Many companies are currently affected by lost working hours and have already had to agree short-time work with their employees or intend to do so in the near future.
If the employer has agreed on temporary short-time work with his employees and has notified the Federal Employment Agency of this, he then calculates the short-time work allowance to be paid and pays it to the employees. The amount of the short-time allowance depends on the net loss of earnings. As a rule, employees receive 60% of the lost flat-rate net remuneration. If at least one child lives in the household, this rate increases to 67%. The loss of earnings is calculated from a comparison between the gross earnings that would have been earned without the loss of work (although this does not take into account one-off payments or remuneration for overtime) and the gross earnings actually achieved.
An application for reimbursement is then submitted to the responsible Federal Employment Agency. The Federal Employment Agency examines the application and, if approved, reimburses the employer for the short-time work allowance already paid.
In addition to the short-time allowance, the employer can pay allowances to the employees. If these are clearly grants, they are not taken into account when calculating the short-time work allowance, so they do not reduce the short-time work allowance. Some collective agreements make such subsidies mandatory. Basically, the payment of a subsidy for the employer is voluntary. If the employer decides to pay subsidies for short-time work benefits, this voluntary nature should also be pointed out in order to avoid a binding effect on the employer.
However, subsidies for short-time work benefits are taxable. However, if the subsidy together with the short-time allowance does not exceed 80% of the lost wages, there is no social security obligation for the subsidy paid.
An increase in short-time work benefits is currently being considered. It is unclear whether the limit up to which social security-free subsidies can be paid will also increase at the same time. The timing of an increase or whether this will even take place retrospectively is still unclear. As a precautionary measure, the voluntary requirement could therefore be supplemented so that the employer reserves the right to offset against subsidies already paid if the short-time work allowance is increased at a later date.
Please note that this is all general information and does not constitute or replace specific legal advice in individual cases.