Short-time work (STW) schemes are defined in a 2020 European Commission regulation proposal as ‘public programmes that allow firms experiencing economic difficulties to temporarily reduce the hours worked while providing their employees with income support from the State for the hours not worked’.
STW can involve either a partial reduction in the number of hours worked for a limited period (such as a partial suspension of the employment contract) or a temporary redundancy (such as a full suspension of the employment contract). In both cases, the employment contract continues and is not broken. STW is intended to help employers achieve flexibility during periods of temporary economic downturn without resorting to redundancies. For the employer, this strategy has the additional advantage of retaining trained labour as opposed to recruiting untrained staff once the economic situation picks up. For the employee, STW enables them to remain in the labour market, even at a reduced level of working time and pay, and hence avoiding a decline in their skills.
STW was used extensively in a number of Member States during the economic crisis of 2008–2010. According to a working paper produced by the Commission, approximately 12 Member States had established STW arrangements prior to the crisis (including Germany and Italy), and 9 countries set one up in response to the downturn.
According to the European Labour Force Survey, almost two million European employees said they worked fewer hours due to a lack of work for technical or economic reasons in 2009: 55% of those workers were from Germany and Italy. A comprehensive OECD study found that short-time work schemes played an ‘economically important impact on preserving jobs during the economic downturn’.
In 2010, Eurofound examined 15 STW schemes. The results highlighted the significant variation in the maximum working time reduction: schemes could cut working time by anywhere between 10% and 100%. Schemes also varied in their compensation for forgone pay, ranging from 55% and 80% of usual wages. The report recommends that such instruments be coupled with access to vocational training and offered as a permanent tool for employers.
Some recent resources give an overview of the mechanisms in place in the various Members States to cope with the COVID-19 crisis. First, Eurofound’s database on restructuring-related legal regulations (updated in 2019), provides a summary of the main existing schemes for each country (search ‘working time flexibility’).
Second, a study by the Institute of Economic and Social Research (WSI) examines the regulations in Germany (including sectoral collective agreements that provide for a ‘top-up’ of the replacement income by law) and Europe.
Lastly, the European Trade Union Confederation issued a briefing note on STW, while the European Trade Union Institute hosts a web page outlining the national measures in relation to the COVID-19 crisis, including STW schemes.
In 2012, the Court of Justice of the European Union clarified the relationship between STW schemes and annual leave entitlement. The Court ruled that national legislation and provisions can apply a pro-rata approach to annual leave entitlement during short-time working (joined cases C‑229/11 and C‑230/11). In these cases, the workers had claimed financial compensation for annual leave while on a fixed-term period of zero-hour STW following redundancy, as provided for by a company agreement. The Court thus essentially ruled that the employer is not liable to compensate for workers on zero-hour STW contracts for loss of paid leave.
In 2019, the Court pronounced a judgment on a case concerning an employee in the building sector who disputed the amount of remuneration to which the employee was entitled in respect of their paid annual leave. Under German law, periods of STW must not impact such remuneration, which is calculated on the basis of the ordinary remuneration received during periods of actual work. However, the same law allows the social partners to depart from this principle. The collective agreement applicable in the building industry allowed periods of STW, during which the employee is not working, to be taken into account in the remuneration calculation. The Court held that this waiver is in breach of EU law. An employee who undergoes periods of STW is entitled ‘to enjoy, during his period of rest and relaxation, economic conditions which are comparable to those relating to the exercise of his employment’.
Annual leave ; flexicurity ; restructuring ; SURE initiative; working time ; working time and collective agreements
Eurofound (2020), Short-time work, European Industrial Relations Dictionary, Dublin
https://www.eurofound.europa.eu/en/european-industrial-relations-dictionary/short-time-work