Kurzarbeit lets a German employer facing a temporary and substantial drop in work reduce employees' hours rather than dismiss them. The employer pays for the hours actually worked, and the employment agency pays an allowance covering a proportion of the net pay lost on the hours not worked.
What it is for
The scheme is designed for shocks that are severe but expected to pass, so that skills and teams are preserved through the trough. It was used at scale during the 2008 financial crisis and again during the pandemic, and is widely credited with keeping German unemployment lower than it would otherwise have been.
Conditions
- The loss of work must be temporary, unavoidable and significant
- A minimum proportion of the workforce at the establishment must be affected
- It must be notified to the employment agency, and approved, before payments begin
- Where a works council exists, its agreement is generally required
Why it matters when hiring internationally
Kurzarbeit is a genuine alternative to redundancy in Germany, and is often expected to be considered before dismissals in a downturn. Companies that reach straight for terminations may find both the works council and, later, a labour court asking why. Whether a small foreign-owned team qualifies depends on the circumstances, so it is a question to raise with the legal employer early rather than at the point of decision.