Employment Law19.02.2021Cologne Newsletter

First short-time work, now fear of it being checked?

Detlef Scheele, the Chairman of the Board of the German Federal Employment Agency [Bundesagentur für Arbeit], had recently reconfirmed in a newspaper interview that the Employment Agency is going to check every company that has received short-time work compensation. The final checks are scheduled to start in April 2021. Anyone who is not sure whether he did everything correctly or who already knows that mistakes were made should take action. Our partner Jörn Kuhn summarises the key points.

The final check

The Employment Agency is obliged to conduct a final check to examine the receipt of short-time work compensation. The 7-month period after the end of the compensation payment period, which was originally intended for this purpose, has been suspended due to the high number of short-time work applications.

The subject of the final check is the examination of the legality of the receipt of short-time work compensation. In particular, the Employment Agency checks the legal requirements, such as the unavoidable, temporary loss of work. In cases of doubt concerning the receipt of short-time work compensation, checks can also already be conducted before the final check.

Due to the unlawful applications for corona subsidies that have already been identified by law enforcement agencies, a high rate of abuse in the receipt of short-time work compensation is also suspected.

However, bearing in mind that short-time work was completely new territory for many companies and – as a further concession – that the documentation on short-time work provided the Employment Agency tended to be tailored more to classic production companies, the sweeping allegation of abuse is too drastic. Implementation errors certainly cannot be ruled out in every case.


Ideally, companies should not only start preparing for the check once it has been announced. Companies should compile the documentation in good time - to the extent possible – enabling them to also conduct their own check again. Only in this way can correction applications still be filed and sanctions avoided (see below in this respect).

The following documents in particular are of relevance to the check: wage records, time sheets, evidence of the operational bottleneck as well as the loss of work due to the effects of corona, evidence of the utilisation of residual leave from the previous year and any previously accumulated overtime of employees prior to the short-time work, as well as shop agreements and contractual bases for the introduction of short-time work.

A detailed check will also and especially be conducted in cases where there has been a sudden rise in the volume of work during the short-time work period or, for example, in exceptional cases, when new employees have been hired.

Companies should compile the relevant documentation and also carry out random payroll checks again themselves with regard to the payroll of individual employees.


Against the background of the manifold risks, companies should accept the effort this involves, which will in some cases be considerable, prior to the check.

The public prosecutor's offices initially regard an abusive application for short-time work as a case of subsidy fraud, the criteria for which can already be met in the case of reckless, i.e. grossly negligent, action without intent. There is also the possibility of trade law sanctions that can lead to the prohibition of business operations (cf. the interview on the threat of sanctions): Abschlussprüfung bei Kurzarbeit: Diese Strafen drohen Firmen, die zu Unrecht Kurzarbeit angemeldet haben | impulse).

For the sake of clarification, please note here that, in case of the unjustified introduction of short-time work, employees retain their full wage entitlement and, therefore, not only does the short-time work compensation have to be repaid to the Employment Agency, the wages also have to be paid to the employees. The problems described here mean that, in some cases, the Financial Control for Undeclared Employment [Finanzkontrolle Schwarzarbeit] will also become involved in the checks. If armed customs officers should suddenly turn up at the company premises, the consequence for many companies is often a serious damage to their reputation.

Error identified - what can still be done?

If the company has identified errors, there are different approaches available. In our experience - over the last few weeks as well as during the 2009/2010 crisis - it seems to make the most sense to contact the responsible case worker at the Employment Agency directly and to make corrections at the same time using the Employment Agency's correction form (Kurzantrag KUG-107, arbeitsagentur.de). In addition, depending on the circumstances of the individual case, information also should be provided to the responsible collection agency or the tax office.

If errors regarding the short-time work are due to irregularities within the organisation, internal measures must also be taken at the same time in order to clearly establish that this is not the fault of the organisation. This may result in further sanctions under the aspect of compliance responsibility.

Should you have any questions on this topic, please do not hesitate to contact our employment lawyer Jörn Kuhn.

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Jörn Kuhn

Jörn Kuhn

PartnerAttorneySpecialized Attorney for Employment Law

Bockenheimer Landstraße 2-4
60306 Frankfurt am Main
T +49 69 707968 140
F +49 69 707968 111