Kurzarbeit (short-time work) is a labour market instrument: if an employer temporarily cannot maintain full working hours due to economic reasons, hours are reduced and the Federal Employment Agency (Bundesagentur für Arbeit) pays short-time work benefit (Kurzarbeitergeld).
Kurzarbeitergeld amounts
- 60% of the lost net salary for employees without children
- 67% for employees with at least one child
- Payable for up to 12 months (extendable in crises)
Tax implications
Kurzarbeitergeld is tax-free but subject to the Progressionsvorbehalt (progression proviso). This usually means a higher tax burden in the annual return.
Requirements
- At least 10% of the workforce affected by a loss of pay
- Employer application to the employment agency
- Collective agreement or works agreement, or individual contract clause
Sources: §§ 95–109 SGB III, Bundesagentur für Arbeit.