Kurzarbeit — short-time work — lets an employer temporarily cut working hours while the Agentur für Arbeit replaces part of the lost pay through Kurzarbeitergeld (KuG). What most employees are never told: your employer cannot impose Kurzarbeit unilaterally — it needs a contractual clause, a works agreement or your consent, and without one you can refuse and insist on full pay. Equally underused: a dismissal issued during Kurzarbeit is often attackable, because Kurzarbeit is legally premised on a temporary lack of work — the opposite of what an operational dismissal must prove. Here is the 2026 framework, the money, and the traps.
The legal framework: §§ 95 ff. SGB III
KuG is paid when there is a substantial loss of work with loss of pay (erheblicher Arbeitsausfall) that is based on economic reasons or an unavoidable event, is temporary, is unavoidable, and — in the standard rule — affects at least one third of the workforce with a pay loss of more than 10% each in the relevant month (§ 96 SGB III). The employer must notify the Agentur für Arbeit (Anzeige, § 99 SGB III) and then apply month by month. Personal requirements on your side (§ 98 SGB III) include that your employment is subject to compulsory insurance and — importantly — not terminated: once notice is given by either side, or a termination agreement is signed, KuG stops for you.
Kurzarbeit needs a legal basis toward you
The SGB III rules govern the relationship between employer and the Agentur für Arbeit. Toward you, cutting your hours and pay is a change to your contract, and the employer needs one of:
- a Kurzarbeit clause in your employment contract (must be reasonably specific — announcement period, scope, duration; boilerplate „the employer may order short-time work at any time” clauses are frequently invalid as unreasonable disadvantage),
- a works agreement (Betriebsvereinbarung) with the works council — the most common and most robust route,
- a collective agreement provision, or
- your individual consent.
Without any of these, an „ordered” Kurzarbeit is ineffective: you can continue to offer your work and claim full salary (Annahmeverzug, § 615 BGB). In practice employers then ask everyone to sign consent forms — often in a single all-hands meeting with visible time pressure. You are not obliged to sign on the spot, and the terms are negotiable: announcement periods, a floor on your hours, an employer top-up to the KuG, and exclusion of dismissals during the Kurzarbeit period are all standard asks. If the employer responds to a refusal with a termination-with-change-offer (Änderungskündigung), that termination is itself reviewable at the labor court.
How much you get: 60% or 67% of the net loss
KuG replaces 60% of the flat-rated net pay difference — 67% if at least one child lives in your household (§ 105 SGB III). The difference is computed between the net remuneration (per official flat-rate tables) of your normal gross pay (Soll-Entgelt) and of your actually earned gross pay (Ist-Entgelt), both capped at the contribution ceiling (Beitragsbemessungsgrenze, around €8,450 per month in 2026). Two practical implications:
- The hours you still work are paid normally by the employer; KuG only tops up the lost portion. In „Kurzarbeit null” (zero hours), KuG is 60/67% of your entire flat-rate net.
- High earners above the ceiling lose disproportionately, because pay above the ceiling is invisible to the calculation.
Many collective and works agreements add an employer top-up (Aufstockung) to 80–90% of net — always worth checking and, where consent is needed, negotiating.
Duration and side income
The statutory maximum is twelve months (§ 104 SGB III). The federal government can — and in weak-economy phases repeatedly does — extend this to up to 24 months by regulation; whether an extension applies in your case depends on the regulation in force when your plant’s Kurzarbeit began, so check the current status rather than assuming.
Side income: a secondary job you already held before Kurzarbeit began does not reduce your KuG. Income from a job taken up during Kurzarbeit is added to your Ist-Entgelt and reduces the benefit — though a Minijob (up to €603 in 2026) has remained exempt under the rules of recent years. Undeclared side work during reported downtime is benefit-fraud territory — see below.
Vacation during Kurzarbeit
- Vacation days are paid at full normal pay (Urlaubsentgelt is calculated as if you were not on short-time), which makes taking vacation during Kurzarbeit financially attractive for you.
