Short-time working allowance has been improved: Higher
reimbursement contributions in the event of lower entry conditions

Short-time working allowance has been improved: Higher
reimbursement contributions in the event of lower entry conditions

The German government has paved the way for the simplified approval of short-time work benefits. Under the COVID-19 crisis, companies will receive support to avoid redundancies and return to normal business operations when employment levels improve. Below we have summarized the topic for you.

Many companies in Germany have been experiencing corona-related shortfalls since March 2020, and some industries have been unable to generate income at least temporarily. For this reason, the Federal Government already facilitated access to short-time working allowance on March 16, 2020, with retroactive effect as of March 1. Companies were thus able to apply for short-time working immediately at the beginning of the corona crisis and thus protect their employees. On September 16, 2020, the Federal Cabinet decided to extend this measure until the end of 2021. The statutory regulation will now be dealt with in parliamentary proceedings. It is to come into force together with the two associated ordinances on January 1, 2021. The following will apply:


  • A claim to STA* exists if at least 10% of the employees (usually 30%) have a loss of earnings of more than 10%. The facilitated access will be extended until December 31, 2021, for companies that have introduced short-time working before March 31, 2021.
  • Legal basis for the introduction of short-time work must be available (collective agreement applicable in the company entitling to short-time work, works agreement with works council, individual agreement for companies without a works council)
  • In view of the current crisis, the Federal Employment Agency has decided to refrain until December 31, 2021 from requiring the use of recreational leave to avoid loss of working hours if short-time working has been introduced until March 31, 2021.However, this only applies to holiday entitlements for the current calendar year. If there are still transferable holiday entitlements from the previous year, these must generally be used to avoid the payment of short-time working compensation.
  • The duration of receipt is based on § 104 of the German Social Security Code Book III. In principle, the following applies: Short-time work allowances can be drawn for 12 months. Interruptions in short-time work of at least 1 month may extend the period of receipt. The subscription period will be extended to up to 24 months for companies that have introduced short-time working until December 31, 2020 (i.e. until December 31, 2021 at the latest).
  • Employees receive 60 per cent of their net wages as short-time working allowance (employees with at least one child: 67 per cent). From the fourth reference month onwards, the short-time working allowance can be increased - provided that the loss of earnings in the respective month is at least 50 per cent. In this case, the increase in short-time working allowance is staggered (70/77 % of net pay from the 4th reference month, 80/87 % of net pay from the 7th reference month). These increases already apply until December 31, 2020, and the Federal Cabinet has decided to extend them until December 31, 2021 for all employees whose entitlement to short-time working compensation was created up to March 31, 2021.
  • Employers will be reimbursed in full by the Federal Employment Agency for the social security contributions they have to pay for short-time work until June 30, 2021. From July 1, 2021, to December 31, 2021, 50 percent of the social security contributions will be reimbursed if short-time work has been introduced by June 30, 2021.
  • The allowance for short-time working for temporary workers will be extended until December 31, 2021, for temporary employment agencies that have introduced short-time working until March 31, 2021.
  • Temporary additional income regulations will be extended until December 31, 2021: remuneration from a low-paid job taken up during short-time working will be paid freely
  • Professional training in times of work loss is supported: For the reimbursement of half of the social security contributions in these cases, the training does not have to be at least 50 percent of the time of work loss anymore in the future.
  • The other conditions for the entitlement to STA remain valid:
    • unavoidable event
    • economic cause
    • evaluation of the temporary redeployment of workers
    • economically reasonable countermeasures must have been taken beforehand (e.g. work in storage, clean-up or repair work)

Main effects for companies

  • Under the COVID-19 crisis, companies receive support to avoid dismissals and return to normal business operations when workloads improve
  • For 24 months, retroactive as of March 1, 2020; the statutory period of entitlement to short-time working allowance is to be extended to up to 24 months by statutory order of the Federal Ministry of Labor and Social Affairs
  • Short-time working allowance is also available for employees in temporary employment
  • In connection with the COVID-19 crisis, non-profit enterprises such as associations, day-care centers and cultural workers can also receive short-time work benefits
  • Waiving the creation of negative working time accounts
  • Full reimbursement of social security contributions from the Federal Employment Agency, also retroactively as of March 1, 2020, to the end of 2021
  • Please note:
    • Reimbursements are only made in arrears, so the employer makes advance payments for the short-time work allowance. According to the Federal Employment Agency, applications during the Corona crisis will be processed more quickly.
    • Despite the rapid granting of short-time work due to simplified examination, it is granted subject to examination and with the possibility of subsequent, detailed regular external audits. This means that if the application is incorrect or incomplete, the grant can be revoked retroactively and any incorrectly paid social security contributions or reimbursements can be processed retroactively - with all liability risks of the management

We will be pleased to support you in all your questions regarding short-time work allowances or other labor law issues. Our specialists will also be pleased to assist you in drawing up company agreements or in negotiations with the works council.

PLUTA provides support for:

  1. Pre-financing of salaries and social security contributions necessary, reimbursement by the Federal Employment Agency will be affected retrospectively
    (Note: at present we do not yet have any reliable empirical data on payment dates; delays may occur due to the current high workload of the Federal Employment Agency)
  2. Extensive documentation required
  3. Targeted control of short-time work via division-specific capacity planning

Contact us now

*) STA: Short Time Work Allowance

further measures to mitigate COVID-19-related economic damages


  • Application for interest-free deferral of mature and maturing taxes until end of 2020
  • Applications for adjustment of advance payments (income tax / corporate tax / VAT)
  • Refund of advance payments is possible
  • Suspension of late payment penalties / enforcement measures until the end of 2020


  • Conditional suspension of the obligation to file for insolvency until September 30, 2020, if the insolvency maturity is based on the consequences of the COVID 19 pandemic and there are prospects of eliminating the insolvency
    • Insolvency maturity is due to the spread of the COVID-19 virus and
    • prospect of eliminating an existing insolvency if no insolvency had occurred by December 31, 2019
  • Extensive suspension of liability and rescission rules as well as criminal law treatment


  • Risk assumption by KfW of up to 90% of the loan volume
  • Application for and granting of loans via intermediary financing partners ("house banks")
  • Up to 800 TEUR with 100% assumption of the credit default risk


  • Liquidity assistance from the Bundesländer for companies and the self-employed (including emergency aid, guarantees, bridging loans, mezzanine)


  • Temporary right to refuse performance in the context of continuing obligations (for consumers and micro-entrepreneurs**)
  • Temporary deferral within the framework of consumer loan agreements
  • Restriction of the possibility of termination of a rental and lease agreement by the landlord
  • Holding of general meetings and shareholders' meetings by means of electronic communication
  • Measures for holding staff council elections in order to ensure that staff councils as well as works councils have the basic capacity to act and make decisions (implementation planned)

*) Act on the mitigation of the consequences of the COVID-19 pandemic in civil, insolvency and criminal proceedings of March 27, 2020, Federal Law Gazette Part 1 No. 14, 569 ff.

To mitigate COVID-19-related economic damage, further extensive measures by companies are necessary.

PLUTA supports