Corona has been leaving its mark all over employment law. A short summary:

Corona has been demanding a lot from both employees and employers. The Short-Time Work Compensation Act (Gesetz zum Kurzarbeitgeld „KuG“) and several subsequent amendments have made it possible to mitigate the most onerous effects of the pandemic on the employment market. As had already been shown during the financial crisis, the KuG has proven to be effective. In addition, many companies have reacted with flexibility to the pandemic by offering employees to work from home, thus offering health protection to employees and, depending on the work area, allowing for the continuation of business operations, at least in part. It is becoming more and more clear, however, that many businesses will not be able to restart out of the crisis without restructuring, not to mention the threat of a wave of bankruptcies. This points increasingly to the question of how the receipt of short work pay and threatened employee redundancies can be reconciled with one another.

A brief overview of some of the key issues:

 

Short-Time Work and the “KuG”

Short-time work has been proven to be a vital element in dealing with the pandemic. Right at the beginning of the crisis, the requirements for receiving pay under the KuG were re-amended. In addition to a revision of other (marginal) requirements such as the notification of short work to the Federal Employment Agency, it is possible, in the case of a “major loss of work”, i.e. “wage losses” of at least 10 per cent of the gross monthly pay for a current total of only 10 per cent of the total workforce (previously 1/3)” to receive a government compensatory payment in the amount of 60 or 67 per cent of the so-called “net wage balance”, as the case may be, or even of 87 per cent under certain conditions. The implementation of a reduction of working time will, however, require an equivalent works agreement (cf. Sec. 87 (1) no. 3 Works Constitution Act).

Aside from this, other solutions in individual agreements with employees may be possible, and some collective bargaining agreement contain provisions allowing for such individual agreements. For further details on all aspects of the KuG, please consult our Client Newsletter 01/2020.

 

Other Measures to Reduce Working Time Volumes

Numerous other measures to reduce the working time volume are conceivable, such as reducing the credit balances on flex-time accounts, agreements for taking vacation time or, to the extent this is possible and as an exception, unilateral directions or other, mutual solutions of all kinds such as unpaid leave or a mutually agreed reduction of working time.

 

Employee Redundancies and Restructuring

Restructuring will be unavoidable for many clients, and particularly measures to reduce personnel will be on the agenda. However, this will take place under changed circumstances for many clients. If as many jobs as possible are supposed to be saved, the first step will be to coordinate the receipt of pay under the KuG and the negotiations on employee redundancies without having these two measures cancel each other out. While the KuG is based, fundamentally, on the merely temporary loss of work, terminations on operational grounds require that positions are permanently eliminated. There is thus not only the danger that a termination on operational grounds will be invalid because of the continued receipt of KuG money, but that, conversely, receiving KuG money will threaten the employee redundancy measures, whereby this may occur as a result of a later audit. Depending on the individual case, approaches can be found, however, that do not result in an “either/or”, but in “and also”. Because many legal issues have not yet been conclusively decided, however, it is recommended to proceed with caution in every case.

Furthermore, what has been learned during the lockdown will likely accelerate the digitalization of work processes, which, depending on the circumstances, can result in a change in operations under Sec. 111 Works Constitution Act.

 

Working from Home

The pandemic has illustrated once more how important it is to question traditional work models. Those who have already created the legal and technical structures in the last few years to allow employees to work from home or engage in mobile working have been able to respond more quickly to the pandemic. From a legal standpoint, a major innovation is becoming visible during the crisis: Whereas the view had been held by virtually everyone that working from home could not be ordered without the agreement of the employee due to principle of the sanctity of the home, this understanding has undergone change. If given on the ground of health protection and is limited to a certain time, the order is now supposed to be possible under the scope of the employer’s right to give directions, and rightly so.

 

Family Life and Work

The pandemic has shown how great the challenges of achieving a balance between family life and work remain. To some extent, working from home allows parents to react to closed daycare and schools to a certain extent, depending on their job profiles. In addition, flex-time account models, depending on their design, provide some leeway to react to this special situation. “Corona Works Agreements” have proven to be helpful in providing supplementary rules. In addition, lawmakers have reacted to the closure of daycare and schools in Sec. 56 (1a) Infectious Diseases Protection Act and created a catch-all provision in the event of closed daycare facilities and schools. Under that provision, a child may not be older than twelve, reasonable daycare must not be available and the employee must suffer from a loss in income. Flex-time accounts, etc. must be put into alignment with this provision.

 

Occupational Safety and Health

Employers are also obliged to protect employees under the scope of their health and safety management from health risks caused by Covid-19, whereby the “SARS-CoV-2 Occupational Safety Standards of the Federal Ministry of Labor and Social Affairs of April 16, 2020” provide assistance, but are only formulated, however, as recommendations. To minimize liability risks (see our Client Newsletter 04/2020), employers would be well advised to launch appropriate measures, taking into account the unique situation of their business and the participation rights of the works council (Sec. 87 (1) no. 7 Works Constitution Act). Involving the works council as early as possible in an employer’s plans has been shown in many cases to be helpful.

 

In Summary

Corona has given rise to many new and challenging issues affecting employment practices. In particular, good interactions with the works council have proven to be a major advantage when the question is how to react quickly and appropriately to the pandemic. This will not be any different in the future when employee redundancies are imminent and the issue at hand is how to lead a company out of the crisis.

We would be pleased to assist in any further questions concerning all aspects of implementing the described measures, for effective communication with the works council and for any other questions of any kind regarding employment law in this time of the coronavirus.

Links:

JUSTEM Client Newsletter 01/22 – There’s no place like home? – The “home office duty” is ending soon

JUSTEM Client Newsletter 08/21 – Testing the Easy Way? – Be Wary of “Online Citizen Tests“ for “3G“ at Work!

JUSTEM Client Newsletter 06/21 – Corona Update – Expansion and Extension of the Corona Occupational Health and Safety Regulation

JUSTEM Client Newsletter 04/21 – Short-time Work Update – Liability risks if short-time work is not validly introduced by a works agreement

SARS-CoV-2 Occupational Safety Standards of the Federal Ministry of Labor and Social Affairs of April 16, 2020

Bundesgesetzblatt (Federal Law Gazette) on the reform of short-time work and short-time allowance (German language)

JUSTEM Client Newsletter 05/20  Short Work Update – “Extension of Supportive Legislation for Short-Time Work”

JUSTEM Client Newsletter 04/20 The Coronavirus Liability Trap – An Overview of Employer Liability Risks if Employees Become Infected at Work

JUSTEM Client Newsletter 03/20  Short Work Update – “System-relevant” Side Jobs While on Short Work

JUSTEM Client Newsletter 01/20 Employment and Corona – Short-Time Work et al. – An Overview