Introduction of short-time work - A guide for companies

According to Section 96 (1) No. 3 in conjunction with Section 96 (4) Sentence 1 of the Third Book of the German Social Code (SGB III), the loss of working hours must be "unavoidable", i.e. all reasonable precautions must have been taken in the company to prevent the occurrence of the loss of working hours.

The instructions concerning short-time working allowance "Fachliche Weisungen Kurzarbeitergeld (Kug)” (FW Kug) and a memo “Merkblatt 8a" of the Federal Employment Agency, which are available in German only, regulate individual issues in this regard.

Possible measures could be:

• Adjustment of operational procedures, Section 96 (4) Sentence 1 SGB III (FW Kug 96.23-29)
  Operational procedures may be adjusted for instance by:
  • building to stock as far as this is spatially and economically justifiable;
  • transferring employees working short-time to other departments still operating at full capacity, as far as permitted by labour law and operationally possible;
  • economically reasonable conversion to other energy sources or shipping routes (e.g. rail instead of road) in case of lack of heating fuel or a shortage in operating supplies;
  • timely and sufficient procurement of raw materials or of heating fuel or operating supplies;
  • clearing up, repair and maintenance or filling work

• Granting of leave, Section 96 (4) Sentence 2 No. 2 SGB III (FW Kug 96.41-48)
  • General principle: The granting of leave may also be considered in order to prevent the loss of working hours. However, the employer cannot be demanded to instruct employees when to commence the leave in order to avoid short-time work against the holiday wishes of the employees.
  • Already planned holidays: If, however, the holiday is fixed for a period covered by short-time work, e.g. by entry in the holiday list, by the holiday plan or company holidays, and the holiday plan shall only be changed because of the short-time work, this constitutes an avoidable loss of work.
  • Remaining leave entitlements: The same applies if short-time work is introduced towards the end of the holiday year or if there are still transferred leave entitlements from the previous holiday year and the employer fails to make a provision on the commencement of the holiday although the employees concerned do not have differing holiday wishes or these do not have to be taken into account. In these cases, Kug is not granted for the duration of the possible leave.

• Use of permissible working time fluctuations, Section 96 (4) Sentence 2 No. 3, Section 96 (4) Sentence 4 SGB III (FW Kug 96.49-52, 67)
  • Collective bargaining agreements, company agreements and employment contracts often provide for the adjustment of working hours to the order situation in order to be able to react at short notice to better or worse utilisation of company capacities,
  • this also includes regulations on "flextime".
  • Only those working time fluctuations are to be used which are already actually in use.
  • It is not necessary to change existing or introduce new working time arrangements.
  • Please take not of the privilege provided for in Section 96 (4) Sentence 4 SGB III.Employees do not have to build up debit hours before short-time working allowance can be paid (cf. Section 1 No. 2 of the German Decree on the simplification of short-time work (Verordnung über Erleichterungen der Kurzarbeit, KugV), Federal Law Gazette (BGBl.) 2020, volume I, p. 595). https://www.buzer.de/Kurzarbeitergeldverordnung-KugV.htm)

• Reduction of working time credits, Section 96 (4) Sentence 3 SGB III (FW Kug 96.53-66)
  • General principle: Working time credits are to be reduced.
  • Section 96 (4) Sentence 3 SGB III provides for five exceptions,
    in particular:
    • No. 4: Working time credits do not need to be reduced if they exceed 10 percent of the annual working time owed without overtime (this means: time credits in the amount of up to 10 percent of the annual working time owed must be reduced)
    • No. 5: Working time credits that have existed for more than one year, do not have to be reduced (the lowest credit amount for the year is to be used)
    • If the conditions of No. 4 and No. 5 are met, the regulation more favourable to the employee must be chosen.

• Regulations in FW Kug 96.54-55 for the creation of non-working shift accounts during the Kug period and in case a flextime policy already exists for the company

The introduction of short-time work requires a legal basis; the employer's right to issue instructions alone is not enough!

• if under a collective bargaining agreement: is there a collectively agreed short-time work clause?
  • if available: Introduce short-time work in compliance with the requirements of the collective bargaining agreements (often "announcement period" to be observed)
• if a works council exists: (Immediate) negotiation with the works council and introduction by means of a company agreement (not a simple agreement between company and works council without after-effect (Regelungsabrede))!
  • Requirements concerning the content of a company agreement: Rights and obligations must be regulated so clearly that employees can reliably identify them. The company agreement has to contain at least: provisions concerning the start and duration of short-time work, regulation of the daily working hours (Lage der Arbeitszeit) and distribution of working time, selection of the employees affected (Federal Labour Court, judgment dated 18 January 2015 - 5 AZR 491/14)
  • if the works council is unable to convene, make sure that resolutions adopted b the works council are effective
     
• if no works council exists, check employment contracts:
  • even if a short-time work clause is included in the employment contracts, it is recommended to enter into a “Supplementary agreement on short-time work”
    • Background: At the moment, no case law of the Federal Labour Court exists concerning the question whether the unilateral instruction of short-time work on the basis of a short-time work clause is permissible; the views in legal literature on this issue are vague. In its judgment of 7 October 2010 - 2 Sa 1230/10, the Berlin-Brandenburg Higher Labour Court (LAG) held a clause to be invalid because the announcement period was missing. Invalidity could also result from the fact that the scope and extent of the short-time work, the definition of the group of persons affected and the manner in which the group of persons is included is left completely open, according to the Court.
  • if the employee refuses to sign the supplementary agreement, he/she should be informed that such an objection could result in the employment relationship being terminated for operational reasons (betriebsbedingte Kündigung). This may also be a case of a termination due to a change of contract (Änderungskündigung).
  • If short-time work is to be announced at the works meeting and introduced by concluding the supplementary agreements, the use of signature lists may be useful.

