The corona virus crisis not only paralyzes the German economy – many companies are now applying for short-time work. We answer the most important questions about short-time work benefits.
The corona virus pandemic is having a significant impact on the German economy. We have put together the most important questions and answers in connection with the application for short-time work (earnings).
The prerequisite for this is that the company employs at least one employee and that the loss of work is due to economic reasons or an unavoidable event, such as the corona virus. In addition, the loss of work is temporary and unavoidable. The changed economic situation must affect at least ten percent of the employees in the respective calendar month. The loss of work should be more than ten percent of the gross wages.
Employers apply to the employment agency. The works council must have approved this. If there is no works council, an individual agreement must be concluded with each employee. Every month, the employer must provide the exact number of employees affected and the amount of the loss in the company. Short-time work allowance is also paid for temporary workers.
The company can reduce working hours completely (zero short-time work) or partially (from five to three days a week). For short-time work zero, the employment agency pays 60 percent of the net salary, for employees with a child on the income tax card 67 percent of the net salary. If the working time is reduced by only two days, the short-time allowance only applies to the two days that have been lost. The employee continues to receive his normal salary for the remaining three days.
Employers no longer have to pay the social security contributions that are attributable to the fictitious wages. They can even have their employees’ social security contributions reimbursed retrospectively. What is new is that employees with a working time account do not have to accumulate minus hours before the employer can apply for short-time working. Only overtime has to be reduced under certain conditions.
Short-time work benefits are calculated on the basis of the net salary and therefore do not have to be taxed again. However, the payments are subject to the so-called progression reservation. This means that the amounts paid have an impact on your tax rate in the annual tax return. By the way: If the employer pays subsidies for short-time work benefits, these must be taxed regularly.
In most cases, the Federal Employment Agency pays short-time benefits for one year. Since the adjustment in the wake of the COVID 19 crisis, payments can be extended to a total of two years. On the website of the Employment Agency you can find applications for lost work and further information for companies to apply for short-time work benefits.