Germany: measures announced to support companies impacted by coronavirus

On 8 March, following several hours of negotiations, representatives of the parties in Germany’s governing coalition announced a range of measures that will be taken to help companies who are grappling with a decline in business activity stemming from the outbreak of the coronavirus. In addition to specific tax incentives and cheap “bridge loans”, the government will seek to facilitate the conditions for short-time working measures. In practice, the Federal Employment Agency will cover between 60% to 67% of the wages of people placed on short-time working for a maximum of 24 months, starting in April. Companies will be eligible for this scheme as soon as 10% of their staff, as opposed to 30% at present, are affected by the decline in business activity. In addition, companies will be fully exempt from paying social security contributions for hours not worked during periods of short-time working. In 2019, these contributions were be entirely borne by employers. However, since 1 January 2020, and following the crisis in the automotive and machine tool sector, the German state agreed to cover 50% of such contributions. These exceptional measures will initially be applicable until the end of 2020. Setting aside the impact of the coronavirus, the Federal Employment Agency has planned for 124,000 instances of short-time working for March 2020. Lufthansa was the first company to announce its intention to take short-time working measures as a result of the coronavirus.