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CMS: Coronavirus Crisis and Employment Law in Germany – Useful Information

The coronavirus crisis is presenting companies with extreme challenges. A multitude of new topics and issues need to be addressed. For many sectors, the question also arises as to how to deal with (temporarily) underutilised staff. Other sectors, by contrast, are complaining about capacity shortages and need to increase staff numbers.

In the following we provide you with a set of building blocks that may help you to find your way out of the crisis. In addition to answers to general questions relating to employment law, you will find valuable information on occupational health and safety requirements for companies. We also address the use of coronavirus apps and requirements around mobile working. This is followed by an overview of potential personnel measures during the crisis: from personnel partnerships, short-time working and cutting remuneration components to mass dismissals.

The effects of coronavirus on German employment law

Please find a wide range of different questions regarding the COVID-19 virus here. For example “May the employer demand a ‘quick test’ from its employees?” or “May the employer unilaterally order employees to take leave?” and “What can I do if there is a risk of my business closing down?”

Compensation claim for working parents

In Germany, working parents who are unable to go to work due to closed nurseries, daycare centres and schools, and who are also unable to work from home, are entitled to receive 67% of their net income. You can find further information in our FAQ.

Working from home

Working from home has taken on a whole new meaning in the coronavirus crisis. We answer the most important questions in our FAQ here.

Coronavirus apps

The purpose of a coronavirus app is to warn people when they have been near someone infected with COVID-19. How can employers take advantage of this kind of app? Please read about it here.

Return from lockdown – requirements for employers

After weeks of being shut down, employers are preparing for their return from the coronavirus lockdown. Businesses, offices and factories are resuming operations again. Employees will be returning from short-time working and from home back to offices, shops and factories. What duties do employers have? What steps must they take? You can find further information in our FAQ here.

Personnel partnerships

The coronavirus crisis – in conjunction with the associated shutdown – means that in some sectors, such as the hospitality industry, the vast majority of employees or even the entire workforce can no longer be put to use. On the other hand, there is a considerable need for personnel in other sectors that cannot be met by the (current) permanent staff, for example in the food retail sector, in logistics and in agriculture. There is nothing more obvious in this context than to develop models that make it possible to bring underutilised workers together with companies looking for staff. These “personnel partnerships” help to avoid dismissals for operational reasons or short-time working. You can find information on this in our FAQ on “Sales slumps and staff shortages” and in our FAQ on “Temporary hiring out of employees“, which address a special model of personnel partnerships more closely.

Short-time working

Short-time working means a temporary reduction of the normal working hours in an establishment. If short-time working results in a temporary complete suspension of work, this is referred to as “working hours reduced to zero”.

The Employment Agency pays a short-time allowance as partial compensation for the wages lost due to a temporary loss of working hours. This way, companies can continue to employ their staff even when orders are cancelled. The short-time allowance therefore helps you to avoid redundancies so that you can immediately draw on your core workforce again after the crisis. You can find further information in our FAQ on “Short-time working“.

Training and funding provided by the Employment Agency

Perhaps improving your employees’ skills will help you during the coronavirus crisis? If certain conditions are met, both companies and employees can be supported by the Federal Employment Agency, and the Federal Employment Agency may subsidise the training of employees.

Federal Employment Agency support for training is generally intended for unemployed persons or persons threatened with unemployment, but – where the legal prerequisites for funding are met – can also be aimed at employees in existing employment relationships. This applies, for example, to employees with no vocational qualifications or qualifications that are no longer relevant, since they face an aboveaverage risk of unemployment. Employees who want to upskill or change jobs can also benefit from this. Employees who are receiving short-time work allowance during employment in an interim employment company can also be funded by the Employment Agency. Please read our FAQ on “Training and funding provided by the Employment Agency“.

Cutting/cancelling remuneration components

Furthermore, the various components of your employees’ remuneration can be critically scrutinised. If savings are to be made here, the legal basis (employment contract, collective bargaining agreement, works agreement, etc.) of the specific remuneration component must first be identified, mainly because different mechanisms for cutting/cancellation will apply and the consent of different persons/bodies must be obtained depending on the legal basis. This has an impact on the timescale and thus on planning. Please read our FAQ on “Cutting/cancelling remuneration components“.

