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Coalition Committee: Increase of Short-Time Work Allowances

On the evening of April 23, 2020, the coalition committee agreed on further measures to soften social and economic hardship resulting from the ongoing Coronavirus pandemic. Among other measures, short-time work allowances is to be increased.

Short-time work allowances is to be increased according to a time scale from 60% to up to 80% (67% to 87% for households with children).

Precondition for the increase should be that the respective employees in short-term work are affected by at least 50% loss of working hours.

From the fourth month of short-term work, the short-term work allowances is then to be further increased to 70% or rather 77% of the lost net salary and from the seventh month onwards to 80% or rather 87%. Currently, the maximum period for which short-term work allowances can be drawn is 12 months.

The new regulation will initially be limited until December 31, 2020.

EMPLOYERS SHOULD TAKE INTO ACCOUNT THE INCREASES IN TOPPING-UP PROVISIONS.

The increase may lead to uncertainties in dealing with contractual or collective topping up provisions. If the employer has promised a percentage increase in short-term work allowances, it is questionable whether this should then also apply to the increased short-term work allowances. If, on the other hand, the regulations provide for an increase in the difference in pay, no application problems should arise: In this instance, the topping up provision may not apply. If agreements on short-term work are currently being negotiated with the works council or employees, this aspect should, however, be taken into account and it should be made clear that the employer’s obligation to top up to a certain percentage of the difference in pay only extends as far as the state does not compensate for this with the short-term work allowances.

IMPLEMENTATION

The resolutions of the coalition committee must be passed by the German Federal Parliament (Bundestag) for the most part as amendments to the law. As an increase in the short-term work allowances plans is only to take place from the fourth month onwards, there is no particular hurry for the short-term work cases currently ordered due to the Coronavirus, as companies will only be in the second month of short-term work at most and the new regulation would then only become relevant on June 1, 2020. If the time limit is implemented as planned, companies and employees could then benefit from a total of no more than four months of the maximum short-term work allowances until the end of the year.

© 2020 McDermott Will & EmeryNational Law Review, Volume X, Number 119

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About this Author

Thomas Gennert Labor & Employment Attorney McDermott Law Firm Dusseldorf Germany New York
Associate

Dr. Thomas Gennert focuses his practice on labor and employment law. He advises clients on the entire field of individual and collective employment law, data-privacy law and compliance, and employment-related litigation as well as employment-related matters in mergers and acquisition transactions. He also advises managing directors and corporate bodies on negotiation and termination of service agreements and liability related matters.

Previously, Thomas worked for an international law firm in Düsseldorf and New York focusing on corporate law, merger and...

49-211-30211-310
Gudrun Germakowski, Employment Attorney, McDermott Law Firm
Partner

Dr. Gudrun Germakowski is a partner in the law firm of McDermott Will & Emery Rechtsanwälte Steuerberater LLP, based in its Düsseldorf office. She is a member of the German Labor and Employment Group, where her practice focuses on transaction related labor law issues, restructuring, redundancy programs and outsourcing activities. She also advises on all individual and collective aspects of labor and employment law.

+49 211 30211 310
Dr. Christian Rolf Labor & Employment Attorney McDermott Will & Emery Frankfurt, Germany
Partner

Dr. Christian Rolf focuses his practice on employment, labor, civil and commercial law, executive compensation and benefits schemes and human resources (“HR”) compliance and data privacy issues. He also has extensive experience in employment law-related matters in M&A and private equity transactions, restructuring scenarios and complex business litigation.

Christian advises all types of clients and businesses on employment and labor law matters, including strategic and private equity investors. This includes providing day-to-day advice as well as analyzing employment-law aspects...

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Dr. Philipp Schaeuble Employment Attorney McDermott Will & Emery Munich, Germany
Partner

Dr. Philipp Schaeuble focuses his practice on Employment Law, advising national and international companies on both individual and collective matters.

Philipp has particular expertise regarding remuneration systems (including regulated remuneration systems), company pensions, restructurings and employment law aspects in the context of public-private partnerships. He also has a special focus on M&A employment law matters.

Philipp advises companies in the Life Sciences, Automotive, Financial and Publishing sectors.

Prior to joining McDermott, Philipp headed the...

49 89 12712 330
Volker Teigelkötter, McDermott, Labor and employment lawyer
Partner

Volker Teigelkötter advises clients on the entire spectrum of German and European labor and employment law. Volker counsels clients on all types of staff-related measures in connection with reorganizations (e.g., redundancy programs, plant closures, relocations, outsourcing, collective dismissals), as well as on individual dismissals for various reasons (e.g., compelling business needs, misconduct, poor performance). This includes representing clients before labor courts and during negotiations with work councils and trade unions. In addition, Volker focuses on employment...

49 211 30211 310