Our payroll department is available to answer your questions about Kurzarbeitergeld (short-time work allowance). Please get in touch:
Anke Stenkamp on 02871 27575 21
Nicole Walker on 02871 27575 22
As early as 16 March 2020, the German federal government had eased access to Kurzarbeitergeld retroactively to 1 March. This meant that companies were able to apply for short-time work right at the start of the coronavirus crisis and protect their employees. On 22 April 2020, the coalition committee agreed on an increase in Kurzarbeitergeld. As a result of the severe economic consequences of the coronavirus crisis, millions of employees are affected by short-time work. More than 700,000 businesses have already registered short-time work with the Bundesagentur für Arbeit (Federal Employment Agency).
What is Kurzarbeitergeld?
The Agentur für Arbeit (Employment Agency) pays Kurzarbeitergeld as a partial replacement for wages lost due to a temporary work shortage. It replaces part of the lost net income: 60 percent for employees without children and 67 percent for employees with children. This relieves the employer of part of the cost of employing their workforce. Companies can therefore continue to employ their staff even when orders fall away. Kurzarbeitergeld thus helps to avoid layoffs.
What has applied since 16 March?
- Only 10 percent of employees in a business need to be affected by the work shortage (instead of one third, as previously) in order for Kurzarbeitergeld to be claimed.
- Employers are reimbursed in full for the social security contributions they have to pay during short-time work (by the Bundesagentur für Arbeit, BA).
- Kurzarbeitergeld is also available for temporary agency workers: temporary employment agencies can now also notify the Agentur für Arbeit of a work shortage.
- No negative working-time balances have to be built up in order to use short-time work: previously, businesses had to make use of agreements on working-time fluctuations wherever possible in order to avoid short-time work.
Which increases were agreed on 22 April?
- Kurzarbeitergeld is being increased, depending on the duration of the short-time work. To date, the Bundesagentur für Arbeit pays 60 percent of the lost wages during short-time work, and 67 percent for parents.
- From the fourth month of receipt, Kurzarbeitergeld for employees without children whose working hours are currently reduced by at least 50 percent is to be increased to 70 percent, and from the seventh month of receipt to 80 percent of the lost wages.
- For employees with children whose working hours are currently reduced by at least 50 percent, the increase from the fourth month of receipt is 77 percent, and from the seventh month of receipt 87 percent.
- These increases apply at most until 31 December 2020.
Important additional information on Kurzarbeitergeld:
The amount of Kurzarbeitergeld is determined by the employee's tax deduction characteristics. As a rule, around 60% of the lost net pay is paid.
If at least one child lives in the employee's household who is to be taken into account for tax purposes under § 32 Abs. 1, 3 to 5 EStG (= entry of a child allowance on the tax card), Kurzarbeitergeld amounts to around 67% of the lost net pay.
For a child who has reached the age of 18, under certain conditions (e.g. vocational training) and upon application, the tax office can enter the child allowance on the electronic income tax card.
Please note: Child allowances are only entered for tax classes I, II, III and IV.
IMPORTANT: Employees with tax class V or VI!!!
The higher benefit rate 1 (Kurzarbeitergeld of 67%) can also be granted if the existence of a child within the meaning of § 32 Abs. 1, 3 to 5 EStG has been evidenced by a corresponding certificate from the Agentur für Arbeit. The issuance of such a certificate by the Agentur für Arbeit may be applied for informally by either the employer or the employee. The application must contain the required details.
The following documents must be enclosed:
• Employees with income tax class V:
Extract from the spouse's electronic income tax card, or a certificate from the tax office or the employer confirming the entry of child allowances on the spouse's electronic income tax card.
• Employees with income tax class VI:
Extract from the electronic income tax card (tax class I, II, III or IV).
• Employees whose children live abroad:
Where possible, a certificate from the tax office confirming that a tax allowance is granted for the maintenance of at least one child within the meaning of § 32 Abs. 1, 4 and 5 EStG.
If 60% is once "mistakenly" settled, this cannot be corrected retroactively!
For the details, please contact the payroll department directly.
Further practical information on Kurzarbeitergeld can be found here:
FAQ of the German Federal Ministry of Labour and Social Affairs https://www.bundesfinanzministerium.de/Content/DE/Downloads/2020-03-18-kurzarbeitergeld-faq.pdf?__blob=publicationFile&v=1
Further information from the Federal Ministry of Labour and Social Affairs https://www.bmas.de/DE/Presse/Meldungen/2020/mit-kurzarbeit-gemeinsam-beschaeftigung-sichern.html
Frequently asked questions
Frequently asked questions
What is Kurzarbeitergeld (short-time work allowance) and how high is the basic benefit?
Kurzarbeitergeld is a benefit provided by the Agentur für Arbeit (Federal Employment Agency) that replaces part of the net wage loss during a temporary reduction in work. Employees without children receive 60 percent, and employees with children 67 percent of the lost net pay. The aim is to ease the burden on employers and to avoid dismissals.
Which simplified access rules for short-time work benefits (Kurzarbeitergeld) have applied since 16 March 2020?
It is sufficient if 10 percent of the workforce is affected by the loss of work (instead of one third). Social security contributions are fully reimbursed to employers by the Bundesagentur für Arbeit. Temporary agency workers are also eligible, and negative working time balances no longer need to be built up.
How was short-time work allowance (Kurzarbeitergeld) increased in stages from 22 April 2020?
If working hours are reduced by at least 50 percent, the short-time work allowance for employees without children rises to 70 percent of the lost net wage from the 4th month of receipt and to 80 percent from the 7th month. For employees with children, the benefit increases to 77 percent from the 4th month and 87 percent from the 7th month. These increases applied until 31 December 2020 at the latest.
When do employees receive the increased benefit rate of 67 percent?
The increased rate is granted if at least one child eligible under § 32 Abs. 1, 3 to 5 EStG lives in the household and a child allowance is registered on the income tax card. Child allowances are only entered for tax classes I, II, III, and IV. For adult children, the allowance can be applied for at the tax office under certain conditions (e.g., vocational training).
How can employees with tax class V or VI obtain the increased benefit rate?
They need a certificate from the Agentur für Arbeit, which can be requested informally by either the employer or the employee. For tax class V, an extract from the spouse's electronic Lohnsteuerkarte showing the child allowance must be attached; for tax class VI, an extract showing tax class I, II, III, or IV is required. If short-time work compensation is mistakenly calculated at only 60 percent, this cannot be corrected retroactively.