Voluntary redundancy programme

If staff reductions cannot be avoided, a voluntary redundancy programme can be considered first. A programme of this kind aims to carry out socially acceptable staff reductions through amicable arrangements with employees. Such a programme normally focuses on fixed conditions for severance payments under termination agreements or the specifics of early retirement or partial retirement solutions.

The voluntary programme can either be “offered” by the employer or regulated by a works agreement. You can find details on this in our FAQ on “Voluntary redundancy programmes“.

Solutions for employees close to retirement

If restructuring is necessary, you as an employer can approach employees who are close to retirement in a targeted way. Restructuring poses significant challenges for the workforce. These challenges typically do not affect employees close to retirement in the same way as those who are still a long way from retirement age. In addition, employees close to retirement are frequently quite willing to consider early retirement as long as the terms are right.

The typical instruments used here are statutory early retirement and partial retirement. Please read the details in our FAQ on “Solutions for employees close to retirement“.

Reconciliation of interests agreements and social compensation plans

If changes to the establishment are unavoidable due to a crisis, you will probably be confronted with the topics of reconciliation of interests agreements and social compensation plans. A reconciliation of interests is an agreement between the employer and the works council as to whether, when and how a change of operations planned by the employer can be implemented. This should always be attempted if the employer is planning a change as defined by section 111 of the German Works Constitution Act (BetrVG). This could be a fundamental change in the organisation of the establishment, for example a transfer (relocation) of the establishment or of important departments of the establishment, the amalgamation or splitting up of establishments, or collective redundancies within the meaning of section 17 of the German Act on Protection Against Unfair Dismissal (KSchG)

A social compensation plan is intended to compensate for or alleviate any economic disadvantages suffered by employees as a result of a change to the establishment. These plans typically comprise severance payments upon termination of employment or compensation arrangements when a change of work location occurs. Other things you need to consider with regard to reconciliation of interests agreements and social compensation plans can be found in the FAQ on “Reconciliation of interests agreements and social compensation plans“.

Collective redundancy

If a certain threshold of dismissals is reached in an establishment within a period of 30 calendar days, this is deemed a “collective redundancy”. The answer to the question of how many redundancies constitute collective redundancy during this period depends on the size of the establishment. Pursuant to section 17 (1) of the German Act on Protection Against Unfair Dismissal (Kündigungsschutzgesetz, KSchG), collective redundancy must always be reported to the Employment Agency. If a works council is in place, it must be involved in a prior “consultation procedure”. For this purpose, the works council must be informed not only in accordance with section 17 (2) of the German Act on Protection Against Unfair Dismissal, but the employer and works council must also consider whether and how redundancies can be avoided or limited and their consequences mitigated. You can find further details on the correct procedure for collective redundancy in our FAQ on “Collective redundancy“.

Interim employment companies

You may also have to deal with the subject of “interim employment companies” in the event of collective redundancies. An interim employment company is a labour market policy instrument designed to delay collective redundancies by moving workers from employment into employment while avoiding an intermediate phase of unemployment.

For this purpose, employees facing unemployment are transferred for a limited period of time to the “interim employment company”. This is an independent business unit that is usually provided by an external specialist. A tripartite contract concluded by the (former) employer, the interim employment company and the employee terminates the employment relationship with the former employer and establishes a fixed-term employment relationship with the interim employment company. The time in the interim employment company is used for professional training and searching for a new job. The financial basis for operating an interim employment company is the support provided for participating in interim employment measures in accordance with section 110 of the German Social Code Book III (SGB III) and the short-time working allowance (Kurzarbeitergeld) available to promote integration during company restructuring (short-time allowance during employment in an interim employment company) in accordance with section 111, German Social Code Book III (SGB III). You can find further information in our FAQ on “Interim employment companies“.

Compliments of CMS Legal – a member of the EACCNY.