Why are there employees with deadweight effect

What happens if employers take advantage of short-time working?

More than 750,000 companies have registered short-time working in the Corona crisis, and the trend is rising. Short-time work is an important and effective tool to secure jobs. However, there are also employers who use short-time working to get rid of their entrepreneurial risks - or who simply take advantage of deadweight effects.

At C&A it's all going on
Employees of the textile group C&A are currently accusing the company of fraud with short-time working. According to Spiegel, overtime should have been demanded from the employees - despite registered short-time work. That comes from an internal letter. The Federal Employment Agency seems to have reacted and frozen the payments of short-time work allowance to C&A. Results of random checks of working hours are still pending (as of June 25, 2020).

Relaxation opens the door and gate ...
How can that even happen? Because things have to happen quickly in the Corona crisis, the regulations for registering short-time work have been relaxed. This simplification of the application process enables, in the worst case, considerable deadweight effects - to the detriment of the employees and the contributors.
For comparison: According to the Federal Employment Agency, after the financial crisis in 2008, 1.4% of companies had to repay short-time work benefits after the agency had reported these cases to customs. The Financial Control of Undeclared Work (FKS) of the customs is responsible for the prosecution of such cases. But, according to the political criticism, far too little is being examined at the moment.

Short-time work despite company profit?
Short-time working is sometimes introduced even though the company is making a profit and dividends are paid out to shareholders. This is possible because the employment agencies usually do not examine the company's economic situation. This is also not necessary to determine the eligibility requirements.

Works councils, watch out!
Basically, the works council is the only body that can limit the abuse of short-time work. To do this, he must actively use his co-determination rights when introducing short-time work. Because without the works council, the employer cannot unilaterally introduce short-time work.
The decisive factor is the economic review of the necessity of short-time work by the works council.

Business information for short-time work
From a business point of view, the works council usually needs the following information on short-time work:
• Description of the scope of the planned short-time work based on workflow plans, project plans and schedules,
• Submission of personnel overviews of the employees directly affected by short-time work and the comparable employees with the essential economic and social data,
• Extent of loss of work and pay for the individual employees (exact calculations, comparison of pay with and without short-time work),
• Data on the current order situation, presentation and explanation of the planned figures for the current and the following financial year, comparative figures from previous years, development of order figures, range of existing orders, production and sales figures, development of stocks,
• Income statement, short-term income statement, audit reports
• Calculations and explanations of the free capacities per employee, explanation of the cause of the free capacities,
• Business calculations to determine the economic benefits of the planned short-time work.

Short-time work as a means of sanction?
In addition to the financial deadweight, there is another risk for employees with short-time work: The employer can send unpleasant employees to short-time work by arbitrarily controlling the workload. The works council can also influence this. He must critically deal with the causes of the free capacities and analyze the workload. The aim is always to distribute the burden of short-time working fairly among all employees.

Penalties threaten
Employers who untruthfully state "significant lost work time" face criminal proceedings for fraud in accordance with Section 263 of the German Criminal Code. Employees must also be careful in the event that they could be prosecuted for aiding and abetting.
If the wages are to be topped up in the event of short-time work, this can be wage tax evasion (Section 370 AO). The employer must also answer for withholding and misappropriating wages, Section 266a StGB.
If the employer puts his employees under pressure to continue working despite short-time work, this can be coercion (Section 240 of the Criminal Code).

The works council can intervene
The current provisions on short-time work invite dishonest employers to unauthorized access to the impressive benefits. The works council has the opportunity to prevent this by exercising its co-determination rights. However, successful influence is only possible if he has carried out a critical, professional review of the entrepreneurial decision to introduce short-time work.