A year on from the shutdown of the global economy, we thought it would be interesting to examine the solutions adopted by our European neighbours to manage an unprecedented crisis. Our roundup begins with Germany and its “Kurzarbeit”...
Having previously been implemented during the 2008 financial crisis, the Kurzarbeit system was used even more extensively during the pandemic.
In April 2020, around 6 million employees became (partially) subject to the Kurzarbeit regime – representing 17.9% of employees eligible for the scheme. Although numbers have fallen in 2021, use of Kurzarbeit remains very widespread.
Main principles of short-time work in Germany
The German system allows companies to reduce staffing costs, while retaining the know-how of qualified and trained employees.
Like the French short time working scheme, the system is based on a temporary (partial or total) reduction in working time. Short-time working may concern all or only part of the company’s employees. The employees concerned work less or not at all during short-time working. The employer must also be able to demonstrate that all alternative ways of reducing working time have been exhausted before resorting to the Kurzarbeit scheme. It is worth noting that in Germany short-time working requires the employee’s agreement or of the works council.
To be eligible for Kurzarbeit, the company must be able to demonstrate the temporary nature of the decline in activity. If the decline in activity is not temporary or pre-dates the scheme (due to economic difficulties, for example), then the redundancy route will be more appropriate. Finally, unlike the French system, a minimum decline in activity is required. To be eligible, the company must demonstrate that the decline in activity affects at least 10% of the workforce.
Short-time working and redundancies are not mutually exclusive or incompatible. There is no general principle prohibiting redundancies, for example. However, some company agreements or collective agreements may stipulate that redundancies are not permitted while short-time working is being used. Employment guarantees and vocational training measures may also have been provided for.
Maintenance of remuneration
Employees on short-time working receive short-time working benefits from the Federal Employment Agency in lieu of salary. The short-time working benefit (general rate) is equivalent to 60% of the net salary for the month during which short-time working applied. An increased rate of 67% is paid to employees with a dependent family. Contributions to pension, health and nursing-care insurance are calculated on the basis of notional remuneration, which generally corresponds to 80% of normal gross remuneration. The employer is solely responsible for these contributions.
Adjustments introduced during the pandemic
It is currently possible, until 31 December 2021, to adopt short-time working for a maximum period of 24 months (compared to 12 months in principle). The German legislature clearly aims to guarantee employment until 2022 through this mechanism.
Finally, like France, Germany has introduced the possibility of reducing or deferring social charges. Employers were therefore entitled to a full and fixed-rate reimbursement of social security contributions until 30 June 2021. After that date, i.e. from 1 July to 31 December 2021, cover will be maintained but reduced to 50%.
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