Kurzarbeit: What to Do When Your Hours Are Cut

Kurzarbeit is a term that’s become increasingly relevant for employees across Germany, especially during times of economic uncertainty. If you’ve recently found your working hours reduced, understanding how Kurzarbeit works can make a significant difference to your financial stability.

This article explains everything you need to know about the short-time work allowance, including how to calculate payments, who qualifies, and what extra support you can access. With clear explanations and practical tips, you’ll learn how to navigate reduced hours, maximize your benefits, and ensure you’re making the most of the support systems in place.

Whether you’re worried about your next payslip or just want to be prepared, this guide will help you take control of your situation and plan your next steps with confidence.

Understanding Kurzarbeit Payments

So, your hours have been cut because of Kurzarbeit. It’s a bit of a shock, but the good news is that the government steps in to help cover some of your lost income. This scheme, known as short-time work allowance, helps keep people employed even when a company faces a significant drop in work.

Essentially, the Federal Employment Agency (BA) pays a portion of your wages for the hours you’re not working. This means you’ll still get paid for the hours you do work by your employer, and the BA tops up a fraction of the rest.

It’s a way for companies to avoid making people redundant during tough economic times, and it’s something that happened quite a bit during the 2008 financial crisis.

Calculating Your Kurzarbeit Allowance

The amount of Kurzarbeit allowance you receive is dependent on the net income you’ve lost. It’s not a fixed sum, but rather a percentage of your usual earnings that you’re no longer receiving due to reduced hours.

Generally, the allowance covers 60% of your lost net pay. However, if you have children, this figure increases to 67%. This is a significant support to help bridge the gap. Remember, this allowance refers to the hours you are not working, while your employer pays you for the hours you are working.

Here’s a simplified look at how it works:

• Hours Worked: You receive your normal pay for these hours from your employer.
• Hours Not Worked (due to Kurzarbeit): The Federal Employment Agency (BA) pays the Kurzarbeit allowance, typically 60% (or 67% for parents) of the net pay you would have earned for these hours.

It’s important to note that the authorities calculate the allowance based on your net earnings, so they aim to replace a portion of what you actually take home.

Temporary Increases to Kurzarbeit Payments

In response to recent economic challenges, the government has introduced temporary increases to the Kurzarbeit payments. This means that for certain periods, you could receive a higher percentage of your lost wages.

These increases are usually tied to how long you’ve been on reduced hours. For instance, after a specific duration on Kurzarbeit, the replacement rate for your lost wages can go up.

Here’s a general idea of the temporary increases:

• Initial Period: You receive the standard allowance (60% or 67% for parents).
• After 4 Months: The allowance can increase to 70% (or 77% for parents) of your lost wages.
• After 7 Months: The allowance can further increase to 80% (or 87% for parents) of your lost wages.

These temporary boosts provide extra financial relief during prolonged periods of short-time work. Always check the latest regulations, as these increases can be time-limited.

Impact of Bonuses and Income Ceilings

When they calculate your Kurzarbeit allowance, you treat certain types of income differently. For example, one-off payments like holiday bonuses or Christmas bonuses generally do not affect your allowance. However, there’s an important limit to consider: the contribution ceiling for pension and unemployment insurance.

The ceiling dictates the maximum income the authorities take into account when calculating your benefits. If your gross salary exceeds this ceiling, any income above it won’t contribute to a higher Kurzarbeit allowance. This means that high earners might not see their allowance increase proportionally to their total salary if a large portion falls above the ceiling.

Eligibility and Application for Kurzarbeit

So, you’ve heard about Kurzarbeit and your hours are getting cut. It sounds like a lifeline, but how do you actually get it? Let’s break down who qualifies and what the application process looks like. It’s not as complicated as it might seem, and understanding the basics can make a big difference when you’re dealing with reduced pay.

Who Qualifies for Kurzarbeit Benefits?

Generally, if your employer has experienced a significant loss of work and has had to reduce your hours, you might be eligible for Kurzarbeit. This isn’t just for people on full-time contracts; many different types of workers can benefit.

The key is that the reduction in hours must be temporary and due to economic reasons or circumstances outside of your employer’s control, like a sudden drop in demand or supply chain issues.

It’s important to note that if your employer has already made you redundant, you won’t qualify for Kurzarbeit, as the scheme aims to prevent job losses, not to support people whose employers have already let them go. The employment relationship must also be uninterrupted for you to be considered.

