“What a nasty surprise.”
“Outrage!”
“How am I supposed to pay for that?”
When it comes to the threat of back taxes during short-time work, users of the IG Metall Facebook page are in agreement. The general sentiment: This is unacceptable!
What upsets so many people is a quirk of tax law. Under this law, certain types of income are tax-exempt, but they increase the tax rate on the rest of your income.
This rule also applies to short-time work benefits (KuG). Employees must report these benefits on their annual tax return. This often results in a back-pay tax bill—and that in a situation where income is already lower due to short-time work. Setting aside savings for a back-pay tax bill? Many workers on short-time work find that difficult.
100 Percent Tax-Exempt
IG Metall is calling on the government to find a solution to this issue. Those receiving short-time work benefits should not be further disadvantaged by tax due to back payments. Employer contributions to short-time work benefits should be 100 percent tax-free. IG Metall and its works councils have negotiated such contributions in many companies.
And we want to achieve further improvements to the short-time work program.
As things stand, the Federal Employment Agency is only topping up short-time work benefits until the end of the year. IG Metall is therefore calling for at least transitional arrangements for employees who are going on or have been on short-time work in 2020: They should continue to receive the currently applicable top-ups beyond the end of the year, for the entire duration of their short-time work.
One of the most pressing issues is extending the eligibility period for short-time work benefits—which is currently set by law at twelve months. But the COVID-19 crisis is far from over. And the challenges posed by digitalization and the industry’s transition to new, environmentally friendly energy sources, business models, production methods, and products do not stop at the pandemic. The government should therefore extend the eligibility period to 24 months across the board, or at least until 2023.
Keep Barriers Low
The government should also extend the reduced eligibility requirements for short-time work at least until 2023. Since this past spring, short-time work benefits have been available when ten percent of a company’s workforce is affected. In addition, employees are not required to accumulate negative hours, and temporary agency workers are also eligible for short-time work benefits. IG Metall has campaigned vigorously for these relief measures.
The eligibility period for transfer short-time work benefits (Transfer-KuG) should also be extended to 24 months. Transfer-KuG provides support when employees cannot be retained at the company despite all efforts. Only if these benefits are provided over the long term can many colleagues complete viable training or retraining programs.
Employers Must Do Their Part
Finally, we want to hold employers accountable. The Federal Employment Agency currently reimburses them for the full social security contributions of employees on short-time work. This money comes from unemployment insurance, which is jointly funded by employers and employees. We want to attach conditions to this relief for companies:
A 50 percent reimbursement may only be granted if employers rule out layoffs for operational reasons during the period of short-time work.
A 100 percent reimbursement of social security contributions may only be granted if employers establish a training plan for the short-time work period. This must be binding, whether through a collective bargaining agreement or a company agreement.
Employees can then use the time during short-time work to pursue further training—for example, to become a technician or master craftsman—though the range of eligible training programs must be expanded. This way, our colleagues can use short-time work to prepare themselves for the jobs of tomorrow.
Our goal is not merely to weather the crisis safely, but to create long-term prospects for all employees.
