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A Useful Tool for Global Employers
While readers outside of Germany may not have heard of “short-time” work, within that country its use is on the rise again. With the economy facing yet another possible downturn, some large companies have publicly announced that they may reduce their employees' working hours in order to realize substantial salary savings. The legal tool to implement such a reduction of working time is known as “short-time work.” For the benefit of global companies with operations in Germany, this article explores how short-time work can be introduced, and which rules must be observed in order to qualify for associated government grants.
Introduction
Employers have several options with which to respond to an economic crises. A first step to increasing the profitability of a business is often the layoff of temporary agency workers. Since they do not stand in an employment relationship with the user company, it is normally fast, simple and therefore cost-efficient to discharge them. Increasing the efficiency of the permanent workforce is considerably more difficult. Many companies are reluctant to implement a reduction in force. Not only can a staff reduction lead to considerable costs due to strict German employment protection legislation, but most companies are also eager to retain well-trained and qualified staff, rather than having to replace them once the economic situation has improved. Short-time work provides a more flexible method to respond to short- or medium-term economic difficulties.
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