Next week, asparagus season would traditionally begin. Yet due to the travel restrictions related to the Coronavirus, the majority of harvest workers from neighbouring European countries will not be able to travel here. Apart from the asparagus harvest, farmers are already noticing a lack of staff for the cultivation of food as well. The Bund Ökologische Lebensmittelwirtschaft, a German association of farmers, is already speaking of a shortage of a hundred thousand workers nationwide.
Beside farmers, many other employers in systematically relevant industries are facing the same problem. That problem of personnel shortage is additionally increasing due to hoarding. The situation is a paradox: at the same time demand in other industries is plummeting, so many employers have to declare short-time work. The employees affected by short-time work then only receive a part of their previous net salary in form of the short-time work allowance (Kurzarbeitergeld – KUG). Which possibilities does labour law offer, not to completely solve that paradox, but at least mitigate it?
Here, we will lay out some labour law options offering benefits for employers and employees. At the same time, they could help to relieve employees in systematically relevant industries and to avoid supply shortages.
I. Employee lease
In the current situation, employee lease is a valid alternative to short-time work. There are different options how employees could be assigned to another company even without a lease permission:
- for the prevention of short-time work or dismissals (Sec. 1 Para. 3 No. 1 Arbeitnehmerüberlassungsgesetz – AÜG)
- within the scope of group privilege (Sec. 1 Para. 3 No. 2 AÜG)
- occasionally (Sec. 1 Para. 3 No. 2a AÜG)
- in small businesses with less than 50 employees (Sec. 1a AÜG).
Employees could be transferred to other systematically relevant industries within the statutory regulations. The Federal Ministry of Labour has further substantiated the requirements for an occasional lease pursuant to Sec. 1 Para. 3 No. 2a AÜG to companies of agricultural production and processing, food logistics and to the health care sector during the pandemic (we explain the requirements in detail in our article « Transfer of Employees as an Alternative to Short-Time Work »).
By using the option of an (occasional) employee lease, employers can prevent short-time work wholly or in part. Instead of reducing working hours to zero (subsidized temporary layoffs), the loss of working hours could completely or at least partially be mitigated by an assignment to another company.
The employee benefits from a partial lease, as he will at least receive a part of his previous salary and is not dependant on short-time work allowance only. The employer benefits from a partial lease, as he can offset – at least partially – the employee’s labour costs to the borrowing employers within the provisions of a leasing contract. And the lessee can swiftly and unbureaucratically cover his labour requirements.
When creating an employment contract, it should be noted that the employer cannot assign his employee to another employer by virtue of his instruction right. The assignment needs to be negotiated in an individual contract with the employee prior to the assignment. At the same time, the lease contract with the borrowing employer should also stipulate the conditions and notification period for the return of an employee to his original employer.
II. Secondary occupation without deduction of short-time work allowance
The legislator reacted promptly and effectively to the increasing personnel shortage in systematically relevant industries by passing the new special regulation Sec. 421c German Social Code – Book III for the Corona Crisis. Employees now have the option to take up a secondary occupation in a systematically relevant industry while receiving short-time work allowance, without any deductions to it.
Thereby, the employee can benefit from an additional source of income next to short-time work allowance, leading to reduced financial losses. However, the additional income and short-time work allowance together may not exceed the main occupation’s contractual salary (planned renumeration) for the additional income not to be deducted from the short-time work allowance. Therefore, the main employer must query the income from the secondary occupation and declare it when applying for short-time work allowance.
Hence, this option results in increased practical effort for the employer. If the employee is still partially working while receiving short-time work allowance, the employer must also ensure that the employee observes the mandatory maximum working hours set in the Working Hours Act, as the working hours from the secondary occupation and the working hours from the main occupation are added up.
III. Inactive employment
Employer and employee can also agree to inactive employment, so the employee can enter into a second employment contract with a systematically relevant employer.
This provides the benefit for the first employer of avoiding the costs of continued salary payments and the effort for the application for short-time work allowance. The employee benefits, as he is not dependant on receiving short-time work allowance and could even earn more than in his first employment.
For this solution, employer and employee should openly communicate under which conditions the employee can switch back to his original employment. Therefore, the actual contracts should be created in a planned manner while considering the individual needs of all parties.
Each of these options has benefits and drawbacks for all parties, so there is no “one fits all solutions”. Instead, individual and creative solutions must be developed to meet the needs of all parties.