24.09.2020 | KPMG Law Insights

Tax dispute – short-time work – help in the crisis, with unexpected risks.

Short-time work – help in the crisis, with unexpected risks.

I. Overview

Since the start of the Corona crisis and the accompanying “lockdown” in March 2020, the topic of short-time work has been more present than ever. Many businesses and even entire sectors of the economy were forced to temporarily close completely or at least experienced severe restrictions due to the government’s strict regulations.

For many companies, short-time work offers what appears at first glance to be an attractive way out of this crisis. The Employment Agency (AfA) reimburses employers, under certain conditions, up to 67% of the salaries they have to pay to their employees. This can go a long way toward preventing employees from having to be issued.

However, this support from the state not only brings financial relief, but is also linked to strict formal criteria. Anyone who makes mistakes when applying for short-time allowance can quickly expose themselves to a significant liability risk, which can result in consequences ranging from reimbursement of short-time allowance received to criminal prosecution and conviction.


II. requirements

Short-time allowance is paid in a two-stage process pursuant to sec. §§ 95 ff. SGB III granted. First, the employer must apply for short-time work at the responsible AfA. In a second step, the employer then pays the short-time allowance to the employee concerned and has this reimbursed by the AfA on application.

a) Application procedure

In the first step, the employer or works council submits a notification of a significant work loss to the responsible AfA.

This is initially a forecast of the extent to which short-time allowances will be required.

Under the Corona-related new rule, employers with at least 10% of their employees affected by a work stoppage are eligible to apply.

As far as work loss is concerned, experience has shown that the AfA encourages generous forecasts. A lower claim in the performance procedure is then possible without any problems. (time) However, a subsequent extension of short-time work beyond the scope applied for is more complex.

It must be shown credibly that there is a significant loss of working hours due to economic reasons or an unavoidable event. Often this can be due to the Corona crisis, although this must also be the actual reason for the work stoppage. The prerequisite for this is, for example, that fewer orders are received or that there is even a temporary plant closure. The work stoppage is unavoidable if everything necessary has been done beforehand to prevent it. This can be done by using up leftover vacation from the previous year or overtime.

Important: Mere preventive quarantine orders by the employer or purely financial damage without a corresponding loss of working hours do not justify a claim to short-time allowance.

However, it must be foreseeable with a certain degree of probability that it will be possible to return to fulltime work in the foreseeable future. Short-time allowance is only granted if there was not already a significant loss of work for other reasons before the crisis, or if there was even a threat of insolvency. In particular, it does not represent a rescue package for companies that are in economic difficulties anyway.

Furthermore, the personal requirements must be checked at the level of the respective employee: In particular, short-time allowance cannot be claimed for employees whose employment relationship ends promptly due to termination or the like.

b) Performance procedure

As part of the benefits procedure, the employer must submit a written application for reimbursement to the Employment Agency within three months (monthly in the case of longer periods of short-time working). On the basis of the personal requirements set out in Section 98 of the German Social Code III (SGB III), the latter examines whether the short-time allowance is actually to be granted and then makes the payment.


III. practical tips

  • First of all, it should be ensured that the notification of the loss of working hours also corresponds to the operational reality and not merely financial losses are confused with a (actually non-existent) loss of working hours. In particular, considerable overtime or special shifts before or after the short-time work period may make a loss of working hours during the indicated period appear questionable.
  • Short-time work must have been ordered for the affected employees before the loss of work is reported to the Employment Agency. This can only be done on the basis of a collective agreement, a company agreement or an individual agreement with the employee. In the absence of such a basis, short-time work cannot be ordered unilaterally by the employer.
  • Because existing leave balances must be reduced as a priority, special care must also be taken when withdrawing approved leave time. If vacation credits from 2020 remain at the end of the year, there will initially be no KUG entitlement in 2021, insofar as such still exist.
  • The actual loss of working time must be clearly recorded and documented on an individual basis. It is also important that applications submitted on this basis are within the range previously indicated.
  • In particular, the recording of employees’ hours must be checked and it must be ensured that applications are submitted on the basis of the actual working hours or short-time working hours recorded.
  • In practice, there is often a need for (subsequent) corrections resulting from the payroll run below the month for purposes of payroll tax and social security (which therefore always requires a forecast for the remaining month) and the actual work loss incurred for the entire month. If there was a deviation from the forecast / short-time work roster in the remaining month, the application for short-time work must in any case be made on the basis of the actual work lost.

IV. Risks

Due to the large number of applications and to ensure rapid processing, short-time allowance is often provisionally reimbursed before the applications are finally reviewed by the AfA.

Requests for corrections may be submitted after the fact, but they do not have the effect of exempting you from penalties. If the authorities assume a deliberate action, a corresponding examination and assessment is carried out on the basis of the possibly incorrect (initial) application.

a) Civil law consequences

If incorrect or incomplete information is provided intentionally or as a result of gross negligence, which wrongly leads to the payment of short-time allowance, the employer is obliged to reimburse the Employment Agency. In addition, late payment penalties may be incurred.

If the employer orders short-time work without a legal basis (e.g. without a voluntary agreement with the employee), the employer is also in default of acceptance, and the employer is in default of acceptance in accordance with Sec. § Section 615 of the German Civil Code (BGB) the obligation to pay full wages despite missed work.

b) Criminal consequences

If incomplete or incorrect information is provided in the notification of short-time work or in the specific application for reimbursement, there is also a risk of criminal penalties and fines.

