No short-time work compensation without German company headquarters?

Recently, there has been an increasing number of inquiries from concerned clients who employ employees in Germany subject to social security contributions but do not have a registered office in Germany.

This is usually due to notifications from the German Employment Agency which, referring to the lack of a company seat in Germany, do not correspond to the notification of loss of employment. However, this is a prerequisite for the reimbursement of the short-time work allowance (KUG) by the Employment Agency. This procedure is difficult to understand, especially since these companies pay social security contributions for their employees in Germany.

What is the basis for this?

The following results from the technical instructions KUG of the Agentur für Arbeit of 20.12.2018:

(2) Kug can only be granted to employees in companies which have their registered office within the scope of SGB III, i.e. within the borders of the Federal Republic of Germany. The company is the person entitled to apply. The employee is not legally granted an independent right to assert Kug claims.

For this reason, home office employees of foreign companies that do not maintain a business in Germany are not entitled to Kug, even if they are employed subject to social security contributions under German law.


What professional directives and decisions already exist in this regard?

This view is confirmed by references in the commentary literature that obviously refer to these technical instructions.

Whether this view of the agency is correct or still up-to-date can be left open. In any case, the case law that has been issued so far follows this view. The Social Court of Schleswig is conducting summary proceedings in this respect:

“In the area of application of the SGB, i.e. in Germany, occupied enterprises and permanent establishments of foreign enterprises are included after the purpose of the Kug to stabilize jobs in Germany without further ado. If, however, the link to a business or a corresponding permanent establishment located in Germany is omitted, the applicability of the Kug regulations is likely to be denied.

Likewise the LSG Bayern in a recent decision:

The linkage of the grant of short-time work compensation to the existence of an enterprise or an operating department in the inland offends (also) regarding an enterprise resident in the European Union abroad neither against the Basic Law nor against the right of the European Union.

Questions about labor law in Corona times?

Christian Seidel

Rechtsanwalt, Fachanwalt für Arbeitsrecht
Prokurist der Acconsis GmbH Rechtsanwaltsgesellschaft

+ 49 89 547143
or by e-mail

My recommendation

In case you have any questions in this regard or in general regarding employment law, I will be happy to assist you. If you need assistance, please contact me.
I will gladly help you.

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