Labour law action required in the Coronavirus crisis: Continued payment of wages and short-time work

Greta Groffy

The German government has currently announced a large number of measures to mitigate the negative impacts on the economy during the coronavirus crisis. Employers are required to make proper use of labour law instruments and the current state subsidies. This applies in particular to the reimbursement of continued payment of wages in the event of a lack of childcare facilities or quarantine on the part of employees, as well as the temporary bridging of work absences through short-time working.

Examination and documentation of wage continuation costs
The employer would be well advised to check his wage continuation costs in the different case constellations. It may be considered in cases of

  • Incapacity to work due to mild cold symptoms, where the employees would normally have worked and now remain at home with a medical certificate,
  • lack of childcare facilities,
  • quarantine of the employee or
  • the employer's release as a precautionary measure.

In order to avoid wage continuation costs, the employer should in any case ask whether the employee would be able to continue to perform his work from home, and should offer this to employee. In addition, work absences and wage continuation costs in the cases mentioned above must be documented in concrete terms in order to assert any claims for reimbursement later on.

Continued payment of wages in case of absence of childcare
If the employee does not have access to childcare facilities for his children and if he asserts this against his employer, he may be entitled to continued payment of wages in accordance with § 616 German Civil Code. According to the current legislation, a claim requires that the incapacity lasts less than ten days from the outset, so that, for example, if a day care centre is closed for two weeks and there is no possibility of care for the entire period, the claim is excluded and will not apply. Nonetheless, in many employment contracts Sect. 616 German Civil Code and thus the claim to continued payment of wages are excluded, which each employer should check in every individual case. If Sect. 616 of the German Civil Code does not apply and there is no other entitlement to continued payment of wages or short-time work compensation, the employee should be entitled to compensation for loss of earnings (67% of net income; limited to EUR 2,016.00 per month, limited until the end of 2020), according to the law passed by the parliament on 25 March 2020. The employer must meet this claim and can have the amounts reimbursed by the appropriate authority.

Continued payment of wages in case of employee’s quarantine
In the event of an officially ordered quarantine, the employee is entitled to continued payment of wages for six weeks in accordance with the compensation claim regulated by the infection protection law (Sect. 56 IfSG). The employer may ask the appropriate authority to reimburse the payments within three months and may even request an advanced payment.

Short-time allowance under simplified conditions
According to the press release issued by the Federal Government on 16 March 2020, compensation for short-time work may now be received under the following simplified conditions:

  • Instead of a 33 % loss of working hours, 10 % is now sufficient for the company or department concerned.
  • Negative working time balances ("minus hours") on working time accounts no longer have to be accumulated before short-time allowance can be applied for.
  • Temporary employees can receive compensation for short-time work.
  • Social security contributions, which have to be paid initially by the employer, are reimbursed by the Employment Agency.
  • The regulations apply retroactively from 1 March 2020.

The content of the corresponding legal regulation will be published over the next few days. In the meantime, the relevant employment agencies are already processing tens of thousands of applications in accordance with the new regulations and have announced that they will waive any deadlines. Nevertheless, employers must ensure that short-time work is introduced effectively so that, in the aftermath of the crisis, they do not have to fear claims from the agencies or employees.

Legally compliant implementation of short-time work
Employers must first inform the competent employment agency about the loss of work and provide evidence that the employees agree to short-time work. Some agencies allow a simple declaration of consent, which the respective employees are asked to sign, to be used as proof. It is indispensable to agree with the employees through supplementary agreements or with the works council through a works agreement, in order to implement effective short-time work. In addition, the short-time allowance must be calculated and paid out correctly, and applications for benefits must be properly submitted to the authorities.

With the assistance of Alicia Wilhelm.


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