It cannot be ruled out that law enforcement agencies may assume subsidy fraud if incorrect information is provided. This is particularly true in view of the fact that recklessness is sufficient for this purpose (corresponds to gross negligence in civil law) and the occurrence of damage is not required.

In addition, charges of fraud under Section 263 of the German Criminal Code (StGB) and embezzlement of remuneration under Section 266a of the German Criminal Code (StGB) may be considered. The latter may be the case, for example, if the employee continues to work beyond the scope of the short-time work without documenting this.

In addition, for example, in the case of a “black” wage increase or an introduction of short-time work that is ineffective under labor law, a criminal liability for tax evasion pursuant to sec. § 370 AO must be added. The benefits obtained from one of the above-mentioned offenses can be confiscated pursuant to Sections 73 and 73c of the German Criminal Code (StGB), and the company may be threatened with the loss of its reliability under trade law and the risk of being barred from bidding for public contracts.

Fines can also be levied in such cases due to undeclared work in accordance with § 8 para. 3 SchwarzArbG, reckless tax evasion pursuant to Section 378 AO and breach of supervisory duties pursuant to Section 130 OWiG. Such fines can be directed both against management personnel and against the company itself (Section 30 OWiG).

Last but not least, strict care should be taken not to exert any pressure on employees to accept short-time work, as the threshold for coercion can quickly be crossed here, particularly in connection with the threat (or suggestion) of adverse labor law measures.


V. Conclusion and recommendation for action

From a company’s point of view, short-time allowance is a valuable instrument for temporarily bridging the loss of work and the associated lack of employment opportunities. This can avoid or cushion terminations and negative financial effects.

However, strict attention must be paid to compliance with the requirements for short-time allowance. Errors in formalities or just in the actual execution in the daily work can entail not only financial liability but also considerable consequences under criminal law and/or fine law for responsible persons in the company or consequences under fine law for the company itself.


KPMG Law advises and supports you in the classification and processing of doubtful cases with extensive expertise in labor and criminal law. Together with you, we also check compliance with the legal requirements in practical implementation and are happy to advise you on any adjustments that may be necessary to create legal certainty.

Explore #more

22.05.2024 | KPMG Law Insights

The AI Act is coming: EU wants to get a grip on AI risks

For many people, artificial intelligence (AI) is the great hope for business, healthcare and science. But there are also plenty of critics who fear the…

17.05.2024 | KPMG Law Insights

Podcast series “KPMG Law on air”: When the family business is to be sold

Around 38,000 family businesses are currently handed over each year. In most cases, the change of ownership takes place within the family. But more and…

03.05.2024 | KPMG Law Insights

Doubts about inability to work? What employers can do

The certificate of incapacity for work (AU certificate) serves as proof of incapacity for work due to illness. However, only if the certificate meets certain…

29.04.2024 | KPMG Law Insights

Agreement on ecodesign regulation: products to become more sustainable

After lengthy negotiations, the Council and Parliament of the European Union reached a provisional agreement on the Ecodesign Regulation on the night of December 5,…

27.03.2024 | KPMG Law Insights

EU Buildings Directive: life cycle greenhouse potential becomes relevant

On March 12, 2024, the EU Parliament approved the amendment to the EU Buildings Directive. The directive obliges member states and, indirectly, building owners and…

19.03.2024 | Business Performance & Resilience, KPMG Law Insights

CSDDD: Provisional agreement on the EU Supply Chain Directive

The EU member states agreed on the CSDDD, the EU Supply Chain Directive, on March 15, 2024. Germany abstained from the vote. Negotiators from the…

21.02.2024 | KPMG Law Insights, KPMG Law Insights

The Digital Services Act – what does it mean for companies?

The Digital Services Act (DSA) is a key component of the EU’s digital strategy and came into force on November 16, 2022. As a regulation,…

15.02.2024 | KPMG Law Insights

Data compliance management: How to implement it in practice

Part 3 of the article series “Professional tips for data compliance management”   The third part of this series of articles deals with data compliance

14.02.2024 | Business Performance & Resilience, PR Publications

Guest article in ZURe: Monitoring the implementation of the LkSG

The current issue of ZURe (p. 20 ff.) contains a guest article by KPMG Law Partner Thomas Uhlig (Head of General Business and Commercial Law),…

09.02.2024 | KPMG Law Insights

Podcast series “KPMG Law on air”: The employment law function

In almost all German companies, the employment law function is located in the HR department and not in the legal department. One of the reasons…


Barnim Baron von Gemmingen

Senior Manager

Theodor-Heuss-Straße 5
70174 Stuttgart

tel: +49 711 781923-433

Dr. Heiko Hoffmann

Munich Site Manager
Head of Criminal Tax Law

Friedenstraße 10
81671 München

tel: +49 89 59976061652

Christian Judis

Senior Manager

Friedenstraße 10
81671 München

tel: +49 89 59976061028

Dr. Stefan Middendorf

Duesseldorf Site Manager

Tersteegenstraße 19-23
40474 Düsseldorf

tel: +49 211 4155597316

Dr. Albrecht Muser

Senior Manager

Friedenstraße 10
81671 München

tel: +49 89 59976061598

Andreas Pruksch

Senior Manager

Theodor-Heuss-Straße 5
70174 Stuttgart

tel: +49 711 781923-419

Arndt Rodatz

Head of Criminal Tax Law

Fuhlentwiete 5
20355 Hamburg

tel: +49 40 360994 5081

Philipp Schiml


Tersteegenstraße 19-23
40474 Düsseldorf

tel: +49 211 4155597150

© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit

 KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.