Loan during Short-time Work
Companies use short-time work to avoid having to lay off employees when they report a temporary shortage of work. In the construction industry, the seasonally short-time working allowance, which used to be officially and today still frequently referred to as bad-weather money, is also being paid. How does the relation of short-time working allowance and the thus diminished total income affect the creditworthiness?
The income during the short-time work
The income during the short-time work consists of the remaining earned income and the short-time working allowance. This is sixty-seven without a child and sixty-seven percent of the child’s net income with the child. Short-time working should be arranged for a maximum of six months, in special cases an extension is possible. While long-term short-time work of large companies is becoming known through television and the press, the public rarely learns of significantly shorter periods of short-time working in smaller companies, although these are the most prevalent.
If the employee wants to take out a loan during short-time working, banks behave differently. Some financial institutions calculate an average of income over the past three months, while other commercial banks take into account the specific short-time work situation and use the usual income for the budget, if they are convinced that the bad order situation will be overcome within a few weeks.
In the case of seasonal short-time work in the construction industry, overcoming short-time working is considered safe, especially since the loss of work is not due to a lack of orders, but due to the inability to carry out work caused by the weather. Since the bad weather is partly predictable, construction workers do not have to apply for credit during short-time work, while employees who are surprised by the reduction in working hours sometimes need a loan to bridge the diminished income. If the short-time working phase takes only a few weeks, then in this case, it makes sense to take advantage of the credit line.
Short-time working as a sign of a shutdown?
When employees take out a loan during short-time work, they sometimes take a risk, because a long or repeated reduction in working hours may indicate a permanent business imbalance. This does not apply to the seasonal short-time work in the construction industry and also not when a few weeks after the reduction in working hours, the order books of the company are full again and even overtime incurred, which is more common than suspected.
If you take out a loan during a short-time work, ideally you will make sure that your employer knows about the future prospects of your job, even if the answers to corresponding inquiries are not always given honestly. In order for repayment of the loan to be settled as agreed, workers who borrow during their short-time work are best placed to choose long repayment terms and, consequently, low monthly installments so that they can pay for unemployment benefits in the unlikely event of a later termination.