German short-time work benefits scheme

Subject: German short-time work benefits scheme

In his reply to question E-001779/2023 of 20 July 2023, Commissioner Nicolas Schmit states that the German short-time work benefits scheme does not breach Regulation (EC) No 883/2004.

In this regard, it should be noted that the short-time work benefits scheme is 100% financed by contributions to the unemployment insurance scheme in Germany, the payment of which is split equally between employers and employees. EU employers without a subsidiary in Germany (i.e. without a permanent establishment with wage tax liability), but with employees in Germany pay monthly unemployment insurance contributions for these employees. However, these EU employers cannot draw the ‘short-time work benefit’, as it can only be drawn by companies established in Germany for wage tax purposes.

This means that EU employers (and their employees) in Germany are paying towards a social security benefit to which they have no entitlement whatsoever.

Is this practice in line with EU law?

Submitted: 19.9.2023

Answer given by Mr Schmit on behalf of the European Commission

(24 October 2023)

The fact that the short-time work benefits scheme is financed by contributions to the unemployment insurance scheme in Germany does not automatically mean that this benefit has the characteristic of unemployment benefit coordinated under Regulation (EC) No 883/2004 (1).

The employer bears the risk to pay the agreed wage even though the workload was diminished and the fact that it is granted based on the needs of the company.

As explained in the reply to written parliamentary Question E-001779/2023, the short time work allowance therefore does not cover any of the risks set out in Article 3(1) of Regulation (EC)883/2004, so it is not a social security benefit covered by Regulation (EC)883/2004.

1 ∙ ⸱ () Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ L 166,

30.4.2004, p. 1-123).