Temporary short-time work

Temporary short-time work

Scientists don't often have the opportunity to put their teachings into practice. Martin Kocher is an exception: As head of the IHS, he warned last summer that short-time work would become “a permanent instrument”. He did this at a media event together with the then Labor Minister Christine Aschbacher. Today he has replaced his former hostess - and made his insights flexible in his political role. He now believes that “corona short-time work in lockdown industries is conceivable up to a maximum of March 2022,” said Kocher in a recent interview with the APA. One thing is certain: In times of crisis, short-time work has proven itself as a labor market instrument. Companies can retain their employees even when business is poor. Most recently, 488,000 people were registered for Corona short-time work in March. At its peak in June there were 1.3 million people.

When recruiters cry

Many companies struggle with the rules on short-time work. Like all salary and personal requirements, they are complicated. The main criticism from companies is the length of the process. The AMS employment service, which is responsible for processing applications, still lacks human resources. There are still companies that do not yet have the subsidies for the short-time work phase in May of the previous year. In mid-February, a legally binding commitment of 10.6 billion euros was made. According to the Ministry of Labor, 6.1 billion euros of this were actually paid out. 

One after another

Phase 4 of the short-time work rules starts on April 1st (until June 30th). The explanation for the phases is simple: The guidelines were introduced with a usually three-month time limit. From phase to phase there were always legal changes that were due to previous experiences and legal requirements. The framework conditions that most recently applied to phase 3 remain the same with a few small changes.

Short-time working salaries

The net income replacement rate for employees remains at 80 to 90 percent in phase 4. The income during short-time work is based on the gross pay before short-time work (including allowances, surcharges and ongoing commissions as well as overtime and overtime bonuses, but not allowances/diets and overtime pay). If the salary components fluctuate, a three-month average should be used. 
● Up to €1,700 gross: Employees on short-time work receive 90% of their income.
● up to €2,685 gross: 85% of income
● from €2,686 gross: 80%
However, the employer is not entitled to any subsidy for portions of income over €5,370. It's different with apprentices: you keep 100% of the previous apprentice's compensation.
This gross replacement rate (80/85/90%) must be paid in any case, regardless of how many or few hours were worked.
For practical use: The Federal Ministry of Labor has put a “short-time working minimum gross pay table” online with the “once” and “now” calculations. An employee with a gross salary of 2,500 euros receives 1,985 euros gross per month during their short-time working hours. 

Questions about working hours

Since October 1, 2020, the range during the respective short-time working period must be between 30% and 80% of normal working hours. Longer periods without work can be agreed. The reduced working hours only have to be achieved on average. Important for companies: The reduction in working hours can be set differently for individual employees or - if there is a works council - agreed with it. However, it should be noted that employees on short-time work are obliged to retain their employees for one month after the end of short-time work. If a dismissal for operational reasons is still to be given, the consent of the works council or union is required. This consent can be replaced by the responsible regional office of the AMS. If an employee on short-time work resigns of their own accord, another must be hired (obligation to fill up). 

That’s how much the AMS pays 

The responsible employment service will reimburse the costs for hours not worked but paid for. The short-time work allowance includes the proportional special payments, the proportional social security contributions (based on the salary before the introduction of short-time work) and other wage-related employer contributions. The employer's social security contributions are taken over by the AMS from the first month of short-time work. 

The “AMS calculator for Covid-19 short-time work allowance” (google it!) calculates the subsidies without obligation: For the employee mentioned at the beginning, who normally receives 2,500 euros gross and is entitled to 1,985 gross for 30 percent of his working hours, the expected Covid-19 short-time work allowance including SV employer share is 2,144 euros. 

The bottom line is that it is not easy for companies to mobilize money from the state. On the other hand, no neighboring country offers anything like comparable support to retain employees. It's easier to put up with the bureaucracy.