Does the Federal Agency permit double collection of short-time work benefits (KUG) and full closure insurance (BSV) ?

– Freedom from imputation does not preclude recovery on account of existing BSV –


“Virus, Virus, give me back my millions!” (free after Sueton).


Short-time work compensation (KUG) is only available as a subsidiary social benefit under the Third Social Security Code. According to legal regulations, benefits or insurance contractual legal claims from a business closure insurance (BSV) are credited, i.e. deducted. This is now said to have changed temporarily by an order of the Federal Institute for Salaried Employees (BA). Really?


BSV exists (only) for those who have anything to do with food, including hospitals, and specifically concerns the Infection Protection Act. In industry and trade (such as hairdressers), it would be more property damage than cause – there it is called business interruption insurance, but even there, extended coverage may be provided.


“SGB III directive of 29.04.2020 – AZ 75095/75096”

On 30.04.2020, DEHOGA (German Hotel and Restaurant Association) announced, for example in Saxony, that for a limited period until 31.12.2020, any services provided by the BSV, whether contractual or voluntary, and whether in whole or in part, will no longer be credited to the KUG. To be able to collect an invitation twice, as it were; it then makes sense not to be fobbed off with less than 15%, but to demand the full sum insured from the insurer (BoD).


In contrast, a weaker BA directive had been promised between politicians and DEHOGA Bayern: It should become possible that only “settlement amounts” of, for example, 15% of the sum insured, which are “really voluntarily” paid by insurers, remain free of charge. A candy on top for the policyholder – a considerable advantage for the insurer (VR). However, such an instruction would have led to numerous other ambiguities and pitfalls.


Agreements at the expense of the welfare state?

Finally, the BoD argued that the state would pay at least 70% of the short-time work compensation; and of the remaining 30%, half would be paid voluntarily, without legal proceedings, quickly. On the other hand, no insurance executive may simply voluntarily make or give away any money to the detriment of his company; this would be a punishable breach of trust, § 266 StGB. In this respect, there is often a lot to be said for the fact that the BSV should actually provide 100% instead of 15% goodwill.


Insurance condition or clauses to the detriment of the user

The customer-friendly interpretation, also with regard to merchants, of insurance terms and conditions has decades of tradition at the Federal Court of Justice. Unclear clauses are always at the expense of the user, who must then pay. The Federal Agency had previously stated that benefits – only voluntary – are not credited, i.e. if there is no insurance contractual entitlement to benefits from the BSV.


A clear conscience does not protect against criminal liability. In the indictment this is then called “unscrupulous” – one had none, or it was stunned or because of the quick money advantage all too ready to be outwitted. Carelessness is sufficient in subsidy fraud, § 264 StGB.


Compensation offers with pitfalls in compensation clauses

A dictum says “The wise merchant always has his files ready for trial”. So you will have to look at all sides – insurance law and social security code.

If not only one association even advises not to assert secure FSIO claims but rather KUG and “goodwill” payments by the BoD (in case of waiver of the insurance benefits due), this is motivated by the economic advantages by increasing short-term liquidity and supposedly avoiding a later challenge and reclaim from the CISA. Therefore, one will also have to examine subsidy fraud, for example – including the question of incitement. Finally, there are numerous other traps at the KUG, which, according to the instructions in the KUG application forms, will lead directly to a criminal complaint in case of overpayment.


Delegation of liability by involving consultants as compliance?

If an entrepreneur wishes to obtain a “clean bill of health” from the consultant, up to more than two dozen high court decisions must be observed. This ranges from the choice of consultant (e.g. your own tax consultant would not normally be suitable) to the content of an appraisal.

Anyone who is planning to obtain a subsidy by fraud anyway cannot later accuse his negligent consultant of liability. If, on the other hand, the consultant is guilty of incitement or aiding and abetting, his professional liability will not pay a cent – at best, good luck for the future.


Contradictory instruction landscape – and lack of commitment?

The “SGB III instruction of 29.04.2020 – AZ 75095/75096” already has a public blemish, because the BA (Regional Directorate NRW) published already with the status one day later (30.04.2020) an FAQ to the KUG, in which the following instruction is contained: “Furthermore, it may be necessary to check whether the company concerned has taken out business closure insurance and whether this covers the payment of fees for the duration of the outage. This can be found in the specific insurance conditions.“.

It is obvious, for example, that concealing the existence of a FSIO together with (possibly partial) performance is sufficient for criminal liability. The perhaps contradictory or repeatedly changed “instruction situation” (if one compares different reports on this by national associations) will hardly suffice to avoid criminal liability through alleged legal error. It is therefore advisable to play with open cards – if the Federal Institute then pays, the courts have already refused to reclaim the money even in the case of obviously illegal notices of performance by the Federal Institute because of the protection of confidence in the legal force of the notice of performance and have denied criminal liability.


Can instructions be illegal, null and void, or can they be changed?

For the entrepreneur, it makes sense to assert existing legal claims from the insurance contract. Other state aid (possibly temporary or non-repayable) could often be considered in addition to the KUG. If an instruction was wrong, or if it was only misunderstood and reproduced incorrectly or incompletely by associations, this is primarily the risk of the entrepreneur. There is a general duty to make inquiries – so that later on a criminal judge does not end up saying “The accused could have already recognized with moderate use of his mind – what was illegal and what was legal”. Unfortunately, the internal directive (dated 29.04.2020) has not yet been published. It is even possible that local employment agencies consider them illegal and do not apply them. At least, however, for good reasons continue to check the existence of a BSV and therefore refuse short-time work benefits altogether.


