Kurzarbeit

What it means

Kurzarbeit, officially support during short-time work, is a state instrument for preserving jobs. If an employer temporarily cannot give staff full work for external reasons, such as a supply disruption, a natural event or a sharp drop in demand, the state contributes to the wage compensation it pays.

During the hours not worked, employees stay in employment and receive wage compensation, part of which the state reimburses to the employer. Instead of laying people off, the company keeps staff it will need once the problem passes.

The support is available when the statutory conditions are met and for the period in which the government or the law declares a situation in which it can be used. In Slovakia it is administered by the Social Insurance Agency, which assesses applications and pays the contribution.

How it works in practice

Before applying, the employment-law basis must be in order: an agreement with employee representatives or an internal rule on an obstacle on the employer’s side, and clear records of how many hours each person worked and did not work. Without precise records the contribution cannot be defended.

Payroll gets more complex under Kurzarbeit: part of the month is work, part an obstacle to work with wage compensation, and income and contributions must be reported correctly for it. We help set up the calculation so that the statements to the insurers match the application.

The state contribution is income for the employer and must be recorded correctly in the books and for tax. If the company is also making redundancies, the support conditions may restrict this, so the combination of measures should be assessed before deciding.

What to watch out for

The most common mistake is claiming the contribution for hours employees actually worked, or having no records to prove the difference. At an audit the contribution is clawed back and penalties may follow.

Kurzarbeit is a temporary fix. If the problem proves permanent, the company merely postpones redundancy and lay-offs. The decision needs a realistic view of whether demand will really return.