Calculating German Short-Time Work Allowance 2026: Amount, Duration, Conditions
When a company puts its workforce on short-time work, employees very quickly come down to one question: how much is left at the end of the month? Answering it with the familiar rule of thumb — "60 per cent" — is unhelpfully imprecise, because those 60 per cent do not apply to your salary but to a difference figure almost nobody carries in their head. This guide walks through the logic of §§ 95 to 106 SGB III step by step, with concrete numbers. You can enter your own figures alongside in the short-time work calculator.
What the allowance replaces — and what it does not
Short-time work allowance is not a top-up on your salary but partial compensation for the part of your pay that falls away because of the reduced hours. You continue to be paid normally for the hours you actually work, and that part is taxed and levied exactly as before. Only for the lost hours does the employment agency step in — and not in full, but with 60 per cent of what the law calls the net pay difference. With at least one child within the meaning of § 32 EStG the rate is 67 per cent. Explicitly not replaced are one-off payments and overtime pay: Christmas bonuses, holiday bonuses, performance bonuses and overtime supplements are excluded when target and actual pay are determined, as are supplements for night, Sunday and public holiday work that no longer arise. Anyone who draws a substantial share of their annual income from such payments loses that share entirely in a short-time year, with no compensation from the allowance.
Conditions: when a company may notify short-time work
The allowance requires a substantial loss of work accompanied by a loss of pay. Under § 96 SGB III the loss counts as substantial only if it stems from economic reasons or an unavoidable event, is temporary and unavoidable — and if in the relevant calendar month at least one third of the establishment's workforce is affected by a pay loss of more than ten per cent each. That one-third threshold was temporarily lowered to ten per cent during the pandemic; that relief expired long ago.
The employer must also notify the loss of work to the responsible employment agency, and short-time work must be permissible under employment law — that is, covered by a collective agreement, a works agreement or individual consent. As an employee you do not apply yourself: your employer processes the allowance through the regular payroll, pays it out and is reimbursed by the employment agency afterwards. On your payslip it appears as a tax-free item.
How the net pay difference arises
The calculation follows § 106 SGB III in four steps. First, target pay is established: the gross pay you would have earned that month without the loss of work, excluding overtime and one-off payments, capped at the 2026 unemployment insurance contribution ceiling of €8,450 per month. Second, actual pay is determined — the gross you genuinely earned. Both amounts are then rounded to the nearest euro figure divisible by 20.
Third, both amounts are converted into a flat-rate net. Under § 153 SGB III this does not use your real deductions but a flat calculation: 20 per cent for social insurance, plus wage tax according to your tax class and the solidarity surcharge. Church tax is deliberately not deducted. Fourth, the difference between those two net figures is multiplied by 60 or 67 per cent — and that result is your allowance for the month.
A worked example: €3,500 gross, 50 per cent of hours lost
Take a childless employee in tax class I on €3,500 gross per month, no church tax. Her normal net is around €2,349. With hours cut by 50 per cent her gross falls to €1,750 and the real net from that to around €1,330. The flat-rate net is roughly €2,411 from target pay and roughly €1,368 from actual pay, so the net pay difference is about €1,043. Sixty per cent of that yields around €626 of allowance — with a child, at 67 per cent, it would be around €696. Check your own constellation in the short-time work calculator.
In total, roughly €1,956 reaches her account instead of the usual €2,349. The shortfall is therefore around €393, or about 17 per cent — considerably less than the figure "60 per cent" initially suggests. Zero-hours short-time work looks different: with a 100 per cent loss of work the wage disappears entirely and only around €1,446 of allowance remains. That is just under 62 per cent of her usual net, a drop of roughly €903 a month.
Duration, social insurance and tax
By statute the allowance is paid for a maximum of twelve months under § 104 SGB III. For 2026 the federal government extended that period by decree to up to 24 months, at the latest until 31 December 2026. If short-time work pauses for at least one continuous month, the reference period extends accordingly; after a three-month interruption a new entitlement period begins provided the conditions are met again.
You stay covered by social insurance throughout. Contributions on the pay actually received run as usual, while for the lost pay a notional wage of 80 per cent of the difference between target and actual pay is applied. The resulting health, long-term care and pension contributions are borne by the employer alone; no unemployment insurance contributions fall due on the notional wage. Your pension entitlements therefore drop only slightly — they do not stop.
For tax purposes the allowance itself is exempt but falls under the progression proviso of § 32b EStG. That means the amount is added in when your personal tax rate is determined, and that higher rate then applies to the rest of your taxable income. Because only ordinary wage tax was withheld during the year, a short-time year very often ends in a back payment. From €410 of wage replacement benefits in a calendar year you are obliged to file a tax return.
In practice: model the drop in your monthly budget early with the short-time work calculator, compare the result with your regular net from the gross-to-net calculator, and set money aside for the later tax back payment at the same time. Planning both effects together — the liquidity drop now and the back payment next year — makes a spell of short-time work considerably calmer. These calculations are orientation figures and do not replace legal or tax advice.