In general, the Federal Employment Agency is subject to the law and must therefore apply it, not even amend it for a limited period. However, the obvious legal situation – as not applicable only until the end of 2020 according to the (alleged) instruction – is the crediting of a BSV benefit to the CISA. Ultimately, the administrative actions of the executive branch are subsequently examined by the independent courts – the behaviour of individual civil servants, for example, on account of embezzlement in the line of duty, is sometimes examined by the criminal judge.


No wage payment obligation of the employer without existence endangerment because of the virus?

In principle, the employer bears the operational risk. In the event of a power failure or damage to machinery (normal business disruption), for example, he must nevertheless pay his wages. Exceptions would be strikes or a disruption of operations which endanger the existence of the business (LAG Schleswig-Holstein, ruling dated June 15, 1989, File No. 4 Sa 628/88; BAG ruling dated June 13, 1990, File No. 2 AZR 635/89).


In its technical instruction of 20.12.2018 of the BA it says: “Such a threat to existence will not exist, in particular, if there is a business interruption insurance policy that includes the wages and salaries for such periods of absence. The employer may not be relieved of his obligation to pay wages by the granting of KUG, since his operational risk is otherwise absorbed.“. Of course, this also applies in the event that a BSV policy exists: The question of whether payments have also been requested (e.g. by reporting the claim to the board of directors) or whether they are waived (in whole or in part) is therefore no longer relevant.


Misconceptions can lead to punishable applications for short-time work by employers

It is therefore always necessary to check in advance whether there is any threat to existence at all – not only if (objectively) there is a BSV or business interruption insurance, but also if there is a legal claim to compensation under the Infection Protection Act, for example; or legal claims to other state aid to avoid a threat to existence, or simply if there are enough reserves. Because then there could be no “loss of work with loss of pay in the sense of §§ 95 ff. SGB III” – in other words, no short-time work may be applied for and approved. And by the reference of the KUG a subsidy fraud would be obvious.


The new directive only says

“When granting short-time work benefits, please note

Payments made – possibly also proportionately – by the insurers as a result of a temporary closure of operations ordered due to the corona pandemic do not reduce the short-time working allowance. It is irrelevant whether the insurer has recognised a legal claim to the benefit (the insured event) or not”.


If, however, because of the existence of a BSV, the existence of the company is not endangered by full payment of remuneration, short-time work and a KUG payment will not even occur, because that would be illegal. This is the point. The payments made by the BSV and others simply mean that there is no longer any operational necessity for short-time working. The full salary can then simply continue to be paid with help from the BSV. No “short-time work” may be ordered or applied for at all because it is not economically necessary. And of course, this means that the KUG is no longer applicable from the outset, simply because there is no permitted short-time work. There is then also simply nothing to be credited against the KUG, which has not even been paid.


Illegal application for short-time work – even though the threat to existence could be averted in some other way?

If a company nevertheless applies for short-time work, even though the BSV also allows full salary payment, this is already illegal. If he then applies for KUG, it is fraud. By its instruction, the BA in no way declares that this would suddenly be legal, until the end of 2020, or would not be pursued. Or if you had to pay KOO anyway. On the contrary, the directive apparently presupposes that Kurzarbeít has been implemented lawfully and only states how to proceed in the event that the BSV is credited. From the outset, however, these can only be legal cases in which the FSIO does not cover the full or partial continuation of salary payments (by insurance contract).


Anyone who announces the introduction of short-time work, even though the full salary can be paid from the BSV, is already acting illegally. The goal of illegally obtaining KUG by fraudulent means is an additional factor. The new directive then does not protect him in any case, because this directive presupposes first of all already lawful action before, and not unlawful action. Those who were wrong are well advised to turn back immediately and repent.


No legal short-time work without threat to existence

Correctly, there is no examination of a payment from KUG, because the application for short-time work itself would have to be rejected because of the BSV. Anyone who does not refer to the BSV at this point exposes himself to the suspicion of criminal liability.

If the directive then only refers to those cases in which short-time work is only permissible in the first place due to the lack of sufficient FSIO, then their non-inclusion is strongly relativised. Cases with a sufficient FSIO should not even occur here, except through fraud or because the employer has misunderstood something, but this does not help him much.

The renunciation of 100 % because of 15 % goodwill is again a delicate matter.


The employment agency will demand the return of any illegally paid short-time work benefits due to sufficient BSV or other means – and usually also file criminal charges. The reimbursement of illegal KUG subsidies from the outset and the “(non-)crediting of BSV payments” against a legitimate KUG are two very different things.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm


by courtesy of (published on 26.05.2020)


and (published in Submissions-Anzeiger No. 101 of 27.05.2020, front page + pages 32 and 33)

and (published in Computern im Handwerk, issue 06/2020, pages 5-7 under the heading: Freedom from imputation does not exclude reclaim due to existing BSV)

and (published in UnternehmerBrief Bauwirtschaft, issue 07.2020, pages 22-24 under the heading: Collect short-time work compensation twice?)

and (published in ExpertenReport 07/2020, page 58-60 under the heading: If KUG and BSV are paid out.




Our office in Munich

You will find our office at Fasolt-Strasse 7 in Munich, very close to Schloss Nymphenburg. Our team consists of highly motivated attorneys who are available for all the needs of our clients. In special cases, our law firm cooperates with selected experts to represent your interests in the best possible way.

About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
»More about Dr. Johannes Fiala

On these pages, Dr. Fiala provides information on current legal and economic topics as well as on current political changes that are of social and/or corporate relevance.

Arrange your personal appointment with us.

Make an appointment / call back service

You are already receiving legal advice and would like a second opinion? In this case please contact Dr. Fiala directly via the following link.

Obtain a second legal opinion

(The first phone call is a free get-to-know-you conversation; without consulting. You will learn what we can do for you & what we need from you in terms of information, documents for a qualified consultation.)