coronavirus and staggered increase in short-time working allowance

Coronavirus: No birthday party but presents

The German Trade Secret Protection Act (Geschäftsgeheimnisschutzgesetz) is celebrating its first birthday these days. It entered into force on 26 April 2019. I had originally planned the title "Happy Birthday Trade Secret Protection Act" for my labour law blog this week. While birthdays do take place at the moment, due to the coronavirus, they are not celebrated. The first birthday of the Trade Secret Protection Act has therefore also lost its importance. The only secret many are interested in is a coronavirus vaccine. The birthday is therefore not celebrated, but presents are still generously distributed.

Dear readers.

On 22 April 2020 the grand coalition agreed on an increased short-time working allowance and thereby distributed generous presents. What does that mean?

Initial situation

Short-time working allowance, as a payment out of unemployment insurance, is intended to compensate for the loss of earnings suffered by employees as a result reduced working hours. During a period of short-time working, employees receive ‑ for the work they actually perform ‑ the corresponding remuneration on a pro-rata basis. In addition, employees receive short-time working allowance for the reduction in working hours. The short-time working allowance is calculated on the basis of the net loss of earnings. It generally amounts to 60% of the standard net remuneration (remuneration for services rendered, pauschaliertes Nettoentgelt). If at least one child lives in the employee's household, the short-time allowance generally amounts to 67% of the lost standard net remuneration.

Short-time allowance if working hours are reduced by less than 50%

The statutory increase in short-time working allowance does not apply to employment relationships affected by working hours reduced by less than 50%. If, for example, working hours are reduced by 30% as a result of short-time working, the legal innovation does not take effect and the amount of the short-time allowance remains at 60% or 67% of the standard net remuneration.

Increase in short-time working allowance

In employment relationships in which work is reduced by at least 50%, the short-time working allowance is increased in stages. During the first three months of short-time work, the allowance rates remain 60% / 67%. From the 4th month up to and including the 6th month, the short-time working allowance is increased to 70% of the standard net remuneration, or to 77% of the standard net remuneration if at least one child lives in the household. From the 7th month of short-time work onwards ‑ if at least 50% of regular working hours are lost ‑ the short-time working allowance is increased to 80% of the standard net remuneration, or 87% of the standard net remuneration if there is at least one child living in the employee's household.

This increase in the short-time working allowance, which is extremely expensive for the Federal Government, will only apply temporarily during the coronavirus crisis and thus, according to the current regulation, until 31 December 2020.

Relationship between top-up by agreements and by law

Many employers have "voluntarily" increased the previously existing short-time working allowance (60% / 67%) in works agreements or individual employment contracts. An increase up to 80% was possible without social security contributions. Up to now, an increase without social security contributions has thus been 20% / 13%. At the beginning of the coronavirus in Germany, an increase in short-time working allowance was not foreseeable. The question could therefore arise as to whether the employer's top-up will be paid up to the agreed limit of e.g. 80 % and will thus be credited to the staggered increase, or whether the regulation should be understood to mean that a certain percentage will be added to the currently valid statutory regulation. This could lead to odd results. For example, in the case of employees for whom a 20% increase from 67% to 87% has been granted, who would then receive 107% of the standard net remuneration from the 7th month onwards instead of 87% as provided for by law. This would be strange and cannot be intended. Employees in short-time work would then receive a higher net remuneration for their forced inactivity than employees who work.

In future agreements with works councils and employees on short-time working, however, it is mandatory to take account of statutory increases in top-up amounts.

Great and expensive presents from the Federal Government. Still, it would be even better to be able to celebrate birthday parties again.

Best wishes from the Labour & Employment Law Practice Group. Stay well!

Dr Erik Schmid


Dr. Erik Schmid, Partner

Dr Erik Schmid

Rechtsanwalt, Licensed Specialist for Labour Law


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