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News & Knowledge

Germany: New Short-time working allowance

14th April 2020

The new short-time working allowance is intended first and foremost to support companies that “suffer from massive supply bottlenecks or are compelled to close by the authorities.” MSI's German member ADKL provides further information on the new short-time allowance and how it works.

The short-time working allowance can be paid on short notice. Applications can be submitted now.

Key aspects:

  • The new rules for the short-time working allowance introduced to help with the corona crisis apply retroactively as of 1 March 2020
  • Social insurance contributions that are due even when short-time work is in place will be refunded in full
  • At least 10% of the company’s total working hours must be suspended


The short-time working allowance is not available to those who are marginally employed (in “mini” jobs), apprentices/trainees, pensioners who are working, or temporary employees. If necessary, these employees would have to be dismissed. The usual rules of labour and employment law must be observed with regard to these employment relationships as well.

The short-time working allowance is paid by the German Federal Employment Agency (Bundesagentur für Arbeit) when the following conditions are met:

  1. Significant loss of work with loss of earnings
    2. Operational requirements
    3. Personal requirements
    4. Notification to the Federal Employment Agency

1.1 Significant loss of work with loss of earnings
There must be an actual significant loss of work. Short-time work cannot be used to assist with purely financial losses.

  1. a) Economic reasons
  • Loss of work due to lack of follow-up orders or postponement of the start of orders or lack of deliveries
  • Assistance is not provided for things like planned reorganisation in production or loss of work that falls within the scope of customary operational risks.
  1. b) Unavoidable event
  • Example: fire at plant
  • Storm damage
  • Measures ordered by the authorities
  • Currently: consequences of coronavirus
  1. c) Unavoidable
  • If the employer has taken every step that is reasonable in economic terms
  • Employees cannot be given other duties within the business (cleaning up warehouses, etc.)
  1. d) Temporary
  • It is foreseeable that a transition back to full work will be possible
  • Support for permanent job cuts not possible
  1. e) Minimum requirements
  • Based on the new rules, the economic situation must require that at least 10% of the company’s total working hours be suspended (previously 1/3 of working hours)
  • The reductions may vary between departments and employees as long as they are in line with operational needs and work out to at least 10% of the company’s total working hours in all

1.2. Operational requirements

  • All businesses that have at least one employee who is subject to payment of social insurance contributions
  • In certain cases, the short-time working allowance may be approved for only certain departments within a business, for example for production, while other departments continue to do business as usual

1.3. Personal requirements

  • The short-time working allowance is paid only if no notice of termination of the employee’s employment has been given and the employee’s employment has not been terminated by a termination agreement
  • At the same time, employees must not be excluded from receiving the short-time working allowance due to factors such as illness

1.4. Notification to the Federal Employment Agency

Applications for the short-time working allowance must be submitted to the Federal Employment Agency either in writing or online (e-service) using the appropriate forms (download KUG 101 and download KUG 107).

Please note: The Employment Agency explicitly points out that the employer is required to notify the Employment Agency before ordering short-time work.


  1. Notify the Federal Employment Agency of the short-time work => short-time working allowance (KUG) business number assigned
    (download form KUG 101)
  2. Obtain agreement/consent from employees (download sample)

Required every month:

  1. Create/prepare the accounting list (target values) through payroll accounting at ADKL
    (download form KUG 108– annex to payment application) to show the loss of work
  2. Employer is responsible for processing and supplementing form KUG 108 with regard to the actual values for each employee
  3. Employer submits payment application (download form KUG 107)

Important on point 1)

The Federal Employment Agency has implemented a simplified reporting procedure (status: 17 March 2020). According to this procedure, the following documents must be sent to the Federal Employment Agency responsible for you ( in order to notify this agency of the short-time working allowance:

  • Fully completed notice of short-time working allowance (KUG)
  • List of affected employees
  • Statement of reasons for applying for KUG (more than simply stating “corona”)
  • List of working hours accounts (any overtime accounts that may exist, are there credit balances, etc.); negative report required


The short-time working allowance is paid to employees by the employer, so it must be pre-financed. The Employment Agency will not reimburse the employer for the short-time working allowance until after the payment application has been received and reviewed.


More information available here:


About ADKL Abels Decker Kuhfuß & Partner - Düsseldorf

ADKL is an multidisciplinary partnership of experienced and entrepreneurial frame of mind certified auditors, lawyers and tax consultants. We consult numerous national and international companies and entrepreneurs with complex economic, legal and tax issues.

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