After long public discussions, the short-time allowance is increased. The corresponding draft law was passed yesterday by the Bundestag.

The following changes then occur:

• The short-time work allowance is gradually increased and
• Short-time workers can earn money without this additional income being counted towards the short-time allowance

1. Increase in short-time work benefits

So far, all employees in short-time work receive 60% of the difference between the previous wages and the reduced wages as short-time work benefits from the employment agency. If the employee has children, the short-time work benefit increases to 67% of the wage difference.

This short-time allowance is now increased. Receive workers

• from the 4th month 70% (or 77%) and
• 80% (or 87%) of the wage difference paid out from the 7th month.

The reference months will be counted from March 2020. An initial increase can therefore take place in June 2020.

It should be noted that the increase only applies to employees for whom the gross wages reduced by short-time work are 50% or less of the previous gross wages.

The increase is limited until December 31, 2020.

2. Expansion of additional earning opportunities

If employees look for further employment during short-time work, this additional income is no longer counted towards the short-time allowance.

So far, income that the employee receives during short-time work has been counted towards short-time allowance (Section 106 (3) SGB III). This regulation was changed a few weeks ago in order to reduce the expected labor shortage in "systemically relevant" industries.

This exception now applies to all sideline activities. Income from secondary employment is no longer counted towards short-time allowance. Note that this rule only applies up to the limit of previous earnings. If the additional earnings together with the reduced wages and the short-time allowance exceed the previous earnings, the earnings will be deducted from the short-time allowance.

This regulation is also limited until December 31, 2020.

3. Tax relief for top-up payments

Furthermore, under the Corona Tax Assistance Act, top-up payments by the employer are to be tax-privileged. If employers make additional payments as part of short-time work, voluntarily or on the basis of a collective agreement or a company agreement, these will in future be partially tax-free. The tax liability does not apply if the top-up amount together with the short-time allowance does not exceed 80% of the lost wages. This means that taxation takes place parallel to the regulation on social security contributions.

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