Kurzarbeitergeld: Am I receiving my full entitlement?

What is the situation?

The rampant spread of Coronavirus and the possible ramifications to one’s employment as a result of this terrible situation remains a hot topic in the current working climate. In our previous articles on this topic, we have sought to detail your rights in regards to possible Coronavirus-based termination and provide a detailed overview as to your rights regarding short-time working allowance (Kurzarbeitergeld), should your working hours have been significantly reduced. As a result of the client contact we have received from these pieces, we would like to focus this article on an issue that has been commonly raised: namely, am I receiving my full short-time working allowance entitlement?

Why is this an issue?

While the vast majority of employers act in good faith when it comes to employee benefits, it is perhaps unsurprising to hear that there are a few who have attempted to abuse the system and retain money meant for the workforce. The reason this becomes even a possibility is due to the way the benefits are paid out by the state. Firstly, the employer must register their intention to reduce hours by filling out the necessary paperwork and provide this to the Employment Agency (Arbeitsagentur). Based on the information provided, the Arbeitsagentur and the employer agree on how much is due to the employees. The employer then pays said amount to the employees and is later reimbursed by the state. The problem is therefore as follows:

As the payments to the employees are disseminated by the employer in the first instance, there have been instances where the employer has paid out less than the employees are due, whilst later claiming the full amount back from the state. Therefore, defrauding both the employee and the social security system.

Thus, it is highly important for the employee to know what they are entitled to and, should such an occurrence occur, to seek legal assistance.

What is my entitlement?

As discussed in our previous article, the employer is entitled to apply for a Short-term working allowance if:

  • The working hours of the entire workforce to be cut by more than 10%.
  • The employee sees a 10% or more reduction in their gross (pre-tax) wage.
  • The employee remains a part of the company.
  • The reduction in hours is temporary.

The employee is normally entitled to 60% of their net (after-tax) monthly pay if they have no children or 67% of their net monthly pay if they have a child who currently lives at home. This amount has been temporarily revised as a result of the ongoing Coronavirus, with benefits increasing the longer the employee is on Kurzarbeitergeld. See the revisions to the benefits system here. The Arbeitsagentur have produced a table which should provide a good overview of exactly how much benefit you should receive.

The span of this benefit should last for a maximum period of 12 months, though there are some murmurings that this time frame may be increased to 24 months in the face of the Corona crisis.

Which issues can arise?

Due to the unprecedented number of Kurzarbeitergeld applications currently being processed in Germany, it is fair to say that there the level of oversight usually employed by the state has been reduced. As mentioned above, we have had several instances of contact, describing situations where employees detail where they feel their employer has taken advantage of the situation.

One of the main difficulties is that the employer registers both the previous number of hours and the adjusted number of working hours on behalf of directly to the Arbeitsagentur as part of the initial registration. This can lead to the employer misrepresenting either the number of hours the employee has worked before the reduction or misrepresenting the working hours that the employee is currently working. Essentially, there is a possibility that the employer can either:

  • Claim additional money based on the basis that the employee’s standard hours or rate of pay was greater than it was
  • Claim that the employee has had their hours reduced whilst continuing to insist that the employee works more hours (please note that, in this instance, the employee can be also liable)

Should the employer engage in such activities, they may be liable for prosecution under German Subsidy Fraud Laws and can result in very heavy fines and possible custodial sentences.

III. Residence regulations for (employed) skilled workers from third countries

1. Skilled workers (professionals) with completed training (vocational training or studies)

Pursuant to § 18a or § 18b(1) of the Residence Act, a residence permit may be issued to a skilled worker for the purpose of pursuing a qualified occupation for which the qualification they have acquired qualifies them. The requirements for the visa or residence permit are:

  • There is a concrete job offer.
  • Approval for employment has been granted by the Federal Employment Agency (Bundesagentur für Arbeit) in accordance with § 39 (2) of the Residence Act.
  • In the case of an educational qualification from abroad, the equivalence of vocational training or the comparability of the foreign university qualification must have been established. As a rule, this must be proven by a certificate of recognition issued by the competent recognition authority in Germany.
  • If a licence to practise a profession is required (in the case of regulated professions), it must be available or promised at the time of application.
  • For persons over 45 years of age, proof must be provided of an adequate retirement pension or a gross salary of at least 55% of the annual contribution ceiling in the general pension scheme must be paid.

