Kurzarbeit in Germany 2021: The program, which saved millions of workers during the coronavirus crisis, will be extended to 2022.
Germany’s coronavirus limit is quickly being surpassed with the number of infection rising forcing Germany to introduce new, strict restrictions. This means that several companies will experience down time and a decrease in the number of orders.
The German government decided to introduce severe restrictions that will paralyse the activities of many entrepreneurs. It was also announced that the Kurzarbeit program that was saving employees and employers, will be extended by at least another 3 months.
Th Kurzabeit program was first developed after World War II but was adapted by current events. The method has saved the German economy twice in the recent years, easing the effects of the crisis and unemployment.
Kurzarbeit in Germany 2021, i.e. reduced working hours
Kurzabeit saves employers and employees in a situation where the company experiences a significant drop in orders and a lack of customers.
The state comes in to take over the payment of part of the employees’ remuneration and pays the compulsory social security contributions for them.
In the case of Kurzarbeit, the employer shortens the working hours. This means that an employee works half-time instead of, for example, full-time. During this period, the Federal Employment Agency pays compensation for the lost wages in the form of the Kurzarbeitergeld allowance.
The short-term work allowance helps companies in Germany to retain valuable employees, even if they temporarily have too little work.
The Federal Employment Agency will reimburse part of the salary costs for shortened working hours. In addition, employers receive a refund of 100% of social security contributions minus unemployment insurance.
Short-term allowance is paid in companies where at least 10 percent of employees have lost their earnings by more than 10 percent. All economic entities employing at least one employee can apply for Kurzarbeit. Also temporary work companies.
The amount of the Kurzarbeitergeld allowance
Employees receive 60 percent of their net earnings as short-term employment benefits (employees with at least one child: 67 percent).
The short-term benefit increases from the 4th month onwards, but the loss of wages in that month must be at least 50 percent.
The increase in Kurzarbeitergeld benefit over time is as follows:
Reference month 1 – 3:
60/67 * net wage percentage
* Workers with at least 1 child
From the fourth reference month:
70/77 * percent of net salary
* Employees with at least 1 child
From the 7th reference month:
80/87 * percent of net salary
* Employees with at least 1 child
Is Kurzarbeitergeld eligible for cross-border workers?
Cross-border workers who work in Germany and who are subject to compulsory social insurance and who pay contributions to unemployment insurance receive the Kurzarbeitergeld on the same terms as employees residing in Germany.
Who can’t get the benefit?
Employees who are on holiday prior to the commencement of the reduced working hours or who are receiving sickness benefits cannot receive Kurzarbeitergeld benefits. People employed at ‘Minijob’ are also not entitled to this allowance – this is because they do not pay social security contributions.
Who pays Kurzarbeitergeld allowance and how long does it take?
The Kurzarbeitergeld allowance is paid by the employer. The allowance is limited to 12 months. In exceptional cases, this period may be extended to 24 months.