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On March 19, 2020, the Austrian Public Employment Service Agency („AMS“) published its new federal short time work subsidy guidelines („STS Guidelines“) elaborated in the context of the „COVID-19 Crisis“. Simultaneously, the social partners (consisting of the Austrian chamber of commerce and unions) published their updated model social partner agreements.

The STS Guidelines and the model social partner agreements implement the following innovations and clarifications:


1. Eligible addressees

The eligible addressees under the STS Guidelines include:

1.1. Employers

Any employer is eligible for the allowance except for:

  • the federal government, the federal states, municipalities and municipal associations,
  • political parties; and
  • other corporations under public law.

Hence, private and associations including non-profit organisations (Vereine) may benefit from reduced-working-time allowance.

1.2. Employees

Any employee, including chief officials, is eligible if such employee is insured pursuant to the Austrian General Social Security Act (ASVG). Hence, senior executives and managing directors (including those that do not hold a significant share in a company) are eligible for allowances.

Likewise, trade apprentices (Lehrlinge) are similarly eligible, if they are included in the personal scope of the model social partner agreement. The new model social partner agreement, which is available as of March 19, 2020, also provides for an option to exempt apprentices and managing directors from reduced-working-time in addition to other employee groups.

According to the information in the new application form, reduced-working time cannot be agreed for marginally employed workers.

2. Clarifications on vacations

The STS Guidelines provide an important clarification on the condition of vacation consumption for the granting of short time work subsidies. In principle, the AMS requires the reduction of vacation and time credits before or during short- time working periods.

Pursuant to the STS Guidelines, the employer must therefore procure that the employees‘ vacations are consumed before or during short-working-time period. The STS Guidelines provide that the employer must be able to prove that it has made a bona fide effort to use up vacation entitlements from previous years and time credits. Respective negotations with the works council and employees should therefore be documented as well as possible. As in the past, for the first three months of short time work, only the vacation entitlemtns from previous years need to be consumed.

If short time work is extended beyond three months, the employer must make a serious effort to agree on the consumptions of three weeks of vacation from the current vacation year.

If an employer cannot reach an agreement with one or more employees, the employer may still be granted short time work subsidy in respect of the other employees.

In our opinion, also economic necessities may serves as valid arguments against the obligation to take consume the entire vacation entitlement.

The new social partner agreement – which must also be signed by the employees/the works council – provides an obligation for employees to consume vacation and time credits of preceding years before or during reduced-working-time at the request of the employer. The only exceptions are „long-term credits“ (eg from sabbatical models).

Vacation and time credits can – according to the new provisions – in principle also be reduced during the short-time work period. The periods of consumption of vacation and time credits has to be paid in the amount of the normal working time before short-time work. The employer will not receive any short time work subsidies for these periods. The same applies to continued remuneration in the event of illness, for which the remuneration entitlement is to be determined according to the model social partner agreement based on the principle of loss of earnings.

Further, the STS Guidelines clarify that in case of a combination of vacation and days of absence, no short time work subsidy is due for the days of absence if it is assumed that the intention is abusive. In assessing whether there is an intention to abuse, it is important to consider whether the vacation agreement would have been concluded in the same way if short time work had not been implemented

3. Remuneration during short time work

The employee receives from the employer

  • the remuneration for the reduced-working-time performed and
  • the so-called short time work allowance per hour of absence (= hours not worked)..

The reduced-working-time allowance only covers the remuneration for regular working hours. Although bonuses and supplements are included in the calculation, overtime pay is not. Hence, overtime lump sums should not be taken into account either. However, the STS Guidelines do not specify whether, and if so, which reductions should also be made for all-in salaries. This could result in massive restrictions, as in most employment contracts have the minimum salary under the collective agreement as the basic salary.

4. Short time work allowance

The employer receives a short time work subsidy from the AMS per hour of absence in the form of a flat rate. This flat rate also includes pro rata special payments amounting to one-sixth, the pro rata social security contributions (related to the remuneration before the introduction of short time work) and other wage-related employer’s contributions. The flat rates can be seen in the flat rate table provided by the AMS (see above).

Only incomes up to the ASVG maximum contribution basis are subsidised – income contributions beyond this are in principle also to be remunerated by the employer to the employee on the basis of the net replacement rate, but they are not subsidised.

Whether the employer can also agree with the employee on a cap on the net replacement rate based on the ASVG maximum contribution basis is not regulated by the STS Guidelines.

5. Social security

The social security contributions for the short time work allowance are based on the contribution base before reduced-working-time was agreed upon. The higher expenses incurred by the employer as a result are now covered by the AMS from the first month of reduced-working-time (instead of the fifth month).

The extent to which an exemption from the obligation to pay ancillary wage costs can be achieved for employee contributions (mandatorily) paid by the employer will be announced separately.

6. Accounting

For all employees who are included in the short time work model in each calendar month, a payroll list must be submitted to the AMS no later than the 28th of the following month. The AMS will provide an accounting file for this purpose. The allowance will be paid out after a review of the relevant accounting file for the calendar month. There is no specific deadline for such review, which means that the allowance will not necessarily be paid out at the end of the calendar month. Submitting documents that have been processed as well as possible will certainly promote quick processing.

7. Working time records

The AMS may further request that records of working hours be disclosed. It is therefore essential for employers to ensure that the actual working hours are correctly and accurately recorded. The location and extent of breaks should also be accurately recorded. This applies to all subsidized employees in short time work models – including those who are not subject to the Working Hours Act (Arbeitszeitgesetz).

8. Short time work and partial retirement

For employees in partial retirement, it was clarified that this group of employees can be included in short time work. In this case, the lost working hours due to reduced-working-time refer to the working hours already reduced under the partial retirement model. This does not affect wage compensation.

This means that such employees will continue to receive wage compensation as before. The short time work allowance refers to the hours already reduced by the partial retirement model, which are again reduced by the reduced-working-time. The employer receives short time work subsidies for the actual hours lost.

In the case of partial retirement models with blocked or unequally distributed working hours, time credits accrue for the leisure phase during short time work in the same extent as would have accrued without reduced-working-time.

9. Maintenance of the workforce – Limitations on redundancies

One of the AMS’s key conditions for granting short time work subsidies is that the number of employees will be maintained (obligation to retain them).

This means that during short time work, no staff may be laid off without the exceptional approval of the AMS, regardless of whether the employee concerned is subject to reduced-working-time or not. The number of employees, ie the jobs in the respective company, is to be protected here.

The model social partner agreement may provide that this obligation to retain staff exists beyond the short time work period The social partner agreement can also stipulate a limited material and/or personal scope of application (eg obligation to retain only those employees affected by reduced-working-time after reduced-working-time). The new model social partner agreement stipulates that the obligation to retain employees after the end of short time work will continue for another month, but only for employees subject to reduced-working-time.

However, the obligation to retain during short time work also means that before the start of short time work, notices of termination can (still) be given. Employment relationships that have been terminated with notice periods running into the period of short time work are not affected. In any case, the early mass redundancy warning system of the AMS, which may be applicable, must be complied with if a certain number of terminations occur within 30 days.

Key contact KPMG Law

Elisabeth Wasinger

Elisabeth Wasinger


Katharina Daxkobler

Katharina Daxkobler


Valerie Kalnein


Key contact KPMG Tax

Margit Müllner
Senior Manager, Tax


Carl-Georg Vogt
Manager, Tax