Need for action regarding short-time work compensation - possibility until 31 July 2020 of having the short-time work notification reinterpreted to apply to individual business departments

Many enterprises that registered short-time work for their entire business in the course of the corona pandemic are currently facing the task of gradually returning to normal operations, possibly limited to individual departments. In order to make this transition easier for employers, the German Federal Employment Agency [Bundesagentur für Arbeit - BA] has regulated that employers have a one-time option until 31 July 2020 to have their original notification of the loss of work for the entire business reinterpreted to apply to individual business departments.

At the beginning of the corona pandemic, many companies were affected by a loss of work on a large scale and across many departments. It was not foreseeable to employers how the situation would develop and the BA was overloaded with a mass of enquiries about short-time work, which meant that the provision of detailed advice to employers on the introduction of short-time work was hardly possible. In this situation, it made sense for many enterprises to deal with the issue centrally within the enterprise and to notify the loss of work in relation to the entire business.

According to the regulations on the facilitated receipt of short-time work compensation, one of the requirements for receiving short-time work compensation is that at least 10% of the employees working at the company are affected by a loss of earnings of more than 10%. As a result of an increasing normalization of business operations and a reduction in short-time work, it is therefore possible that the 10% threshold is no longer achieved in relation to the entire business. In order to avoid it no longer being possible to apply for short-time work compensation for the entire business, it is therefore advisable to change the notification to individual business departments that are still affected by short-time work.

Such a conversion of the original notification from the entire business to one or more business units and vice versa is not generally possible. Rather, a new notification would have to be for the business department(s). Not only is this time-consuming and entails with a high organizational workload for the employer, this would also interrupt the compensation payment period of the original notification for the entire business and a new compensation payment period for the business departments in question could only begin after a waiting period of three months (cf. § 104 (3) German Social Code Book III [Sozialgesetzbuch III - SGB III]).

In view of the aforesaid special situation caused by the pandemic, the BA is now offering employers the one-time opportunity to informally reinterpret their notification originally submitted for the entire business as a notification for one or more business departments by way of a declaration by the employer to the responsible BA.

A reinterpretation is possible in consideration of the following points:

• The original notification must have been submitted in the months of March 2020, April 2020 or May 2020 due to the crisis situation caused by the corona pandemic.
• Formally, no new notification is required, but only a declaration by the employer to the responsible BA. Contact should be made with the responsible BA as soon as possible, whereby a written or electronic declaration should be made in the form of a notification pursuant to § 99 sentence 1 SGB III for evidentiary purposes.
• The BA then decides in operational service whether a reinterpretation is permitted in each individual case.
• The notification can only be reinterpreted once, and the responsible BA must receive the declaration of reinterpretation by 31 July 2020 at the latest.
• In the event of a reinterpretation, the compensation payment period recognized for the entire business will continue to apply to the business department(s). For the operational departments excluded from the reinterpretation, however, the compensation payment period is interrupted, which means that a renewed notification of a loss of work would only be possible again for these departments after an interruption of three months (§ 104 (3) SGB III).

Enterprises that originally introduced short-time work for their entire business should therefore check whether the minimum loss threshold of 10% is no longer currently met or will not be met in the foreseeable future, and whether a reinterpretation to apply to individual departments is therefore worth considering. Since the favorable opportunity to reinterpret the notification is only possible once, the examination should also take into consideration departments in which short-time work might occur over the next three months.

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