Businesses can introduce short-time work as a means of weathering economic hardship caused by the coronavirus crisis. Germany’s federal government has therefore moved to relax the conditions for applying for short-time allowance.
With supply shortages and empty order books among its consequences, the crisis surrounding the coronavirus is placing a massive burden on businesses and threatening jobs. Short-time work and short-time allowance can help firms to maintain liquidity and secure jobs. We at the commercial law firm MTR Rechtsanwälte can report that in view of the rapid spread of the coronavirus, the federal government has decided to significantly relax the conditions for applying for short-time allowance and for permission to introduce reduced working hours.
In order to support businesses, the existing rules governing short-time work have been made less strict with retroactive effect from March 1, 2020. This means that businesses are already able to apply for permission to introduce reduced working hours in response to the coronavirus crisis.
The new arrangements enable businesses to apply for short-time allowance if ten percent of the workers at a workplace are affected by a loss of work due to the coronavirus crisis. Previously, the loss of work needed to affect one third of employees. Of equal importance to employers is that they will be fully reimbursed for the social security contributions they pay for their workers. Short-time allowance can also be claimed for temporary workers.
Employers must submit the application for short-time allowance to the local employment office where the operational headquarters is located. Its approval is conditional on the normal working hours being significantly restricted. This is likely to come about during the coronavirus crisis as a result of, for example, supply shortages, government measures, and orders that are cancelled or fail to materialize.
As a rule, the following conditions must be met when applying for short-time allowance: there needs to be a substantial loss of work together with a loss of wages, i.e. there needs to be a so-called “unabwendbares Ereignis” (unavoidable event). This includes, e.g., official measures adopted in response to the coronavirus crisis. The loss of work must therefore be unavoidable, but also temporary. Moreover, at least one employee needs to be employed at the workplace. The loss of work must be reported in writing to the local employment office during the month in which the reduced working hours were introduced. Employers may also need to observe collectively agreed arrangements, agreements with the works council, and clauses in employment contracts that address short-time work.
Lawyers with experience in the fields of labor and employment law can advise employers on matters relating to short-time work as well as other legal issues in connection with the coronavirus crisis.