The residence permit for skilled workers in accordance with § 18a or 18b of the Residence Act is issued for a period of four years. If the employment relationship is limited to a shorter period, the residence permit is issued for that period. If the conditions for issuance continue to be met, the residence permit can be extended or a permanent residence permit may be issued.

2. The EU Blue Card for Academic Professionals

The EU Blue Card pursuant to § 18b (2) of the Residence Act applies exclusively to skilled workers with a university degree recognised as equivalent or a German university degree. To obtain an EU Blue Card, the following requirements must be met:

  • There is a concrete job offer for employment that is appropriate to the qualification.
  • If a license to practise a profession is required (in the case of the regulated professions), this must be available or promised at the time of application.
  •  Annual gross salary amounting to at least two-thirds of the annual contribution ceiling in the general pension insurance scheme.
  • For employment in certain occupational groups, the required salary limit is lower in the general pension scheme, at least 52% of the annual contribution ceiling. This applies, for example, to medical professionals, specialists in engineering, natural science and mathematics, and IT. In such cases, unlike in the general case, the approval of the Federal Employment Agency is required

In principle, the EU Blue Card is issued for a maximum of four years. If the conditions for issuance continue to be met, the EU Blue Card can be extended. If the duration of the employment relationship is less than four years, it shall be issued for the duration of the employment contract plus three months.

3. Special case: IT specialists with practical professional knowledge from third countries

There is a special rule for the recruitment of foreign IT specialists, according to which applicants from third countries receive the approval for employment by the Federal Employment Agency in the IT sector, without the need for formal recognition of their qualifications by a competent recognition body in Germany (§ 19 (2) in conjunction with § 6 of the Employment Regulation (BeschV)).

The following requirements must be met:

  •  The applicant can demonstrate at least three years of professional experience in the IT sector within the last seven years, which corresponds to the qualification level of an academic specialist.
  •  The applicant should demonstrate the appropriate qualification by successfully participating in theoretical training or relevant IT examinations.
  •  The gross annual salary must be at least 60% of the annual contribution ceiling in the general pension insurance scheme.
  •  The applicant has at least B1 level of German knowledge based on the CEFR (Common European Framework of Reference for Languages). In individual cases, proof of German language skills may be waived, e.g. if it is not absolutely necessary for the potential job.
4. International students and graduates of German universities as potential for skilled workers

After successfully completing a degree in Germany, university graduates from third countries are allowed to stay in Germany in order to look for qualified employment. They are granted a residence permit for up to 18 months to look for a job in Germany (§ 20 para. 3 No. 1 Residence Act).

In addition, international students from third countries may obtain a residence permit for another purpose during or even before graduation in Germany, in accordance with § 16b (4) of the Residence Act:

  • Taking up employment as a skilled worker (§ 18a; 18b of the Residence Act) or on the basis distinct practical professional knowledge (§ 19c Para. 2 of the Residence Act): Students may be sufficiently qualified to take up a qualified job without completing their domestic studies on the basis of previously acquired degrees or with the knowledge and skills acquired so far. In such cases, the purpose of residence may be changed if there is a concrete job offer. Upon application, the skilled worker will be granted a residence permit to pursue qualified employment.
  • Admission of qualified vocational training (§ 16a of the Residence Act): This enables foreign students to switch to dual vocational training, e.g. if there is an offer of a training place, the corresponding residence permit can be issued upon application.

V. Conclusion

If you are planning on pursuing self-employment in Germany and do not want to go through the application procedure for the residence permit on your own, or simply have any further questions in this regard, we would be happy to help you.

We also support companies in the planning of assignments of foreign skilled workers as well as the  specialists themselves who need legal support.