COVID-19 Germany: German Government to Approve New Benefit Packages for Employers

The German government has agreed on additional benefit packages worth billions. Companies that recently implemented short-time work and their employees are to profit from this.

Here are the key changes:

• Significant top-up of short-time work allowances
  • Amid the pandemic, many employers have implemented short-time work schemes, i.e. a temporary reduction in hours partly funded by state benefits. The (partial) loss of remuneration is compensated by the short-time work allowance by the Federal Employment Agency (Bundesagentur für Arbeit) in the amount of 60 % of the net pay difference or in the amount of 67 % of the net pay difference for employees with at least one dependent child, however, with a cap. Find out more about how to implement short-time work and questions by employers that frequently come up in our previous blogs here and here.
  • Now the short-time work allowance for those who are currently working at least 50 percent less is to be increased until December 31, 2020
    • to 70 % (or 77 % for employees with at least one dependent child) of the net pay from the fourth month of receiving the allowance
    • and to 80 % (or 87 % for employees with at least one dependent child) of the net pay from the seventh month of receiving the allowance
  • The new regulation will most likely come into force on May 01, 2020. It should be noted that the new regulation only affects employees who work less than 50% of the normal working hours and that the increase will only take effect from the fourth month of receipt.
• Extension of the possibility to receive unemployment benefits
  • Up to now, anyone who becomes unemployed has been receiving unemployment benefits (Arbeitslosengeld I) for twelve months. This applies to individuals up to the age of 50. For unemployed persons aged 50 and over, the period of entitlement increases to up to 24 months.
  • Unemployment benefits are 60 percent of the employee's last net wage, and 67 percent for unemployed persons with children, however with a cap.
  • The eligibility period to receive unemployment benefits is now being extended to further three months for unemployed persons whose entitlement would end between May and December 2020 since these people have little prospect of finding a new job due to the crisis.

Please feel free to reach out to our Employment Team in Germany or your usual contact at Orrick to find out more or if you need any help.