Government measures in key jurisdictions 4th edition - Flipbook - Page 52
Germany
Employment
What
financial support
is
the government
providing
businesses
to and to
individuals on
employment
issues?
Insolvency
•
Employers may choose to temporarily reduce the working time of their employees if the company is
affected by the corona crisis (e.g. if a company is closed down or if there are difficulties in the company
due to missing orders or supplies). The remuneration of the employees will be reduced
correspondingly. This measure shall avoid layoffs and enable companies to keep qualified workers
during the crisis.
•
Affected employees can receive so-called "short-time working allowance". This benefit must be applied
for by the employer. If granted, the government will generally refund 60% (employees without children)
or 67% (employees with children) of the difference between the regular net income and the reduced
net income. The German government has introduced legislation to increase the short-time working
allowance to 70% or 77% starting from the fourth month and to 80% or 87% starting from the eight
month. Due to new legislation, it is sufficient if at least 10% of the workforce are affected by short-time
work.
•
FAQ short time work by corona.
•
The German government has passed legislation to facilitate access to the short-time working allowance.
Also, the additional income opportunities during short-time work have been extended.
•
Coronavirus: FAQ Employment Law Part 3.
•
The base period of unemployment pay will be extended by three months for those whose entitlement
ends between 1 May and 31 December 2020.
•
In case the government orders a (regional) quarantine, the employer pays the regular salary and the
regional government will refund the money. After six weeks, the employees will receive sick pay by the
government.
•
Coronavirus: FAQ Employment Law.
•
Has the government
made any changes
•
to insolvency
legislation?
The statutory obligation to file for insolvency within three weeks after a state of insolvency
has been reached was originally suspended until 30 September 2020. It has now been
extended to 30 December 2020.
However, this does not apply if the insolvency is not a consequence of the Covid-19 pandemic or
if there are no prospects of remedying an existing inability to pay.
If companies were not insolvent on 31 December 2019, it is legally assumed that insolvency is
based on the consequences of the Covid-19 pandemic and that there are prospects of
eliminating an existing insolvency.
•
Companies’ own applications for the opening of insolvency proceedings and applications by
creditors (third-party applications) nevertheless remain possible. In the case of third-party
applications, however, the opening of insolvency proceedings requires that the reason for
insolvency already existed on 1 March 2020.
•
If the obligation to file for insolvency is suspended, companies may continue to make payments in
the ordinary course of business although a state of insolvency is reached.
•
Restructuring in times of Corona – legislator assists with suspending the obligation to file for
insolvency.
Government measures in key jurisdictions
52