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Coronavirus I – Compensation for loss of earnings due to a lack of childcare services

In the course of the coronavirus crisis, the German “Act on the Protection of the Population in the Event of an Epidemic Situation of National Importance”, from 27.3.2020, added a new compensation regime for particular loss of earnings situations to the German Infectious Diseases Protection Act.

As is generally known, due to coronavirus, facilities for the care of children or schools have been temporarily closed in order to prevent the spread of infections or communicable diseases. The aim of the provision in the Infectious Diseases Protection Act is to mitigate the loss of earnings suffered by employees, who are entitled to the custody of children, in cases where the employees were unable to pursue their professional activities. Those eligible for compensation are employees who are entitled to the custody of children who are under the age of twelve years, or who are disabled and therefore need help.

In order for employees to qualify for compensation they have to provide sufficient documentary evidence that, during the period of closure of or prohibition on entering the facilities for the care of children or schools, it was not possible to guarantee any other reasonable care options for the child. A childcare option that would be deemed to be reasonable could be, for example, if there was entitlement to so-called emergency childcare in a kindergarten or school, or if it was possible to turn to the other parent or other family members/relatives to ask them to assume the care of the child. As a general rule, grandparents should be classified as a risk group and, therefore, cannot be considered as a childcare option.

There would be no entitlement to compensation

  • i f the working time of those entitled to custody has been reduced due to the imposition of short-time working, or
  • employees who are entitled to custody are still due time credits, or
  • if there is an option to work from home.

In terms of duration, the right to compensation is limited to a period of no longer than six weeks and, in terms of the amount, to 67% of the loss of earnings incurred by employees who are entitled to custody, up to a maximum amount of € 2,016 per month. If the closure or prohibition on entering ends before the time period expires then the right to compensation would cease to apply. This right will be granted by the regional authority responsible for the implementation of the Infectious Diseases Protection Act.

Please note: From a tax perspective, under the Infectious Diseases Protection Act, the compensation payment will initially be tax-exempt. However, it will be subject to the exemption-with-progression rule so that it will ultimately entail a tax payment to a certain extent.

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