Part-time lay-offs and the working time limit
We are currently receiving a lot of communications from puzzled persons about reviewing the working time limit for those who are laid off. We understand this, as the law works against common sense here.
An adjusted daily allowance cannot be paid if working hours exceed 80% of the maximum working time of a full-time employee.
The working time, which is the basis for the salary paid during the application period, is included in the working time comparison. This working time is compared with the maximum working time of the adjustment period. The adjustment period is four calendar weeks or a month.
However, in the case of partially laid-off workers, the comparison is made with the maximum working time of one calendar week instead of the adjustment period.
When the working time of a partly laid-off worker to be compared is the working time of one month and this is compared to the maximum working time of one week, the end result is often a negative allowance decision, because the 80% working time limit is exceeded.
- Maximum working time 7.5 hours per day = 37.5 hours per week = 161 hours per month.
- The 80% working time limit is 129 hours per month.
- A partially laid-off person is paid a salary for 120 work hours.
- The monthly working time limit is not exceeded.
- However, the review shall be carried out against the maximum working time of a calendar week, i.e. 37.5 hours. So, 80% equals 30 hours.
- The working time limit is exceeded. 120 hours is more than 30 hours.
Earnings-related daily allowance and work can be combined
Earnings-related daily allowance and part-time work can be flexibly combined. In practice, this means that you work part-time, get paid and at the same time we can pay an adjusted earnings-related daily allowance.
An adjusted earnings-related daily allowance means that the amount of earnings-related daily allowance takes into account the salary paid for part-time work. The daily allowance will not be reduced by the salary in full. After an exempt amount of a few hundred euros, each euro paid reduces the daily allowance by 50 cents. On our website, you can find a practical calculator for estimating the amounts in euros.
If you are laid off by reducing your daily working hours, it corresponds to a situation where you work part-time. In such a case, we can pay an adjusted earnings-related daily allowance even if you are partially employed.
80% working time limit
We cannot pay an adjusted earnings-related daily allowance if the working time in part-time work exceeds 80% of the maximum working time for full-time work. This relates to the definition of part-time work. In unemployment security, the line between full-time and part-time work has been drawn to this 80%. If the working time is more than 80% of the maximum working time, it means that the employment is full-time. If working time does not exceed 80% of full-time work, it is considered part-time work.
If you have been laid off by reducing your daily working hours, you are within the scope of adjusted allowance. It is sufficient that even one hour is deducted from working time on a single day of work. However, you are not entitled to adjusted daily allowance and we cannot pay a daily allowance, if your working time exceeds 80% of the maximum working time of a full-time employee.
How is the working time limit reviewed?
Pursuant to the Unemployment Security Act, a person laid off by reducing their daily working hours is not entitled to unemployment benefits, if their paid working hours exceed 80% of the maximum working time applicable to a full-time worker in the sector during a review period of one calendar week.
According to the law, the comparison therefore takes into account the working time on the basis of which the salary is paid. It is compared during the review period of a calendar week for those laid off by reducing their daily working hours.
However, the working time on which the salary is based is rarely the working hours of one week. After all, the salary is typically paid for either two weeks, four weeks or a month, depending on the employer. As a result, we have to compare working hours that are not commensurate with each other.
When the review period is the maximum working time of a calendar week, the limit of 80% is, for example, 30 hours. If, on the other hand, the working time on which the salary is based is, for example, a month’s working hours, it is quite likely that it will exceed 80% of the maximum working time of one calendar week.
Oddly enough, why is this?
Adjustment in the past was based on earnings. This “earnings-based” means that the adjustment took into account the income earned during the adjustment period. The challenge here was that we often needed to wait for the salary to be paid, so that we would know what amount the adjustment would be based on. This led to situations where a person would accept part-time work and this would result in a delay in the payment of the benefit. This delay may have been an obstacle for a person to feel comfortable about accepting a job.
The solution was to move to payment-based adjustment. This “payment-based adjustment” method means that the adjustment takes into account the earned income received during the adjustment period. This was implemented by defining in the law that the adjusted unemployment benefit is determined on the basis of the earned income of the adjustment period. This section of the law also applies to those laid-off by reducing their daily working hours
The move from earnings-based adjustment to payment-based adjustment also changed the way of how the working time limit is reviewed. The review of the working time limit was carried out in such a way that the working time affects the right to receive adjusted unemployment benefit only during the adjustment period during which the salary earned for the work in question is paid. If this change had not been made, it would have resulted in one job possibly leading to the withholding of unemployment benefits for two adjustment periods: First for the period during which the work was done (working time limit is exceeded) and then for the period during which the salary is paid (euro limit is exceeded).
With regard to the working time limit, the law provided even before the amendment that in lay-off situations, working time would be reviewed during a review period of one calendar week. No changes were made to this in connection with the amendment to the law. As a result, by reducing the daily working time of those laid off, the working time limit is reviewed by comparing the maximum working time of a calendar week with the working time which forms the basis for the salary. However, as mentioned above, the working time on which the salary is based is rarely the working hours of a single week, in which case a review of the working time limit often leads to an unfavourable decision for the review week.
Is there anything that can be done about this?
So, we are in a situation where the law leads to decisions that are difficult for the recipient of the decision to understand. From the point of view of applying the law, there are no alternatives. For example, the Social Security Appeal Board has rejected applicants’ appeals and found that when a person is laid off by reducing their daily working hours, the working time review takes place during review periods of one calendar week. If the working time on which the salary is based exceeds 80% of the maximum working time of a full-time worker in the sector during the review period of one calendar week, the applicant is not entitled to an adjusted unemployment benefit.
The work to develop the legislation on adjusted daily allowance was interrupted due to the COVID-19 pandemic. Fortunately, this process is underway again at the moment. We have provided the legislators with examples of this strange situation and have offered our views on the matter. In our view, this peculiarity in the legislation should be rectified as a matter of urgency.