Kurzarbeitergeld in Germany: How the Short-Time Work Benefit Works

Kurzarbeitergeld (KUG) is a German benefit provided when a company temporarily reduces working hours due to economic reasons or an unavoidable event but wishes to retain its employees. The employee receives a reduced salary for the hours actually worked, and part of the lost net income is compensated through the Bundesagentur für Arbeit.

The main idea behind Kurzarbeit is not to fully replace wages, but to help a company weather a temporary downturn without mass layoffs.

What Is Kurzarbeit?

Kurzarbeit means reduced working hours. The employer temporarily reduces working hours for the entire company, a department, or a group of employees. Sometimes employees work fewer hours than usual; other times, work is almost completely suspended for a certain period.

Kurzarbeitergeld does not apply to just any drop in revenue. There must be a significant, temporary, and unavoidable Arbeitsausfall—that is, a work stoppage or reduction in work resulting in a loss of earnings. The cause may be economic circumstances or an event that the company could not have prevented.

Who Submits the Application

Employees do not apply for Kurzarbeitergeld themselves. The employer handles the process:

1. First, the company notifies the Agentur für Arbeit at its location of the reduction in working hours.
2. The agency verifies whether the basic conditions have been met.
3. The employer calculates and pays employees their wages for hours worked and the KUG.
4. The employer then applies to the Bundesagentur für Arbeit for reimbursement.

The online procedure and forms are available on the Bundesagentur für Arbeit website: Kurzarbeitergeld bei Entgeltausfall.

When can a company use Kurzarbeitergeld?

Several conditions apply to standard konjunkturelles Kurzarbeitergeld in 2026.

• The reason for the reduction in working hours must be economic or related to an unavoidable event.
• The situation must be temporary: the company is expected to be able to return to normal operations.
• Job losses cannot reasonably be prevented by other measures, such as the use of eligible Arbeitszeitkonten or scheduling vacation time where applicable.
• In the affected month, a significant portion of the employees at the company or division must experience a loss of earnings of more than 10% of their monthly gross pay.
• The company must have at least one employee.
• Employees for whom KUG is requested must meet certain eligibility requirements, including being insured for unemployment and having an ongoing employment relationship.

During the coronavirus pandemic, relaxed rules were in effect, such as a lower threshold for the number of affected employees. These special COVID-related exemptions should not be applied to the standard rules for 2026 without a separate review.

Employee Consent and the Betriebsrat

An employer cannot simply declare Kurzarbeit without regard to the employment contract and the rules governing employee participation. The basis for this is usually a collective bargaining agreement, a Betriebsvereinbarung, a provision in the employment contract, or an individual agreement.

If the company has a Betriebsrat, the implementation of Kurzarbeit usually requires its approval. If there is no Betriebsrat, the employer often obtains written consent from the affected employees, unless the right to Kurzarbeit is already provided for in the employment contract or an applicable collective bargaining agreement.

For the employee, the practical minimum is as follows:

• Request a written explanation of the duration and scope of the Kurzarbeit program;
• Check what percentage of working hours is being reduced;
• Clarify how vacation time, overtime, and bonuses will be accounted for;
• Continue calculating wages and KUG;
• If you have any questions, contact the Betriebsrat, a labor union, a Lohnsteuerhilfeverein, or a labor law specialist.

Who is eligible for KUG

Kurzarbeitergeld (KUG) generally applies to employees who are in an employment relationship subject to unemployment insurance and who continue that relationship after the start of Kurzarbeit. A temporary contract does not in itself preclude KUG, provided the conditions are met.

There are important restrictions:

• A “Minijob” typically does not qualify for KUG, because such employment is not subject to unemployment insurance contributions.
• Employees whose employment is already being terminated due to dismissal or an Aufhebungsvertrag may not meet the eligibility requirements.
• Ausbildung students and special groups of workers are subject to separate rules.

If the situation is unusual, it’s best to check not against general guidelines, but based on the employer’s calculations and official information from the Bundesagentur für Arbeit.

How much is paid

The basic amount of Kurzarbeitergeld:

• 60% of the flat-rate net difference between regular earnings and earnings during Kurzarbeit;
• 67%, if the employee has a child as defined by the Leistungssatz rules.

Simply put, it is not the entire salary that is compensated, but a portion of the lost net income. If a person continues to work some hours, they receive their regular pay for those hours plus KUG for the lost portion.

KUG is similar to Arbeitslosengeld in terms of income replacement, but it does not mean losing one’s job: the employment contract remains in effect.

Social Security Contributions and Taxes

During Kurzarbeit, social insurance contributions continue to be calculated, but the calculation differs from that for a regular full salary. Contributions for the hours actually worked are paid as usual. For the lost portion of earnings, special rules based on a notional wage are applied; the employer calculates the details.

