Many businesses facing financial strain due to the coronavirus outbreak prefer to use short-time work allowance instead of terminating employees’ contracts. The previously announced short-time work allowance period, valid until August 31, 2020, was extended by two months, making the allowance effective through October 31, 2020. Employers are especially concerned about which absence code to use for days when employees are not working during this extended period.
Short-Time Work Allowance Extended
The short-time work allowance, initially valid until August 31, 2020, was extended by presidential decree for two additional months, now running through October 31, 2020. As a result, businesses that have been economically affected by the pandemic can continue to benefit from the allowance for an additional two months instead of terminating employee contracts. However, when preparing payroll and Social Security Institution (SGK) notifications, employers face uncertainty about which absence code to use for employees who exhaust their short-time work allowance mid-month and then remain on unpaid leave under pandemic-related measures.
Specifically, after the short-time work allowance ends within a month, employers who want to place employees on unpaid leave under cash wage support must determine whether to use code 27 (Short-Time Work Allowance and Other Reasons) or code 29 (Pandemic Unpaid Leave and Other). The correct code depends on the employee’s actual status: whether they are still regarded as benefiting from the short-time work allowance or have moved to unpaid leave with cash wage support for the remaining days.
Which Code Should Be Chosen?
Under Law No. 7244 dated April 17, 2020, and the temporary Article 10 added to the Labor Law No. 4857, cash wage support can be provided to employees placed on unpaid leave due to the pandemic who are not covered by the short-time work allowance and who would otherwise be prevented from receiving unemployment benefits because their employment contracts cannot be terminated within the protected period. This support is available provided they do not receive a pension from any social security institution and the support period does not exceed the non-termination period set forth in temporary Article 10.
According to the legislation, the procedures and principles for cash wage support specify in subsection (a) of Article 5 that employers must submit monthly notifications for employees placed on unpaid leave to the SGK by the 3rd day of the month following the month in which the unpaid leave was granted in order for those employees to benefit from cash wage support. For those reported employees, the reason for missing days on the monthly premium and service statements should be recorded as code 28 – Pandemic Unpaid Leave.
Select Code Based on Application Scope
For domestic service workers insured under Law No. 5510, when they are employed for more than 10 days within a month, any change to their status must be reported to the SGK using the same absence code until the end of the month in which unpaid leave was granted. Additionally, for periods subject to notifications under Law No. 4447, if there is an unpaid leave day that does not fall under temporary Article 24 due to the pandemic, the appropriate code on declarations should be 29 – Pandemic Unpaid Leave and Other.
Therefore, if an employee in the same month benefits both from cash wage support and short-time work allowance, the declaration code to be used is 29 – Pandemic Unpaid Leave and Other. Recent changes to declaration deadlines and methods make it especially important for employers to choose the correct codes when submitting reports. Selecting an incorrect or incomplete code during declaration may result in penalties imposed on the employer, who will be responsible for paying those fines.