Labor Law for Businesses

Short-time work is essentially a hybrid of unemployment and part-time employment. Affected employees work fewer hours or cease working entirely within the company due to a decline in orders or reduced demand for the company's services. 

The purpose of short-time work is to help companies overcome temporary periods of low orders and to prevent layoffs during a reduction in work. If the necessary conditions are met, short-time work benefits (Kurzarbeitergeld) can be applied for as compensation for both employees and employers.

Short-time work cannot be unilaterally imposed by the employer. However, the possibility of implementing short-time work may already be stipulated in employment contracts. Even in such cases, short-time work must be announced with specific notice periods. If short-time work is to be implemented at short notice, it requires the consent of the individual employee concerned.

To apply for short-time work, four conditions must be fulfilled. You can also find comprehensive information on this topic on the website of the Federal Employment Agency.

There must be a significant reduction in work. This reduction must be attributable to either economic reasons, such as a poor order situation, or an unavoidable event. This condition is certainly met for most businesses due to the current COVID-19 pandemic. The federal government has now set a minimum requirement: there must be a loss of earnings of at least 10% for at least 10% of the employees in a company or a specific department. 

The reduction in work must be of a temporary nature, meaning there must be a reasonable expectation that a return to full employment will occur in the foreseeable future.

The reduction in work must be unavoidable. This condition has now been relaxed by the federal government. Companies must have taken all possible steps or attempted to prevent or limit the work reduction. For example, there is no longer an obligation to accumulate negative working hours that would need to be compensated later once the economic situation recovers. However, overtime hours, for instance, must still be reduced before short-time work benefits can be applied for.

Furthermore, company-specific and personal conditions must also be met. The company-specific requirement is simply that at least one full-time employee is subject to social insurance contributions. Personal conditions for employees include that they have not been dismissed, are not marginally employed, or are not currently undergoing vocational training. 

The application can be submitted online to the Federal Employment Agency.

The Federal Employment Agency reimburses employers 60% (or 67% for employees with children) of the "lost net earnings." This means that if, for instance, half of the work hours are cut, the Federal Employment Agency will supplement the remaining half of the salary by 60% or 67%. The exact amount of the subsidy also varies depending on the employee's tax class.

Yes, the Federal Employment Agency reimburses short-time work allowance retroactively. Therefore, employers must continue to pay their employees' wages. To assist with calculating the short-time work allowance and determining the amounts to be paid to employees, the Federal Employment Agency also provides a table online.

Yes, employers must continue to pay social security contributions in full along with wages. This includes both the employer's and employee's full shares for health, pension, and long-term care insurance.

However, until the end of 2020, these contributions will be fully reimbursed by the Federal Employment Agency. This is a deviation from the standard regulations for short-time work, implemented due to the Corona crisis.

Employees are not required to use their vacation days. Vacation is intended for employee rest and recuperation and therefore cannot be unilaterally mandated by the employer. Different rules may apply in cases of company agreements where, for example, fixed company holidays have already been established in the employment contract. Such arrangements remain valid.  

Furthermore, employees cannot "cancel" already approved vacation, for example, because travel is currently not possible. In such cases, the employee must then spend their vacation at home. 

Nevertheless, it is advisable to seek mutually agreeable solutions with employees. 

Employees must be informed about the implementation of short-time work. As a precautionary measure, their written consent should be obtained. Once all the aforementioned prerequisites are met, the Federal Employment Agency will specifically review the submitted documents, including the announcement of short-time work and the agreement with employees regarding its introduction.

Employers must provide a detailed explanation of the reasons for implementing short-time work. It is advisable to submit documents that show comparative figures, such as those from previous years. These could demonstrate, for example, a decline in sales or the cancellation of orders by primary clients or contractors. Furthermore, explanations must be provided regarding the temporary nature of the work reduction, which in this context, naturally refers to the Corona pandemic. 

It is important to note that applications for short-time work allowance can also be submitted retroactively, subject to a three-month exclusion period. This period begins at the end of the calendar month for which the short-time work allowance is being requested. 

No, this is generally not possible solely on the grounds of the Corona pandemic. An extraordinary termination of employment due to a temporary decline in orders is typically not justified, as the employer is responsible for bearing the operational risk. 

