German Government decides to increase short-time work allowance

The German Federal government decided on April 22, 2020 in a coalition resolution to increase the short-time working allowance.

The resolution provides that short-time work allowance will be paid out in amounts staggered by the duration of the entitlement as follows:

• 60% for employees without children or 67% for employees with children during the first 3 months of short-time work;
• 70% for employees without children or 77% for employees with children from the 4th to the 6th month of short-time work;
• 80% employees without children or 87% for employees with children from the 7th month of short-time work.

A prerequisite for the increase is that the working hours of employees entitled to short-time working allowance are reduced by at least 50%.

In addition, the extended additional income opportunities recently agreed for employees on short-time work – employees are allowed to make additional income that together with the short-time work allowance amounts to their full net salary – are to be extended until December 31, 2020.

It is expected that the agreed amendment to the law will be implemented shortly and will apply retroactively to short-time work compensation received from March 1, 2020.