Short-Time Work Allowance: Income Protection When Working Hours Are Reduced

Kurzarbeitergeld: Protecting your income when working hours are reduced

1. What is Kurzarbeitergeld?

Kurzarbeitergeld is a cash benefit financed by unemployment insurance (Agentur für Arbeit). It is granted to employees when the employer temporarily reduces working hours in order to avoid dismissals during economic or operational disruptions. The benefit is paid out by the employer, who then gets reimbursed by the unemployment insurance fund (arbeitsagentur.de).

2. How much is the benefit?

• 60% of the difference between the regular net salary and the net salary during reduced working hours.

• 67% if the employee has a child or if a child tax allowance (Kinderfreibetrag ≥ 0.5) is registered on the tax card (arbeitsagentur.de).

• The difference is calculated based on official, standardized (pauschalisiert) tables (arbeitsagentur.de).

3. Duration of entitlement

• As a rule, Kurzarbeitergeld is paid for a maximum of 12 months.

• Exception until the end of 2025: The entitlement period has been extended to up to 24 months for cases that end or begin within this year.

• From January 2026 onwards, the maximum duration will revert to 12 months.

4. How do the rates change over time?

• Normally, a fixed rate of 60% (or 67% with a child) applies during the first three months.

• During the COVID-19 pandemic, these rates were temporarily increased:

  • 70–77% starting from the 4th month,

  • 80–87% starting from the 7th month.
    These increases were not extended beyond 2022 (hire.workwise.io).

5. Simple practical example

The employee Anna has a regular net income of €2,400. Due to Kurzarbeit, this is reduced by 50% to €1,200.
The difference is therefore €1,200 ⇒

• Anna without children receives 60% of €1,200 = €720 extra.

• With a child she receives 67% of €1,200 = €804 extra.

Her total monthly amount = reduced salary during Kurzarbeit + Kurzarbeitergeld (finanztip.de).

6. Who is entitled to support?

• Employees who are covered by statutory social insurance (e.g. pension insurance, statutory health insurance – GKV) and have a valid employment contract.

• Condition: The loss of work must be at least 10% of the total working hours and must affect at least one third of the employees in the company, each with a loss of at least 10%.

• Only eligible employees are covered; certain forms of temporary or agency work may be excluded if the legal requirements are not met.

7. How do employees receive their payments?

• The employer or, where applicable, the works council notifies the unemployment insurance fund (Agentur für Arbeit) when Kurzarbeit begins.

• The employer continues to pay the reduced wage to the employee and adds the Kurzarbeitergeld on top.

• After submitting the monthly reports and payroll data, the employer is reimbursed by the unemployment insurance fund.

8. Protection of pension and social insurance

While receiving Kurzarbeitergeld, contributions to social insurance (pension, statutory health insurance – GKV, long-term care insurance) are calculated on the basis of a fictitious income of up to 80% of the original gross salary, so that a prolonged reduction in income does not unduly harm your future social security entitlements.

Quick summary

Item
Details

Compensation rate
60% in general, 67% with a child

Duration of support
Normally 12 months, extended to up to 24 months until 2025

Eligibility conditions
Work loss ≥ 10%, at least one third of the workforce affected

Application process
Submitted by the employer to the unemployment insurance/Agentur für Arbeit

Social insurance status
Contributions continue; social insurance coverage remains in place despite lower income

Disclaimer

The editorial team of the website strives to provide accurate information through thorough research and by consulting multiple sources. However, errors may still occur, or some information may be uncertain or incomplete. Therefore, please regard the contents of this article as a preliminary point of reference and always contact the competent authorities and professional bodies to obtain confirmed and up-to-date information.