Here’s a quick rundown of who typically qualifies:

• Employees subject to compulsory insurance: This is the main group. If you pay into social security, you’re likely in.
• Midijobbers: If you earn more than a ‘Minijob‘ but less than the standard contribution threshold, you’re usually eligible.
• Temporary agency workers: Recent regulations have expanded eligibility to include these workers, which is a welcome change.
• Trainees: Apprentices and trainees can receive remuneration for reduced hours for up to six weeks.

However, there are some exclusions. For instance, ‘Minijobbers‘ (those earning a small, fixed amount) are generally not eligible for Kurzarbeit benefits. Also, if you and your employer agreed to terminate your contract before Kurzarbeit began, you can’t claim it.

Employer’s Role in the Kurzarbeit Application

As an employee, you usually don’t have to apply for Kurzarbeit yourself. Your employer is the one who initiates the process by reporting the loss of work to the local Employment Agency (Agentur für Arbeit).

They’ll need to explain why the work has been lost, linking it to economic reasons or unavoidable events. Think of it as your company officially telling the government, “We’re facing a tough time, and we need help keeping our staff employed.”

Once the employer applies, the Employment Agency assesses the situation. If approved, they’ll calculate the Kurzarbeit allowance. This allowance is then paid out by your employer, along with your remaining salary.

The agency then reimburses your employer for the allowance and also covers the employer’s social security contributions for the reduced hours. It’s a system to keep people employed, and it relies heavily on the employer taking the first step.

The application for Kurzarbeit allowance must be submitted promptly. The Employment Agency generally considers entitlement to the allowance to begin in the calendar month when they receive the notification. Missing this deadline could mean losing out on benefits, so employers need to be on the ball.

Temporary and Marginal Workers Under Kurzarbeit

When it comes to temporary and marginal employment, the rules for Kurzarbeit can be a bit nuanced. As mentioned, ‘Minijobbers‘ are typically excluded from receiving Kurzarbeit benefits because their employment isn’t subject to compulsory social insurance contributions in the same way. However, if you’re a ‘Midijobber‘, you generally fall under the umbrella of eligible workers.

Temporary agency workers, often referred to as ‘Leiharbeiter‘, have recently seen their eligibility expanded. This means that if you work through an agency and the client company cuts your hours for economic reasons, you can now claim Kurzarbeit. This is a significant change that offers more protection to a group of workers who might otherwise be vulnerable during economic downturns.

It’s also worth noting that trainees are entitled to receive their full remuneration for a period of up to six weeks, even if their working hours are reduced under Kurzarbeit. This ensures that apprentices continue to receive the support they need to complete their training.

For marginal employment relationships, the situation can be complex, and it’s always best to check with your employer or the local Employment Agency for specific details related to your contract.

Navigating Reduced Hours and Income

So, your working hours have been cut because of Kurzarbeit. It’s a bit of a shock, isn’t it? Suddenly, your usual pay packet looks a lot thinner. But don’t panic just yet. This scheme helps you keep your job while the company gets back on its feet. Let’s break down exactly how this affects your finances and what you can expect.

How Kurzarbeit Affects Your Net Pay

When your employer puts you on Kurzarbeit, they reduce your working hours. Naturally, this means you’ll be paid for fewer hours. The Kurzarbeit allowance from the government steps in to cover a portion of the wages you’ve lost.

Typically, this allowance covers 60% of your lost net income. If you have at least one child, this increases slightly to 67%. It’s important to remember that this is a percentage of the lost income, not your total previous salary. So, while it cushions the blow, your overall net pay will be lower than before.

For example, imagine you earned €2,000 net per month and your employer cuts your hours by 40%. You’d still earn 60% of your original pay (€1,200). The remaining 40% of your income (€800) is the ‘lost’ income.

The Kurzarbeit allowance would then cover 60% of that €800, which is €480. Your total income would be your earned pay plus the allowance: €1,200 + €480 = €1,680. This means you’re still taking home less than your original £2,000, but you’ve avoided a much larger drop.

Understanding the Impact on Part-Time Roles

If you’re already working part-time, Kurzarbeit can have a slightly different flavour. The rules generally state that the reduction in working hours must affect at least 10% of the company’s workforce.