The initial statement regarding full, automatic reimbursement of all social security contributions by the government cannot be safely applied as a general rule. Such reimbursements have varied during periods of crisis and depend on current regulations; therefore, employers should check the latest guidelines from the Bundesagentur für Arbeit.

Kurzarbeitergeld itself is not subject to income tax like a regular salary, but it is taken into account under the Progressionsvorbehalt. This can affect the final tax rate for the year. Therefore, recipients of KUG often have to file a tax return and verify the result via the Steuerbescheid.

Standard types of insurance also remain relevant:

• health insurance;
• pension insurance;
• Caregiving insurance;
• Unemployment insurance.

Illness During Kurzarbeit

If an employee falls ill during Kurzarbeit, it is important to distinguish between the period during which the employer continues to pay wages and the possible transition to Krankengeld. The general logic is as follows: illness does not always nullify the right to KUG, but the calculation depends on the timing of the illness, the period of continued wage payment (Entgeltfortzahlung), and the status of the payment.

In practice, the employee should ask the employer for a pay stub and, if necessary, clarify the situation with their health insurance provider (Krankenkasse), especially if the sick leave lasts longer than the employer’s usual payment period. For more details on sick leave rules, see and sick leave in Germany at.

Is it possible to work additional hours?

If a side job existed before Kurzarbeit began, its income generally does not reduce the KUG to the extent that employment has not increased. If the side job began during Kurzarbeit, the income may reduce the calculated loss of earnings and, accordingly, the amount of KUG.

The details matter here: type of employment, start date, income level, and any temporary exceptions in effect. Therefore, it’s best to discuss taking on a new side job during Kurzarbeit with your employer in advance or check the official rules to avoid having your benefits recalculated.

How long does Kurzarbeitergeld last?

The standard maximum duration for receiving Kurzarbeitergeld is up to 12 months. During exceptional circumstances, the federal government may temporarily extend this period through separate regulations, but such extensions must be verified against the current legal framework.

If Kurzarbeit is interrupted, the rules regarding its duration depend on the length of the interruption. After a sufficiently long return to normal work, a new Anzeige and a recalculation of the period may be required. Employers should check the deadlines with the Agentur für Arbeit, and employees should keep their documents and calculations on file.

What an employee should check

Before agreeing to Kurzarbeit or after receiving a notice, check the following:

• On what basis is Kurzarbeit implemented: a contract, a works agreement (Betriebsvereinbarung), a collective bargaining agreement (Tarifvertrag), or a separate agreement;
• What is the specified period, and can it be extended?
• by how much working hours and wages are reduced;
• How does an employer calculate KUG?
• What happens to vacation time, overtime, and the time account;
• Will your job responsibilities and position remain the same?
• Is there a concurrent termination (Kündigung) or termination agreement (Aufhebungsvertrag)?
• Will you need to file a tax return?

Kurzarbeit is often more advantageous than layoffs because it preserves the job and the employee’s connection to social insurance. But you shouldn’t agree to it blindly: the terms must be clearly outlined in writing.

What an employer should check

It is important for the employer not only to submit the form but also to properly document the grounds for the request:

• an economic reason or an unavoidable event;
• the temporary nature of the work reduction;
• why the downtime cannot be prevented by other reasonable measures;
• the group of employees or department affected by Kurzarbeit;
• agreement with the Betriebsrat or employees;
• Calculations for Sollentgelt, Istentgelt, and KUG;
• Deadlines for notification (Anzeige) and application (Antrag).

Errors in the procedure can lead to a denial of benefits or subsequent demands to repay the money.

FAQ

Does the employee apply for Kurzarbeitergeld on their own?

No. The employer submits the application and handles the calculations. The employee receives the payment through the employer along with their paycheck.

Does a Minijob entitle you to Kurzarbeitergeld?

Usually not, because a Minijob does not include unemployment insurance contributions. However, Minijobbers may be counted toward the number of affected employees in certain calculations, so employers should check the official regulations.

Is Kurzarbeitergeld taxable?

KUG is not taxed like regular wages but is taken into account under the Progressionsvorbehalt. Because of this, the total tax liability for the year may change, and filing a tax return often becomes mandatory.

Is it possible to opt out of Kurzarbeit?

This depends on the employment contract, collective bargaining agreements, the Betriebsrat, and whether the employer is requesting separate consent. If you’re unsure, don’t sign the document right away: ask for time to review it and seek advice.

Are the COVID rules still in effect?

The special concessions introduced during the coronavirus pandemic were temporary. As of 2026, they cannot be considered standard practice without separate official confirmation.

Conclusion

Kurzarbeitergeld helps German companies temporarily reduce working hours and retain staff. For employees, this means partial compensation for lost income, not a full salary. In 2026, it is particularly important to distinguish between standard rules and the temporary crisis-related exemptions of previous years, and to verify calculations using official sources from the Bundesagentur für Arbeit.