Government Subsidies: Austrian Short-Time Work Explained

In response to the Covid-19 pandemic, the Austrian government introduced a regulated regime of short-time work, or 'Corona-Kurzarbeit', to counteract the negative economic impact of the virus. The scheme, which was initially announced in March 2020, allows employees to receive 80 to 90% of their normal salary while reducing their working hours. The intention behind the short-time work is a temporary reduction of normal working hours and remuneration. To take advantage of this regime, the company has to discuss it either with the works council if there is one, or with affected employees.

Employees receive at least 80-90% of their former net salary

In response to the economic impact of the COVID-19 pandemic, the Austrian government introduced a regulated regime of short-time work, or 'Corona-Kurzarbeit'. This scheme allows employees to receive 80-90% of their former net salary while reducing their working hours.

The amount of salary an employee receives depends on their previous gross monthly income. For instance, employees earning up to €1,700 gross are entitled to at least 90% of their former net salary. For incomes between €1,700 and €2,685 gross, employees are entitled to 85%, and for incomes between €2,685 and €5,370 gross, they are entitled to 80%. The Austrian Labour Market Service (AMS) does not provide subsidies for income parts above €5,370.

The AMS pays the difference between the reduced net income (paid by the employer) and the guaranteed minimum income. This means that employees can receive up to 90%, 85%, or 80% of their former net income, depending on their salary.

During the short-time work period, employees will receive the same net salary, regardless of the extent of the work performed. However, if employees perform work that entitles them to a gross salary exceeding the net replacement rate, the higher salary must be paid out.

Employers receive subsidies of up to 80-90% of the employee's net salary

The Austrian government introduced a regulated regime of short-time work, or 'Corona-Kurzarbeit', to counteract the negative economic impact of COVID-19. The intention behind this scheme is to temporarily reduce normal working hours and remuneration.

Under the short-time work scheme, employees receive 80-90% of their normal salary while reducing their working hours. The scheme allows for a reduction in working time of up to 100%, with a minimum of 10% and a maximum of 90% within an initial averaging period of 3 months. This means that employees can be released from work entirely for certain periods.

• Up to EUR 1,700 gross: 90%
• Between EUR 1,700 and EUR 2,685 gross: 85%
• Between EUR 2,685 and EUR 5,370 gross: 80%

The subsidy is capped at a gross remuneration of EUR 5,370. It also includes the employer's social security contributions and pro-rated parts of special payments. The subsidy is granted in the form of flat rates for each "suspended" working hour.

The short-time work scheme helps to maintain employment security during temporary economic difficulties, avoid redundancies, and allow businesses to retain personnel flexibility. It is worth noting that the scheme has been extended multiple times since its introduction in March 2020, demonstrating its importance in supporting businesses and employees during the COVID-19 pandemic.

Employees must use holiday entitlements and time credits before starting short-time work

In Austria, employees are required to use their holiday entitlements and time credits from previous years before starting short-time work. This measure aims to reduce the financial burden on employers and the state during the COVID-19 pandemic. While the use of old vacation days and time credits is encouraged, it is not subsidised by the Labour Market Service (AMS). Therefore, employers must pay the employee's full salary for these periods without claiming subsidies for "suspended" working hours.

Employers are expected to make a serious effort to ensure employees use their old vacation and time credits. For example, by sending a letter to employees, requesting that they use up their old vacation days as much as possible. However, employers cannot unilaterally order employees to consume their holiday entitlements or time credits. Instead, they must negotiate with the works council or seek individual agreements with employees.

If short-time work is extended beyond the initial three-month period, employees are expected to use additional vacation days from the current vacation year, up to three more weeks if they have accrued that many days. This condition is part of the Austrian government's "corona short-time work" initiative, which aims to reduce the negative economic impact of COVID-19 on businesses.

Employers must forward the agreement form to the Labour Market Service (AMS)

To apply for the Austrian government's short-time work scheme, employers must forward the agreement form, signed by the works council or all the affected employees, to the Labour Market Service (AMS). This is a crucial step in the application process, as it involves submitting the necessary documentation to the relevant authority for approval and subsequent disbursement of funds.

The agreement form outlines the terms and conditions of the short-time work arrangement, which is a temporary reduction in normal working hours and remuneration to counteract the negative economic impact of COVID-19. This form is either agreed upon between the employer and the works council or directly between the employer and each affected employee. In the latter case, the employer must use master agreements called 'social partner agreements', which can be found on Chamber of Commerce or union websites. Due to restrictions on movement during the pandemic, employers can also reach agreements with employees via email or messaging apps such as WhatsApp.

In addition to the agreement form, employers must also submit a special form to the AMS containing key information about the company and the short-time work arrangement. This includes details such as the number of white-collar employees and workers, the planned duration of short-time work, the number of affected employees, the average income, and the maximum planned reduction in working hours.

The AMS plays a vital role in the short-time work scheme by providing preliminary approval for complete applications that include the social partner agreement. Trade unions, which examine applications selectively, can reject individual applications within 48 hours. On the other hand, the Chamber of Commerce has offered its global approval for all applications submitted in accordance with the social partner agreement to expedite the process.

It is worth noting that short-time work can be agreed upon retroactively, starting from March 1, 2020, for a maximum of three months, after which it may be extended by another three months. During this period, employees are expected to use any accrued holiday entitlements and time credits, if feasible, before commencing short-time work.

The short-time work scheme offers a safety net for employees, ensuring they receive 80% to 90% of their former net income, depending on their salary. The AMS subsidises the difference between the reduced net income paid by the employer and the guaranteed percentage of former net income. However, it is important to note that the AMS will not provide short-time subsidies for any portion of the salary exceeding €5,370.

During short-time work, no employees can be laid off for business reasons

Short-time work is a measure that can be taken when a company is in temporary, non-seasonal economic difficulty. It involves a temporary reduction in working hours and remuneration. During this period, employees are still entitled to between 80% and 90% of their former net income, with the AMS paying the difference.

To be eligible for short-time work, a company must first discuss it with the works council or with affected employees. An agreement must then be reached with either the works council or with individual employees, using master agreements called 'social partner agreements'. The employer must then forward the signed agreement form to the AMS.

During short-time work, an average of at least 10% of the weekly normal working time must be worked, with a maximum of 90%. Normal working hours can be reduced to zero for some weeks, as long as the average of at least 10% is maintained over the whole period.

While employees cannot be laid off for business reasons during short-time work, ordinary terminations for personal reasons are permitted. However, the employer must then "refill" the headcount by employing a new worker.

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