Coronavirus - Kurzarbeitergeld in Germany
Retention opposed to termination
The Coronavirus outbreak continues to progress rapidly throughout Europe and the wider world, placing a huge strain on business’ large and small. Such is the financial strain caused by the fall in income, many companies are unfortunately resorting to the termination of employees in an attempt to try and mitigate costs (check our article on an expats rights in relation to a coronavirus-based termination here). In an effort to dissuade companies from terminating employees, the German government has moved to relax the application criteria and process for a Short-time working allowance (Kurzarbeitergeld).
What is a Short-time allowance (Kurzarbeitergeld) and am I eligible?
The Short-term allowance is a mechanism whereby the state covers a certain percentage (normally 60% or 67%, depending on family status but this has recently been temporarily amended due to the impact of the Coronavirus. Please see the new level of benefits here) of the employee’s wage, should the employer temporarily reduce their working hours, even to the point of zero hours per week. This allowance is designed to prevent dismissals. The employee is retained by the company but paid temporarily by the state (technically the government refunds the employer for the renumeration payments to the employee) until such time that the business has recovered to the point where it can take back over the responsibility for the employee’s renumeration. Basically, the government will assist with the payroll until the storm has been weathered.
The German government is using this already established mechanism as a way to mitigate the devastating financial effects of the Coronavirus pandemic. To this end, eligibility has been temporarily relaxed until the end of 2020, with the current main conditions being as follows:
- The employee is in agreement to be sent on Short-term work (Kurzarbeit); this agreement should be either in the employment contract or in a collective agreement (Betriebsvereinbarung); an individual agreement in the light of the current crisis is also possible
- The cut in hours applies to 10% of the company employees (previously 33%), with the employees seeing at least a 10% reduction in their overall gross wage
- The employee remains part of the company and is not made redundant
- The cut in working hours is temporary
- The employer (in agreement with their relevant employee representative body, in most cases the local Works Council (Betriebsrat), if applicable) has registered their intent and reasoning for cutting the hours of the employees with the Agentur für Arbeit.
This list is by no means exhaustive and, as ever, a great deal will depend on individual circumstance. Should you require clarification on your rights and options in this regard, please do not hesitate to get in touch using the contact details below.
How do I apply for Kurzarbeitergeld?
It is not the employee who applies for the Short-time allowance directly, rather everything should be handled via the employer. The employer contacts their local Employment Agency (EA) and provides details as to why this cut in hours is necessary. The EA will then approve or deny the application. Assuming an approval, the employer will then pay their employees the defined Short-term allowance and be reimbursed by the EA. How long the employer reimbursement will take is not stated at this time (March 2020).
This benefit can last up to a maximum of 12 months but will again depend on the individual circumstance.
This is a trying time for employees and employers alike. The relaxation of the eligibility rules provides a safety net for both but, even though the application process has been expanded and simplified, the eligibility and application processes can be a cause of great confusion and stress, especially for expat employees and business owners. We at ZELLER & SEYFERT have extensive experience in dealing with matters relating to Kurzarbeitergeld so, should you have questions in this regard, please contact Atty. Dr. Christian Zeller via email (firstname.lastname@example.org) or telephone (+49 (0) 30-40 36 785-80) for a free initial “Corona consultancy”.
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