Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?
If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.
- Agreement with works council / union on short time work – funding by the state
- Company vacation – funded by employees (reduction of their vacation account)
- Reduction of overtime hours - funded by employees (reduction of their overtime account)
- Additionally, in case there is no works council in place, mutual agreement with employees re. short time work.
if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?
- Short time work agreed with the works council in a writing (sometimes already stipulated in tariff agreements)
- Whether company vacation and reduction of overtime accounts can be ordered by the employer itself (in alignment with works council - if existing) must be reviewed on a case-by-case basis. The company vacation must be based on operational reasons and take the interests of the employees into account. Therefore, a unilateral grant of vacation is only possible under restricted conditions. A reduction of overtime accounts depends on the respective regulations in place for overtime.
- Additionally, in case there is no works council in place, mutual agreement with employees re. short time work in writing.
- Company vacation and reduction of overtime accounts can mostly be done by the employer itself (in alignment with works council - if existing) based on operational reasons, like currently the corona impact.
Are there any governmental programs if a company needs to close totally or partially for a certain time period?
If short-time work can be ordered in the company based on a corresponding clause in the employment contract, in a works agreement or in the collective bargaining agreement, employees may under certain circumstances be entitled to receive short-time work compensation under Sections 95 et seq. of German Social Code (SGB III). The prerequisite for the allowance is a considerable loss of working hours. The loss of working hours may have economic reasons or be due to an "unavoidable event". An epidemic with significant number of employees on sick leave in the company or effects on the supply chain and production can be regarded as such an unavoidable event. The entitlement to short-time work compensation is 60% resp. 67% of the loss of earnings (net). As a general rule, the employer must pay social security contributions based on 80% of the lost net earnings without the employee's participation. However, these social security contributions will now (according to a new regulation for the Corona situation) be fully reimbursed to the employer.
If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.
Conditions for receiving short-time work compensation: Needed is a considerable loss of working hours with loss of remuneration, which is based on economic reasons or an unavoidable event, which is temporary and unavoidable and results in a loss of work of at least 10 % of the employees employed in the operation and a loss of earnings of more than 10% of the gross remuneration. Further requested are operational conditions (at least one employee at the operation) and personal conditions for employees. The loss of work needs to be notified to the employment agency.
Amendment of the Infection Protection Act from March 30, 2020: Parents, who have to stay at home due to the ordered school and kindergarten closures of their children (under the age of 12 years) and consequently lose their income, are entitled to a compensation of 67% of their net income, but a maximum of about 2.000 EUR per month for six weeks. At first, the compensation is paid by the employer and will then be reimbursed by the competent state authority.
If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).
Step-Plan for receiving short-time work compensation:
- Create a legal basis for short-time work (corresponding clause in the employment contract, in a works agreement or in the collective bargaining agreement)
- Order short time work
- Notification of loss of work to the employment agency (with the relevant information according to the loss of work, the company, the reduced working hours, etc.)
- Short-time work has to be paid at first by the employer
- Reimbursement request of short-time work compensation to the employment agency (with the relevant information regarding the employees which receive short-time work compensation and a settlement list as an appendix to the reimbursement request)
- If necessary correction of the short-time work compensation
Please note that the COVID-19 scenario is constantly changing and that this information is current as of 16 April 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.