Many clients and friends are staying home in Corona Crisis and its lockdown of economy. The legal fundament is called “Kurzarbeit” and “Kurarbeitergeld”. It can applied when the companies are severely affected by a collapse of the order situation and aren’t liquid anymore to pay the wages of the employees.
With this post I want to give you an overview about “Kurzarbeit” before.
The advantage of Kurzarbeit / short-term work for Germany
Advantage for the German state
Short-time work in Germany is a political instrument for regulating the labor market, which ensures that the company does not have to lay off its employees in a temporary crisis and thus prevents unemployment.
In this economic crisis, companies can no longer sell their products and services because the market no longer exists. Once production stops and no products can be sold, companies normally have to lay off their employees. However, they don’t have to do this now, because the state participates in the wages. The state itself benefits by this instrument as well. In the long run it’s cheaper to pay Kurzarbeitsgeld instead of paying the Arbeitslosengeld (unemployment transfers) to those who have lost their job.
Advantages for companies
The advantage of short-time working was of great benefit to German companies during the last financial and banking crisis in 2008. At that time, when the economy was recovering and the demand for goods was slowly rising again, German companies managed to resume production from scratch. Fast and in high quality. They did not have to search for and train new employees, but the experienced people were only waiting to get back to work. As a result, short-time work for companies ensures that the specific know-how of their employees is safeguarded.
Advantages for employees
Employees don’t lose their jobs through short-time work. They work shorter hours, less than the contractually agreed number of working hours per week. They also receive lower wages, just as much as they actually worked.
However, this salary is now supplemented by supplementary funds from the state employment agency (BA). The bottom line is that a person who works reduced hours receives less than his or her regular wage. As a general rule, this is about 60% of the previous net wage. Anyone who has children receives about 67%.
Let’s assume that a company reduces the working time of its employees by 50%. For those 20 hours per week, the employee receives only half the contractually agreed wage. The loss of earnings is 20 hours or the corresponding salary. As a compensation, the Agentur für Arbeit now pays 60% of the loss of earnings. For those who have children it’s 67%.
Applying for short-time work compensation
This is all done via the employer, which submits an application to the employment agency. As an employee, you usually have nothing to do with it, as many employment contracts already contain a wording on the subject. Large companies very often have a collective agreement in which short-time working is incorporated.
If a company so far has not yet made any arrangements as to how short-time work will be handled at the company, then the staff has to give their consent in writing.
Special features in the 2020 crisis due to coronaIn March, the government and the Bundestag decided on several ways to ease the application for short-time work. It aims to make it feasible for many more companies than ever to apply for and be granted short-time work.
One facilitation concerns temporary employment agencies. Until today, companies that ‘lend’ employees to their customer companies could not apply for short-time work compensation. Now, however, it’ s possible to prevent dismissals in these cases as well. This is a great help in order to prevent the dismissal of people.
Benefits for international professionals working in Germany
This is a great benefit especially for international specialists, as many are integrated into research projects via service companies or temporary employment agencies.
This a short overview how “Kurzarbeit” works. If you are in a job right now, I guess you already know about. We just hope that this instrument works out well for our economy in these difficult times as well.
Stay healthy, keep going!