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Application for short-time work: Loss of work must be temporary

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Closed restaurants, unusual trade fairs, entry restrictions: the corona pandemic has left many German companies in trouble. Even industries that were considered crisis-proof have been hit. This also has an impact on the labor market. In order not to dismiss their employees, many companies send them on short-time work.

What already proved its worth twelve years ago during the Great Depression is still an effective instrument now. Because there is less to do, entrepreneurs are reducing their employees’ working hours and applying for short-time work benefits. If the help is approved, the Federal Employment Agency (BA) steps in and pays short-time allowance. The company saves labor costs, which in turn means that jobs can be retained.

Originally, the subscription period was planned to be twelve months. Because the effects of the pandemic will remain with us for some time, the government extended the deadline to 24 months last year. According to the BA, 2.26 million employees are currently still on short-time work.

The application is linked to several conditions. So there must be a “significant loss of work”. That means: at least ten percent of the workforce has lost wages of more than ten percent. This must also be based on economic reasons – missing orders, shortage of raw materials – or on an inevitable event such as the Corona crisis. Another criterion is that the loss of work is temporary – that is, the company assumes that the employees will be able to return to normal work in the foreseeable future.

Short-time work benefits attract fraudsters

As helpful as the instrument of short-time work is, it leads to cheating. The temptation is great to officially send employees on short-time work, to bag the state support and still let the employees continue to work at the same or at a barely reduced level.

There are still no reliable statistics on how widespread fraud in short-time work benefits is. In the summer of last year, however, there were more media reports about trickery in the applications. For example, a 36-year-old entrepreneur from Hamburg is said to have invented 90 employees for his consulting company and received 7.4 million euros in short-time work benefits.

This and similar cases: For example, when companies let their employees work full-time even though they have applied for short-time work for them, it is relatively clear. It is a fraud. Companies should therefore ensure that their workforce really only works as much as the time has been reduced. If the order situation changes and more employees are needed again, a company must disclose this.

Is the absence really temporary?

The situation is a little trickier when it comes to whether the situation is temporary and whether employees can return to their normal workload in the foreseeable future. Ulrike Schweibert is a specialist lawyer for labor law. “If companies apply for short-time working, even though they know very well that they have to close their operations or an area of ​​them, this is legally critical,” she explains in an interview with NewsABC.net. “In that case, the prerequisite that the loss of work is temporary is missing.”

Aviation is a good example: industry experts currently do not expect passenger numbers to reach the level before the crisis until 2024 at the earliest. Airlines shut down parts of their fleets, but still send their pilots and flight attendants on short-time work.

“If a company employs a lot more staff than it will need in the foreseeable future, then it should consider whether an application for short-time allowance for all employees is still justified,” says the labor law expert. Sometimes it is more correct to cut staff in areas that no longer have a future. This also works if the employees who remain in the company are to remain on short-time work.

A legal gray area

Short-time work allowance can currently be drawn until the end of the year. However, according to all forecasts, the situation in the aviation industry will no longer stabilize this year or next. “A legal gray area,” says Schweibert. It looks similar with the stand builders.

There is a fundamental conflict in the companies concerned: On the one hand, they want to save jobs with short-time working, on the other hand, the question is how useful it is to keep jobs that will no longer exist in the long term. “You shouldn’t scandalize that,” says Schweibert. “But that is a really problematic question.” Because the cost of the short-time allowance is ultimately borne by the contributors – that is, employer and employee together.

However, large corporations such as an airline or a retail chain do not really need to fear legal consequences. Because as long as it is conceivable that the employees can be deployed elsewhere in the company, employers are not liable to prosecution. “The cases are not always clear,” says Schweibert.

However, if this option does not exist and an employer applies for short-time work allowance, this could possibly be interpreted as fraud. This mainly applies to smaller and medium-sized companies, in which the human factor also plays a role. “The managing director should think carefully about whether to sign the application,” says the labor law expert. Because with his signature he confirms that all information is correct.

Bad surprises are possible

Even if the BA waves the application through for the first time, the companies can have a rude awakening later. Because in order to be able to react quickly to the crisis, the BA approved countless applications in a great hurry. Schweibert is certain that there will be a second wave of tests afterwards. “There will be a lot more to come,” she says.

If there is actually a subsidy fraud, the company manager faces a fine or imprisonment. Under certain circumstances, the owner can also be temporarily prohibited from remaining managing director. According to Schweibert, the decisive factor is whether the short-time work allowance was wrongly paid and whether this can be blamed on the managing director – because he made false statements or at least accepted them.

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