Preprinted form "Anzeige über Arbeitsausfall” (Notification of loss of working hours), available in German only

• The number of the form in the bottom left-hand corner must be: Kug 101 - 03.2020
• https://www.arbeitsagentur.de/datei/anzeige-kug101_ba013134.pdf
• Responsible employment agency: The employment agency in whose district the company is located is responsible. If the company has permanent establishments in different districts, each employment agency where such permanent establishments are located has to be notified, which means that several notifications may be necessary
• Form of the notification:
  • signed by ordinary mail, signed fax, signed scan by e-mail or
  • online at https://www.arbeitsagentur.de/unternehmen/finanziell/kurzarbeitergeld-bei-entgeltausfall (online registration of the company with the Employer Service of the Federal Employment Agency is required; if this has not already been done, the following telephone number of the Federal Ministry of Labour and Social Affairs can be used for registration: 0800 / 455 55 20)

• Filling out the notification form on the computer
• Under E. "Angaben zum Arbeitsausfall” (Information on loss of working hours): here the operational situation leading to the loss of working hours has to be described in a brief and meaningful manner, e.g.
  • officially ordered closure of the [BUSINESS/ PERMANENT ESTABLISHMENT/FACTORY] from [DATE] by [AUTHORITY] in [street, street no., postcode and city] due to corona pandemic
  • corona-related (massive) supply disruptions and the resulting lack of meaningful employment opportunities for [PURCHASING / DISTRIBUTION / ETC.]
  • Corona-induced massive [decline in orders on hand/ demand / cancellations of orders] and the resulting lack of meaningful employment opportunities for [PURCHASING / DISTRIBUTION /etc.]
     
• Note of the Federal Employment Agency in Merkblatt 8a

In order for the notification to be processed without delay, it is essential that

• the reasons for the planned short-time work;
  • causes of loss of working hours; comparative values that prove the underutilisation of capacities;
  • information on products/services; main customers and/or main contractors; and
  • information on the temporary nature of the loss of working hours;

be presented in detail.

Two pre-printed forms are required!

1. Pre-printed form "Antrag auf Kurzarbeitergeld (Kug) – Leistungsantrag” (Application for short-time working allowance (Kug) - benefit application"

• correct number of the pre-printed form at the bottom left: Kug 107 - 01.2018
• https://www.arbeitsagentur.de/datei/antrag-kug107_ba015344.pdf
• responsible employment agency (may differ from the agency responsible for the notification!): the employment agency in whose district the payroll accounting department responsible for the company is located is responsible. In case of several payroll accounting departments in different districts several applications need to be filed!
• Form of the application:
  • signed by ordinary mail, signed fax, signed scan by e-mail
  • on line at https://www.arbeitsagentur.de/unternehmen/finanziell/kurzarbeitergeld-bei-entgeltausfall (online registration of the company with the Employer Service of the Federal Employment Agency is required; if this has not already been done, the following telephone number of the Federal Ministry of Labour and Social Affairs can be used for registration: 0800 / 455 55 20)

• Filling out the application form on the computer
   

2. Pre-printed form "Kug-Abrechnungsliste - Anlage zum Leistungsantrag” (Kug settlement list - annex to benefit application)

• correct number of the pre-printed form at the bottom left: Kug 108 - 01.2018
• https://www.arbeitsagentur.de/datei/kug108_ba013010.pdf
• Filling out the application form on the computer

Overview in the tables of the Federal Employment Agency:

1) Tabelle zur Berechnung des Kurzarbeitergeldes (Kug) (Table for the calculation of short-time working allowance (Kug))

2) Tabelle zur Berechnung des Kurzarbeitergeldes (Kug) für Beschäftigte, die keine Sozialversicherungsbeiträge zu tragen haben (Table for calculating the short-time working allowance (Kug) for employees who do not have to pay social security contributions)

3) Section 2 (1) KugV: the employer will be reimbursed by the Federal Employment Agency in the form of a lump sum payment for the social security contributions for working hours lost up to 31 December 2020 which are to be borne by him alone, upon application

Section 2 (3) KugV: the way the lump sum is determined is based on the social insurance lump sum pursuant to Section 153 (2) No. 1 SGB III less the amount for employment promotion

• whether this will lead to full reimbursement of the social security contributions to be borne by the employer, as currently announced on the website of the Federal Ministry of Labour and Social Affairs (as at: 30 March 2020), is unclear: https://www.bmas.de/DE/Schwerpunkte/Informationen-Corona/erleichtertes-kurzarbeitergeld.html;jsessionid=89275423A950981E46EAF49CB32F25B8)