Order bottlenecks and now? Opportunities of short-time work - an overview - update!

In Germany, too, the consequences of the spread of the corona virus are becoming increasingly dramatic. Supply bottlenecks are arising, orders are declining. Many companies are therefore currently thinking about introducing short-time working in the affected areas or in the entire company.

On 13 March 2020, the Federal Cabinet therefore passed the "Act on the temporary crisis-related improvement of the regulations for short-time working compensation" in a fast-track procedure. The law provides that the Federal Government may issue statutory regulations, limited in time until the end of 2021, which do not require the approval of the Bundesrat, to facilitate access to short-time working compensation, to relieve companies and also to enable temporary workers to access short-time working compensation. Retroactive to 1 March, simplified access rules are thus to apply. The access threshold is to be reached already if only ten percent of the employees are affected by the loss of work. So far, this had to be one third of the employees. In addition, temporary workers are also to receive short-time work compensation, and the Federal Employment Agency is to fully refund the social security contributions that employers normally have to pay for their employees in the future.

With this in mind, employers should currently consider the following when introducing short-time work:

Short-time work means a temporary reduction in the regular working hours of a company with a simultaneous reduction in remuneration. In principle, this can also be achieved by a complete reduction in working hours, so-called "zero short-time work". Short-time work with a corresponding reduction in pay requires an agreement with the employee or, if a works council exists, the conclusion of a works agreement with the works council. Provisions in collective agreements usually only contain authorizing norms for the operating partners. They do not directly and unilaterally authorize the employer to introduce short-time work without the consent of the works council. If an agreement cannot be reached with the employee, it is necessary to issue notice of change of employment. However, this is only conceivable in companies without a works council or in the case of senior executives.

If short-time work has been properly introduced, this will result in the partial or complete suspension of the main contractual obligations under the employment contract, namely the duty to work and the obligation to pay remuneration.

As compensation, the employee may be entitled to short-time work compensation (KUG), i.e. to financial support from the Federal Employment Agency. Whether the employees are entitled to short-time work compensation (KUG) in the event that short-time work is duly ordered depends on § 95 SGB III. This depends on whether there is a considerable loss of working hours in the sense of § 96 SGB III, that the short-time work has been notified in writing to the employment agency in accordance with § 99 SGB III and that an application has been made in due time in accordance with § 325 Para. 3 SGB III. In addition, the operational (§ 97 SGB III) and personal (§ 98 SGB III) requirements must be fulfilled. The operational prerequisites pursuant to § 98 SGB III are fulfilled if at least one employee is employed in the company, whereby a company is also an operational department within the meaning of the regulations on short-time work compensation. The personal prerequisites regulated in § 98 of the Third Book of the Code of Social Law require, among other things, that the loss of wages is due to short-time work and that there is an employment subject to compulsory insurance. The claim to KUG is excluded if the employee receives sick pay or in the event of an effective termination or cancellation of the employment relationship. Further reasons for exclusion result from § 98 paras. 2 and 3 SGB III.

A loss of working hours within the meaning of § 96 I No. 1 SGB III is significant if it is temporary and unavoidable and is due to an unavoidable event or for economic reasons. Pursuant to § 96 para. 1 No. 4 SGB III, up to now at least one third of the employees employed in the company had to be affected by a loss of earnings of more than 10 % of their monthly gross salary in the respective calendar month. As mentioned at the beginning, this access regulation has now been relaxed. In future, companies will be able to apply for the KUG if only 10% of the workforce is affected by the loss of earnings. There are economic reasons, for example, if - as is increasingly the case - there is a decline in orders as a result of the corona virus. In addition, the loss of work may only be temporary. This means that a return to full-time work can be expected in the foreseeable future. Indications as to what is meant by "foreseeable" are provided by the maximum periods for drawing the short-time working allowance (12 months).

Short-time work must ultimately be unavoidable (§ 96, Subsection 4, SGB III). This means that all measures must be taken to prevent short-time working, such as transferring employees from the department concerned to a full-time operational department or reducing overtime. Short-time work therefore presupposes that the department concerned is affected.

The procedure for applying for the KUG itself has two stages. After the written notification pursuant to § 99, Subsection 1, SGB III, by the employer (Step 1), the employment agency decides whether there is a considerable amount of work. Thereafter (step 2), the KuG must be filed for each individual employee pursuant to Section 325, Paragraph 3, SGB II within a preclusive period of three months after the respective month for which the KUG is applied for. The employee also retains a claim for payment against the employer in the amount of the reduced wage claim and additional KUG. This claim against the employer may become relevant in the event of revocation of the KUG.
The Federal Employment Agency's instruction manual and the Federal Employment Agency's leaflet "Kurzarbeitgeld - Informationen für Arbeitgeber" (Short-time allowance - Information for employers) contain helpful information for employers.

If you have any questions or would like to know whether and how you can introduce short-time working, please feel free to contact us at any time. The Schalast team is always at your disposal.