level. Reductions in earnings resulting from short-time work are not taken into account.
From when is the short-time allowance paid?
At the earliest from the month in which the application is submitted to the Employment Agency. The application for April 2020 must be received by the responsible employment agency by 30.04.2020 at the latest.
What can employers do to mitigate the loss of pay of their employees?
Employers can pay voluntary allowances to top up the short-time working allowance. In this way, the employer can partially compensate the employee’s loss of earnings.
You can agree the grants in individual contracts. However, they are usually regulated within a collective agreement. These subsidies are subject to income tax.
If subsidies plus short-time working compensation do not exceed the notional remuneration, they do not have to be added to the remuneration subject to social insurance contributions. This means that the voluntary contributions to short-time work compensation are not taken into account when calculating contributions or when granting social insurance benefits.
Is short-time work compensation also possible with fixed-term contracts and extended time limits?
Is short-time work compensation also possible for foreign employees with a temporary residence permit?
Yes, if foreign employees are in a legal employment relationship subject to compulsory insurance and have a work permit, if required, they can also receive short-time work benefits.