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Pro­tec­tive shield to man­age the coro­n­avirus pan­dem­ic: Com­pen­sa­tion for short-time work

The German government is expanding its short-time work scheme (Kurzarbeit), which provides compensation to certain workers whose working hours have to be reduced. The aim is to provide fast, targeted help if businesses experience work shortages during the coronavirus pandemic. Applications for the short-time work scheme are filed by companies, not by their employees. Access to this benefit is being granted with retroactive effect from 1 March 2020. This means that businesses can apply for access to the scheme now.

Protective shield to manage the coronavirus pandemic
Source:  Federal Ministry of Finance

Compensation for short-time work is paid by official employment agencies as a partial replacement for the wages that workers lose due to temporary work shortages. This reduces employers’ payroll costs and enables them to keep their workers employed even during work shortages. In this way, Germany’s short-time work scheme helps to prevent redundancies.

What rules apply under these exceptional circumstances?

In order for employees to claim compensation for short-time work, only 10% of a company’s employees have to be affected by work shortages (instead of the usual 33%).

The social insurance contributions that employers have to pay when they are using the short-time work scheme are reimbursed in full (by the Federal Employment Agency).

The benefit will also be available to temporary/agency workers. Temporary work agencies can report work shortages to the government immediately.

Workers no longer have to build up negative balances in working hours to claim compensation for short-time work. Previously, businesses were required, where possible, to make use of existing flexitime arrangements before using the short-time work scheme.

For more information on the German government’s short-time work scheme, see the FAQs provided by Federal Ministry of Labour and Social Affairs.