COVID-19 and payroll: Guideline for payroll accounting and contribution deduction

The payroll accounting for Corona short-time work confronts many employers with new challenges. Especially when applications for short-time work have not yet been approved, which is still frequently the case at present. Recommendations from the Social Partners have now been published.

We briefly summarize these recommendations below.

The payroll accounting for Corona short-time work confronts many employers with new challenges. Especially when applications for short-time work have not yet been approved, which is still frequently the case at present. Recommendations from the Social Partners have now been published, which we have summarized briefly below.

Even if short-time work has not yet been granted, the reduced net remuneration (namely 80%, 85% or 90% of net remuneration before short-time work) can be paid out on the basis of the social partner agreement.

A guideline for payroll accounting and contribution deduction must be drawn up by the company for the payroll dept. which facilitates subsequent recalculation and must subsequently be accepted by the tax authorities. This guideline must in any case state the following:

• Special payments, all social security contributions and other wage-related levies are to be paid on the basis of full remuneration before short-time work; the monthly contribution base notifications to the regional health insurance fund are to be submitted correspondingly;
• Payment of 80%, 85% or 90% of net remuneration before short-time working to employees;
• Corresponding note to the employees on the pay slip.

This notice to employees must in any case draw attention to the following:

• Payroll accounting for the short-time work salary is provisionally based on a flat-rate calculation;
• About 80% / 85% / 90% of the net salary before short-time work is paid out;
• Corrections of accounts and payments (both upwards and downwards) are reserved and carried out as soon as a detailed accounting is possible.

If short-time work has started during a running month, the remuneration of the previous month (in case of irregular remuneration the average of the previous three months/13 weeks) is to be used as the calculation basis (eg start: 16 March; calculation basis = February remuneration or in case of irregular remuneration: average of the fees for December, January and February/ the 13 weeks from 16 December).

If the reference months include temporary reductions in remuneration, such as leave or partial sick pay etc., the remuneration is to be applied without taking such reductions into account. However, if these reductions continue in the current month, these reductions affecting the current month are to be seen as reducing the remuneration.

Periods of vacation or time off must be compensated in full with the remuneration applicable before short- time work. Special payments are also to be paid in the amount that would have been granted without subsidized short-time work.

With regard to social security contributions, employee benefit contributions and other payroll contributions (LSt, KommSt, DB, DZ), the social partners have also stipulated that, in addition to the basis of calculation before short-time work, possible exemptions, eg commuter's allowance or tax exemptions such as dirt-, aggravation- and hazard-supplements as well as surcharges for Sunday, holiday and night work must also be taken into account.

Extension of short-time working

If an extension of short-time work is necessary, the corresponding application must be received by the AMS with sufficient time in advance, but at least four weeks before the extension of short-time work starts. This will have to be done by using the business function "Extend project" in the IT tool which is still to be provided by the AMS. Further requirements for application and granting must be awaited.

The publication of further guidelines, particularly concerning the accounting of short-time work vis-à-vis the AMS, can be expected in the near future.

We would be pleased to provide you with a sample guideline for payroll accounting and contribution deduction for your company and a sample letter to your employees and are of course at your disposal for ay other questions you might have.