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Short-time working allowance as an instrument in the Corona crisis
17. April 2020
In order to avoid redundancies in companies in the Corona crisis, the Federal Cabinet has decided that short-time work compensation should flow at short notice and that you can apply for it retroactively as of 1 March. The federal government is using the short-time work allowance as an instrument during the Corona crisis. We present the new regulation.
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The new short-time working allowance is intended for companies affected by supply bottlenecks, closure by the authorities, capacity utilization problems and order reductions. In this way, the federal government wants to preserve jobs by making it easier to draw short-time work benefits. In this way, the federal government wants to cushion the economic impact of the virus on the labour market.
The short-time working allowance enables companies to maintain the liquidity of their operations in a phase in which their own sales would not cover costs under normal conditions. The new regulation was passed last Friday in summary proceedings.
Legal framework for the receipt of short-time working compensation
Short-time work compensation as an instrument in the Corona crisis can be applied for if an „unavoidable event“ occurs. Such an event exists if the loss of working hours was caused by exceptional weather conditions or officially recognized measures that are not in the employee’s responsibility.
In concrete terms, with reference to the current situation, this means that the Corona crisis is such an event when employees are no longer working to capacity due to its effects. If companies send employees home without a home office purely as a precautionary measure to prevent the virus from spreading, this is not considered an „inevitable event“.
If the authorities recognise the circumstances as unavoidable, they will take over part of the payment for a maximum of 12 months. The legislator has revised other legal requirements that have applied to date in the course of the current crisis.
In order to implement the short-time working allowance, companies must conclude a works agreement with the works council. If there is no works council, companies must obtain written consent from the employees concerned.
These relief measures are planned for the receipt of short-time work compensation:
Only ten per cent of the workers employed in the company must still be affected by the loss of working hours. Until now, it was at least one third.
Employees should not have to produce minus hours. As a result, employers do not have to use their employees‘ work time accounts to compensate. They must give priority to any remaining leave that employees have from the previous year. It is still unclear to what extent they must reduce overtime beforehand and whether vacation for the current year should be given priority.
The companies concerned will be reimbursed in full for the employer’s social security contributions for their short-time workers.
Temporary workers are also to receive short-time work compensation.
Who is entitled to short-time work benefits?
Temps are not entitled to short-time work compensation. In the case of employees subject to social insurance contributions, the short-time work allowance is subject to four conditions:
There must be a considerable loss of working hours.
The company must employ at least one employee subject to social insurance contributions – the relief thus also applies to micro-enterprises
They must not have given notice to the employees concerned before the short-time work and there cannot be a termination agreement in place.
The employer must report the loss of working hours during the month in which the short-time work begins.
How much short-time work compensation can employees expect?
Employees generally receive 60 percent of their net wages. If they have to care for children, they receive 67 percent of their net wages. In this respect, the introduction of short-time work benefits can lead to drastic cuts, especially for employees with relatively low net incomes. The employer must be aware of this.
The employee’s insurance cover remains in force during the period in which the short-time work allowance is paid.
We have put together a team of several employees to provide you with the best possible support in this extraordinary situation.