The most important points about the coronavirus from an employment law perspective
Coronavirus is fundamentally changing day-to-day business operations. There is uncertainty on the part of both employees and employers in view of the increasing number of quarantine cases (I.) and official company closures (II.), working from home (III.) and the closure of childcare facilities and schools (IV.). The focus is also on short-time work (V.) and the deferral of social security contributions (VI.). Here are the most important facts in brief.
In order to stem the spread of the coronavirus, the competent authorities are currently ordering quarantine for both those who are acutely ill and persons who are merely potentially infected. The form in which affected employees will continue to receive their salary depends on the category into which they fall:
- Employees who are unable to work due to a coronavirus infection will receive a continuation of remuneration according to the usual regulations. It is widely acknowledged that this will not change due to the quarantine measure that has been ordered.
- If they are not acutely ill but are in quarantine due to a suspicion of a possible infection, the provision in section 56 Infection Protection Act (Infektionsschutzgesetz) will apply, under which employees will receive compensation in the amount of their net remuneration for the first six weeks of the quarantine. The employer will pay out the compensation, but be reimbursed for it by the competent authorities upon application. As of the seventh week of quarantine, the competent authorities will pay compensation in the amount of the sick pay directly to the employees. Some of the competent authorities are of the opinion that the employer is primarily obliged to continue to pay the remuneration in accordance with section 616 German Civil Code. We do not consider this to be correct in the current pandemic situation.
Quarantine periods which are ordered due to the illness of an employee, like all days of incapacity to work, are not to be set off against the annual vacation. If the employees are not acutely ill but have been placed under quarantine due to a suspicion of a possible infection, they are not unable to work and will still be obliged to work. If they carry out their work from home or from the place of the quarantine, they will continue to receive their remuneration from the employer unchanged. If they are not able to do so, they will receive compensation in the amount of their current net salary. This will not be set off against their annual vacation.
If the quarantine measure keeps employees at home and they are able to work from a home office, they will be obliged to avail themselves of this possibility. The same applies if they are able to perform mobile work at a different quarantine location. Their duty to work will only be eliminated if they become unable to work due to illness. Naturally, the situation will be different if the employees must come into the establishment to perform their work, e.g. because they work on machines.
In general, company closures are a risk that must be borne by the employer and not the employee. Employees will continue to receive their salary. It is unclear whether this also applies in the case of official closures, such as the current area-wide official closures in particular. To minimise the economic risk, it is advisable to apply for the short-time allowance (see below for details).
The following distinction must be made here:
- The employer cannot unilaterally order an employee to set up a home office on account of the special protection afforded to the home in the constitution. In addition, the employer would be responsible for compliance with occupational health and safety regulations at the employee’s home office. For this, the employer would have to carry out a risk analysis and inspect the home office.
- In the current situation, ordering mobile work is more appropriate. To this end, the employer provides the employees with the necessary work equipment (usually a laptop with the software to be used) and temporarily instructs them to carry out their work on a mobile basis. It is also conceivable for employees to use their own terminal equipment (bring your own device), although the employer cannot unilaterally order this, either, thus transferring its obligation to provide the work equipment to the employee.
In order to prevent or stem an infection in the business operation, cooperation between the employer and the employees is of decisive importance:
- The employer is obliged, within the scope of its duties of care toward its employees, to protect their health. It must inform them about the risks of infection and illness, in particular if it is aware of illnesses in the establishment or the vicinity of the work. As a preventive measure, it should keep itself apprised of current developments and inform the employees on a regular basis. It should make suitable recommendations with regard to hygiene.
- Business trips to risk areas could represent an instruction outside of the limits of reasonable discretion and should be avoided.
- If employees can also do their work in a home office, the employer should think about ordering this as a precaution.
- If an employee has become infected, the competent authorities will place that employee and all of the persons who had contact with him or her under quarantine. The employer is legally obliged to cooperate with the authority in its attempt to identify all of the contact persons.
- The other employees can continue to go about their work. If the employer decides to close the company temporarily for the sake of precaution, it will be obliged to continue to pay the remuneration.