However, how this applies to existing part-time roles can vary. Some companies might reduce your hours further, meaning you’d receive Kurzarbeit allowance on top of your already reduced part-time pay. In other cases, the company might decide that your current part-time hours are already low enough and not reduce them further, meaning you wouldn’t receive the allowance for those specific hours.

It really depends on the company’s specific policy and how they implement the Kurzarbeit scheme.

Additional Earnings While on Kurzarbeit

This is a common question: can you pick up extra work while on Kurzarbeit? Generally, yes, but there are important rules to follow. The primary purpose of Kurzarbeit is to keep you employed with your main employer.

If you take on additional work, you usually need to declare it. The income from this secondary job might affect your Kurzarbeit allowance, as the allowance is based on your lost net income from your primary job. Some schemes allow a certain amount of additional earnings without impacting your allowance, especially if the secondary job is in a sector with high demand.

However, if you exceed certain thresholds, you may receive a reduced allowance or lose it altogether. It’s always best to get clear guidance from your employer or the employment agency before taking on any extra work to avoid any misunderstandings or repayment issues.

Key Points to Remember:

• Your net pay will be lower than your usual salary.
• The allowance covers a percentage of your lost income.
• Impact on part-time roles can vary by company.
• Declare any additional earnings to avoid issues.

It’s a bit of a balancing act, trying to make ends meet when your income drops. The Kurzarbeit allowance helps, but it’s not a full replacement. And remember: don’t hesitate to ask questions – your employer and the employment agency are there to help clarify things.

Duration and Company Entitlement

So, you’re wondering how long this whole Kurzarbeit situation might last, both for you and for your company? It’s a fair question, and the rules around it can seem a bit complex. Let’s break down the typical timeframes and what companies need to do to keep receiving support.

Maximum Duration of Kurzarbeit Allowance

Generally, a company can receive the Kurzarbeit allowance for a maximum of 12 months. This is the standard period set out in the regulations. However, there have been temporary extensions, especially in response to economic crises.

For instance, during certain periods, authorities may extend this duration—sometimes up to 24 months—but they usually set specific end dates for these extensions. It’s always worth checking the latest government announcements for any current extensions that might apply to your situation.

The key thing to remember is that the loss of working hours must be temporary, with the expectation that normal working hours will resume within this timeframe.

Support Beyond Kurzarbeit

Even with Kurzarbeit helping to bridge the gap, you might find that your reduced income still makes it tough to cover all your essential living costs. It’s good to know that there are other government benefits available to provide additional financial support when you need it most.

These schemes act as a safety net, ensuring you and your family can manage during periods of reduced earnings.

Applying for Basic Subsistence Benefits

If your Kurzarbeit payments, combined with any other income, aren’t enough to live on, you might be eligible for basic subsistence benefits, often referred to as Citizens’ Income or Bürgergeld. If you’re eligible, your local Jobcentre will calculate your partial top-up.

This benefit aims to cover your basic needs, like housing, food, and heating, ensuring you have the essentials.

Eligibility for Child and Housing Benefits

Beyond basic subsistence, there are other specific benefits you could claim. The government pays Child Benefits (Kindergeld), to help parents with the costs of raising children. The amount you receive depends on the number of children you have.

Similarly, housing benefits (Wohngeld) can help with your rent or mortgage payments if you have a low income. These benefits are separate from Kurzarbeit and you can apply for them independently.

It’s worth investigating these options, as they can significantly ease the financial pressure when your income is lower than usual. You can find more information on eligibility for these benefits on the Federal Employment Agency website.

It’s important to remember that these benefits are there to help. Don’t hesitate to look into them if you’re struggling.

• Basic Subsistence Benefits: Covers essential living costs when other income is insufficient.
• Child Benefits: Financial aid for families with children.
• Housing Benefits: Assistance with rent or mortgage payments.

Applying for these can make a real difference to your financial situation while you’re on Kurzarbeit.

Wrapping Up

So, while having your hours cut due to Kurzarbeit isn’t ideal, it’s good to know there’s a system in place to help soften the blow. Remember, your employer handles the main application, and the allowance comes through them.

Keep an eye on your payslip to make sure everything adds up, and don’t be afraid to look into other support like housing or child benefits if you’re really struggling. It’s a bit of a juggle, for sure, but with a bit of planning, you can get through it.

Frequently Asked Questions