Whether redundancies are justified always requires a case-by-case assessment. Redundancies are only permissible if „urgent operational requirements“ exist, meaning the employer cannot stabilize their business situation through any measures other than termination. The dismissal must be unavoidable. Furthermore, a social selection process must be conducted for every redundancy. 

If no protection against dismissal applies (e.g., for small businesses with fewer than 10 employees), employment can generally be terminated with the statutory notice period as stipulated in §622 of the German Civil Code (BGB). 

As soon as a suspected case of coronavirus is identified within the company, the employer must inform the remaining workforce about it. This is crucial for promptly identifying and informing potential contact persons. This obligation stems from the employer's duty of care towards their employees. 

Not only a confirmed infection, but even a suspected case of coronavirus must be reported to the authorities. However, this reporting obligation applies to the diagnosing doctor, not to the employer. 

The employer's duty of care towards employees includes the obligation to inform them about potential health risks and to educate them about internal protective measures, as stipulated in §§ 12 (1) and 81 (1) sentence 2 of the Works Constitution Act (BetrVG).

To prevent potential infection, employers are required to implement protective measures to ensure employees are safeguarded and cannot be infected by other staff or third parties. The specific design of these protective measures is not legally prescribed and depends on the individual business. In any case, it will likely be considered reasonable to establish internal company regulations for hygiene protection. Protective equipment or disinfectants only need to be kept available and provided to employees if the nature of the business or a high number of employees makes it necessary. 

Unless otherwise stipulated in their employment contract, employees do not have a legal right to work from home. The employer determines the place of work in accordance with Section 106 of the Industrial Code (GewO). 

However, if the employee's duties allow for mobile working, a suitable agreement can also be made retrospectively for a temporary period. 

If an employer does not grant an employee's request to work from home, the employee remains obligated to report to the workplace. Should the employee still fail to come to work, this may lead to legal consequences under labor law, particularly a warning or termination.

This exception applies if the employee can demonstrate a concrete risk of infection at their workplace, or if an authority has classified the risk of infection as very high, rendering it unreasonable for the employee to continue working. 

Although the employer has the right to determine the place of work in the absence of other agreements (Section 106 GewO), they can only unilaterally mandate working from home under exceptional circumstances. Furthermore, a strong justification should be provided, as this involves an intrusion into the employee's private living space, which is generally not permitted.

Additionally, the employer must ensure that the employee is actually able to work from home. Therefore, the employer must provide the employee with the necessary technical equipment and guarantee that the employee can connect to the company server, for instance, via VPN. 

A distinction must be made here based on the reason an employee remains at home. 

If an authority imposes a ban on professional activity on individuals who are not ill themselves but are suspected of infection (e.g., due to a family member's illness) (Section 31 of the Infection Protection Act - IfSG), thereby prohibiting the employee from working, then a claim for compensation arises under Section 56 of the IfSG. 

This regulation largely mirrors the continued payment of wages: the employee will initially receive their salary for 6 weeks, followed by sick pay. However, the employer can apply for reimbursement from the competent authority within three months. As a "special provision," the employer may also request an advance payment for the estimated reimbursement amount, in accordance with Section 56 (12) of the IfSG. 

If an authority orders the closure of an entire business, it is debated whether there is an obligation to continue paying wages. On one hand, it is argued that the reason for the business closure in such cases typically does not fall within the employer's responsibility and is therefore not covered by general operational risk. However, if such a closure order is considered part of the employer's general operational risk due to specific circumstances, the employer would be obligated to continue paying wages. This, however, requires an individual assessment of each case. 

If the employer voluntarily instructs employees to remain at home, they are in all cases obligated to continue paying their wages. 

Even during the current Corona crisis, an employee is generally still obligated to perform their work. Without an official ban on activity from the authorities, an employee may only refuse to work if there is an objective risk. The employee would need to provide proof of such a situation, and the requirements for this are quite stringent. However, for instance, an employee cannot be compelled to undertake a business trip to a high-risk area designated by the Federal Foreign Office. 

Should an employee unlawfully fail to report to work during the Corona pandemic, labor law measures can be taken, similar to other instances of misconduct. It is, of course, important to respond appropriately, which means the response will depend on the degree of fault attributable to the employee for their misconduct. 

If an employee repeatedly fails to report to work, does not resume their duties despite a warning, and there is no demonstrable risk to the employee at their workplace, then termination may be considered as a last resort.