Kurzarbeitergeld Explained: Rules, Eligibility, and What It Does to Your Pay in 2026

Orders dry up, a key supplier has a problem, or a factory needs retooling. Instead of laying staff off, many German employers respond by cutting hours and applying for Kurzarbeitergeld (KUG) to soften the resulting pay cut. It's a tool the German government leaned on heavily during the 2008/09 financial crisis and the pandemic, and one that parts of the automotive and manufacturing sector have used again repeatedly through 2025 and 2026 as demand and supply chains stayed volatile. The whole point of the design is to keep people employed rather than pushing them into unemployment.

This article walks through who actually qualifies, exactly how the payout is calculated (with a live chart, not a rule of thumb), how a claim moves from notice to payday, what happens to your pension and health insurance while you're on it, and a few traps most explainers skip. Every figure here comes from this project's own tested calculation engine, the same one behind the free Kurzarbeitergeld calculator below.

Kurzarbeitergeld is governed by §§95 to 109 SGB III. Kurzarbeit itself, the temporary reduction in contractual hours and pay, is an agreement between employer and workforce, usually through a works agreement with the Betriebsrat or individual employee consent. Kurzarbeitergeld is the separate wage replacement benefit the Bundesagentur für Arbeit then pays for the resulting shortfall. Crucially, you stay employed by the same employer the whole time; only your hours and gross pay for the affected period drop. That makes it a fundamentally different benefit from Arbeitslosengeld, which only applies once a job ends entirely.

A separate variant, Saison-Kurzarbeitergeld (§§101 to 103 SGB III), covers seasonal weather related shortfalls specifically in construction and related trades and follows its own rules; Transferkurzarbeitergeld (§111 SGB III) covers staff moved into a Transfergesellschaft during a restructuring. Both are out of scope for this article, which covers the general case only.

Three separate legal tests all have to be met. §96 SGB III requires an erheblicher Arbeitsausfall: it must rest on economic reasons or an unavoidable event, be temporary, be unavoidable, and in the relevant month at least one third of the employees in the operation must each lose more than 10% of their monthly gross pay. §97 SGB III sets betriebliche Voraussetzungen: at least one employee, and a valid legal basis for the reduced hours through a collective agreement, works agreement, or individual consent. §98 SGB III sets persönliche Voraussetzungen: the employee must remain in an unterminated employment relationship, stay subject to compulsory insurance, and not simultaneously draw certain other benefits such as Krankengeld.

This is a company level decision, not an individual application, covered step by step later in this article. Like this article, this site's calculator only computes the amount; whether your company's own situation actually qualifies is a determination made entirely by the Agentur für Arbeit.

Two scenarios show how the cushioning effect changes with how much work is actually lost. Both start from a gross Soll-Entgelt of €3,600 a month; the two differ in how much of that is cut, tax class, and whether a child is counted under §32 EStG.

While drawing Kurzarbeitergeld you remain in an active employment relationship, so you stay compulsorily insured across all four social insurance branches (pension, unemployment, statutory health, and long term care) throughout, with no gap in coverage. Your pension entitlement in particular doesn't simply accrue at your reduced hours' lower rate: §163 Abs. 5 SGB VI treats 80% of the difference between your Soll- and Ist-Entgelt as additional pensionable earnings, credited on top of what you actually earn, specifically so a spell of Kurzarbeit doesn't quietly shrink your eventual pension the way full unemployment would. The same 80% fictitious wage is also used for statutory health and long term care insurance contributions under §249 Abs. 2 SGB V and §58 Abs. 5 SGB XI, though not for unemployment insurance, which stays entirely contribution free on that fictitious portion.

None of this costs you anything extra. Contributions on the fictitious 80% amount, across pension, health, and care insurance alike, are borne solely by your employer, not split with you the normal way, and are not deducted from your own Kurzarbeitergeld or wage. From your side, the practical effect is simply that your pension, health, and care insurance coverage carries on close to normal, without you ever noticing the mechanism behind it.

The 60% or 67% Leistungssatz is a statutory floor, not a ceiling. Many Tarifverträge, particularly in the metalworking and automotive sectors where IG Metall is the bargaining partner, contractually oblige employers to top up Kurzarbeitergeld to a higher share of net pay, commonly somewhere between 80% and 95%, sometimes close to full pay for an initial period before stepping down. Some individual employers do the same voluntarily even without a Tarifvertrag requiring it, particularly for a short, clearly temporary Arbeitsausfall where retaining goodwill and skilled staff matters more than the short term saving.

Any top up is a matter of contract or company policy, not something SGB III itself provides, so check your own Tarifvertrag or ask your employer directly rather than assuming either the bare statutory rate or a generous top up applies by default.

Kurzarbeitergeld is a genuinely old instrument, first introduced in 1910 and reshaped into roughly its current form after the Second World War, but it became widely known internationally during two more recent episodes. During the 2008/09 financial crisis, Germany's relatively fast recovery and comparatively small rise in unemployment were repeatedly credited in international commentary to how aggressively short time work was used to keep manufacturing workforces intact rather than laying them off. During the pandemic, uptake reached a scale never seen before: at its April 2020 peak, roughly 6 million employees in Germany were on some form of Kurzarbeit at once according to Bundesagentur für Arbeit figures, spanning almost every sector rather than just manufacturing.

The most recent wave is narrower but still substantial. Through 2025 and into 2026, parts of the automotive supply chain and related manufacturing sectors have used Kurzarbeit repeatedly in response to weak demand, the costly shift toward electric vehicles, and ongoing supply chain disruption, alongside the temporary 24 month Bezugsdauer extension covered below.

§§95 to 109 SGB III themselves, the 60%/67% rates, the eligibility tests, and the standard 12 month cap, are permanent law and haven't changed. What has moved repeatedly since 2020 is the Bezugsdauer ceiling, extended by temporary ordinance each time, most recently to 24 months through the end of 2026 by the Vierte Verordnung of 17 December 2025. Whether it's extended again into 2027 is a fresh political decision the Bundeskabinett will have to make; treat the 24 month figure as accurate for 2026 specifically, not as a permanent feature of the law.