Definition
A labour market scheme used across EU member states that allows employers to temporarily reduce employees' working hours during economic downturns while the government partially compensates workers for lost income, preserving jobs and retaining skills.
UK Context
Best Practices
- Monitor national eligibility criteria and apply for short-time work promptly when economic conditions deteriorate
- Consult with works councils or employee representatives before implementing reduced hours as required by national law
- Use periods of reduced activity for employee training and skills development to emerge stronger when demand recovers
- Maintain transparent communication with affected employees about the scheme's terms, duration, and their income impact
- Plan for the transition back to full-time working as conditions improve, including phased increases in hours
Frequently Asked Questions
How is short-time work different from redundancy?
Short-time work preserves the employment relationship while temporarily reducing hours and pay, with government subsidies partially compensating workers. Redundancy terminates the employment relationship entirely. Short-time work is designed for temporary downturns, allowing rapid scaling back up, while redundancy involves the permanent costs of severance, recruitment, and training when activity recovers.
Who pays the short-time work allowance?
The cost is shared. The employer pays for hours actually worked. The government (typically through the unemployment insurance system or a dedicated fund) pays a short-time work allowance for the hours not worked, usually calculated as a percentage of the worker's normal net salary — commonly between 60 and 80 per cent depending on the member state and personal circumstances.
How long can short-time work last?
Maximum durations vary by member state and may be extended during crises. Germany's standard Kurzarbeit lasts up to 12 months but was extended to 24 months during the pandemic. France's activité partielle has varying limits depending on the reason and agreement with authorities. Most schemes are designed to be temporary, with reviews and extensions as needed.