- The Agentur für Arbeit requires the employer to use leftover vacation from the previous year to avoid the work loss before KuG is granted — you may therefore be directed into taking old vacation days first.
- For months of Kurzarbeit null, the case law accepts a pro-rata reduction of vacation accrual — full zero-hour months earn no new vacation days. Reduced-hours months with fewer working days can be affected proportionately.
Dismissal during Kurzarbeit: the contradiction argument
An operational dismissal requires the employer to show that the need for your work has permanently ceased. Kurzarbeit is only lawful because the loss of work is temporary. An employer who dismisses for operational reasons while your unit is on short-time work is asserting both at once — and the labor courts make it carry that contradiction: it must explain what changed after the Kurzarbeit decision to turn a temporary shortfall into a permanent one. Absent a convincing new development (a lost anchor client, a closure decision post-dating the KuG application), the dismissal is vulnerable, which translates directly into settlement leverage in a Kündigungsschutzklage and a better severance than the standard formula.
Know the mechanics if notice arrives: KuG stops from the day notice is given (§ 98 SGB III) — from then on the employer owes your full contractual salary through the notice period, even if there is no work. File within three weeks, and register as job-seeking on time (see registering as job-seeking) to protect your unemployment benefits.
Worked example
Tomasz, a logistics coordinator in Bonn, gross €4,200 per month, one child, is put on 50% Kurzarbeit under a works agreement. Approximate 2026 figures using the flat-rate method: full-time net ≈ €2,750; at 50% he earns €2,100 gross ≈ €1,580 net from the employer; net difference ≈ €1,170; KuG at 67% ≈ €784. Monthly total ≈ €2,364 — about 86% of his former net for 50% of the work. (Exact amounts follow the official tables; treat these as illustrative.)
In month five, the employer issues an operational dismissal citing „persistent lack of work” — while still drawing KuG for the department on the premise that the lack of work is temporary. From the day of notice, Tomasz’s KuG stops and the employer owes full salary (€4,200) through his three-month notice period = €12,600. His Kündigungsschutzklage leans on the contradiction argument; the employer cannot point to any post-Kurzarbeit development. Settlement at the Gütetermin after six years of service: €16,800 (0.67 monthly salaries per year — above the opening offer of €10,500), full pay through the notice period, and an agreed Grade-2 reference.
Frequently asked questions
Can I refuse Kurzarbeit?
If there is no contract clause, works agreement or collective provision authorizing it — yes. Without a legal basis you are entitled to full pay, and „ordered” short-time is ineffective. Be aware the employer may respond with an Änderungskündigung, which is itself subject to labor-court review; refusing is a negotiating position, not a risk-free veto, so take advice on your specific setup.
Does Kurzarbeit reduce my severance or notice-period pay later?
Severance conventions and formulas ordinarily use your full contractual salary, not the reduced Kurzarbeit pay — as does salary during a notice period, since KuG ends at notice. Watch for settlement drafts that quietly compute from reduced figures.
Is KuG taxable?
KuG itself is tax-free but subject to Progressionsvorbehalt: it raises the tax rate applied to your other income, which typically produces a back-payment after your tax return. Budget for that, especially after long Kurzarbeit phases. Filing a return is mandatory for the affected years.
What happens to my health insurance and pension during Kurzarbeit?
You remain fully insured. For the lost hours, contributions are calculated on a notional 80% of the lost gross and are borne by the employer. Pension accrual therefore dips only modestly.
Can the employer pick and choose who goes on Kurzarbeit?
The selection must follow the authorizing instrument (works agreement, clause) and equal-treatment principles. Singling out individuals without objective criteria — or using Kurzarbeit selectively to pressure unwanted employees — is challengeable.
My employer is on Kurzarbeit and now pays late or not at all. What do I do?
Your salary claim for worked hours and the KuG pass-through remain enforceable — the employer pays KuG out with the payroll and is reimbursed by the Agentur für Arbeit. Persistent late payment during Kurzarbeit is often an insolvency early-warning sign: assert claims in writing quickly (forfeiture clauses!) and see our article on late salary.