Planned Novelties in Employment and Social Law through German “Social Pact II”

The CDU/CSU and SPD parliamentary groups have introduced a new package of laws into the German Bundestag containing important labour and social regulations, which will be passed in the near future. This package again contains numerous changes in labour and social law. Further measures are to be taken to cushion the economic and social hardships of the crisis as far as possible.

In the area of short-time work – limited until December 2020 – the possibilities for earning additional income will be expanded: This means that now – regardless of the sector in which this takes place – the difference to the previous net income can be earned without being offset.

In addition, the government-paid short-time working allowance is to be increased: Until now, this has been 60% (or 67% for maintenance obligations) of the net wage difference for short-time work. The plan is to increase this to 70% (or 77%) from the fourth reference month and 80% (or 87%) from the seventh reference month. This too is initially limited until the end of 2020. However, only short-time working months from March 2020 are relevant.

These measures further increase the attractiveness of short-time working (for which the employee’s consent, or a works agreement, is required). At the same time, they also minimize the costs for employers who have agreed with employees or the works council to increase the short-time working allowance.

Furthermore, the social protection package includes an extension of the period for which unemployment benefits are paid to those workers whose entitlement to unemployment benefits (usually one year) would have ended between 1 May 2020 and 31 December 2020. This is a due to the fact that the current economic situation means that there is little recruitment. If necessary, this should now be used – in the case of already planned hirings – to postpone the hiring date (in agreement with the employee), as this will give them greater financial security.