Workforce Reduction After Corona Short-time Work: Liability Risks And Strategy Advice From Germany

The simplified rules for (state-subsidised) short-time work have provided temporary economic relief for many companies, enabling them to better weather the Covid-19 crisis. But now many are faced with the question of whether short-time work is sufficient, or whether they need to further cut costs, including potentially by implementing a workforce reduction. But how easily can employers 'switch' from short-time work to staff reductions?

Different forecast decisions

At the heart of the problem is the fact that the introduction of short-time working and the decision to reduce staffing levels each require different business forecast decisions.

According to s96 para. 1 of the German Social Code III, the introduction of short-time work requires a work stoppage the reasons for which are of an economic nature or result from an unavoidable (external) event. The Covid-19 crisis represents such an unavoidable event (this is also the view of the Federal Employment Agency).