- Employees who were in a risk area may not decide on their own to stay home from work for the sake of precaution. In order to protect their coworkers and comply with their fiduciary duties toward the employer, they should inform the employer. The employer is then obliged to decide whether to release its employees for the duration of the incubation period or order home office for them insofar as this is possible.
If an employee’s own child is ill, that employee can temporarily stay home to take care of the child with a continued payment of salary in accordance with section 616 German Civil Code. However, if the child is healthy, but no suitable childcare is available, then the limits of this temporary paid release from work will quickly be reached. Such release can also be excluded by the employment contract.
As from 30 March 2020, all working parents who are reliant on childcare have a claim to compensation if the childcare facilities for their children have been officially closed to prevent infections and if they incur a loss of earnings because of that. They must however provide the authorities and the employer, should the latter so request, with proof that no other suitable childcare arrangements were available. The compensation amounts to 67 % of the loss of earnings, but no more than EUR 2,016 per month for a maximum period of 6 weeks. There is no entitlement to compensation during school holidays. The regulation applies until 31 December 2020.
The employer can order short-time work if there is a basis for this in the employment contract, a works agreement or a collective bargaining agreement. The introduction of short-time work is also subject to co-determination by the works council.
The employer can apply for the short-time allowance with the Federal Employment Agency (for the filing of applications, see: here and here as well as for the notes on the application procedure: here) if the conditions laid down in sections 95 to 99 German Social Security Code, Book III have been fulfilled. It can do so if
- there is a considerable cut in working hours,
- the operational requirements have been met,
- the personal requirements have been met and
- the Federal Employment Agency has been informed of the loss of working hours.
The cut in working hours must be due to economic reasons or an inevitable event, be temporary and unavoidable and exceed a significance threshold in the relevant month.
According to the Federal Employment Agency’s current information leaflet “Short-time allowance (KUG): Coronavirus: information for undertakings”, employees can receive short-time allowance if orders are not placed or are cancelled due to the coronavirus or materials are lacking or if work ceases due to governmental protective measures.
The minimum requirements for a substantial cut in working hours are set out in section 96(1) no. 4 German Social Security Code, Book III. Pursuant to section 1 no. 1 of the Short-Time Allowance Ordinance (Kurzarbeitergeldverordnung - KugV) which was enacted on 23 March, with retroactive effect as of 1 March 2020, a company may register short-time work if at least ten percent of its workforce are affected by a cut in working hours. The threshold up to now had been one-third of the workforce.
The requirements regarding the unavoidability of the cut in working hours laid down in section 96(4) German Social Security Code, Book III have also been relaxed: It is no longer required to build up negative working time balances (“minus hours”) before the short-time allowance is paid (section 1 no. 2 Short-Time Allowance Ordinance).
The operational requirements are met by every company in which at least one employee is employed.
Personally, an employee fulfils the requirements for the receipt of the short-time allowance pursuant to section 98(1) German Social Security Code, Book III if he/she is in an employment relationship that is not terminated and subject to compulsory insurance. Accordingly, employees in minor employment are excluded from the short-time allowance if they are not subject to compulsory insurance.
Employers will be reimbursed for their 100 % of payable social security contributions for lost working hours by the Federal Employment Agency in a lump sum upon application (section 2 Short-Time Allowance Ordinance).
Short-time allowance will also be paid for temporary workers pursuant to section 3 Short-Time Allowance Ordinance.
In derogation of section 76(2) sentence 2 German Social Security Code, Book IV, an interest-free and security free deferral of social security contributions by the statutory health insurance funds would come into consideration for those companies/employers which find themselves in serious financial difficulties (National Association of Statutory Health Insurance Funds). This has been limited to the contributions for March and April 2020.
If the employer and the employees work together on this, the impact of the coronavirus on their operation can be kept as low as possible. Openness and information are the key to preventing illness in the workforce. Should an employee become infected despite thorough preventative measures, it is of vital importance for the employer to know and comply with the applicable statutory provisions.