React flexibly, reduce costs

More free time for employees, meaning less pressure for the company

• When orders temporarily decrease, a sabbatical can help. A sabbatical allows employees to recharge their batteries while reducing costs for the company. The employment relationship is suspended, but it remains in place. The employee's obligation to work and the employer's obligation to pay are paused. However, entitlements that would become due on   the termination of employment, such as vacation compensation, do not need to be paid. Both sides benefit.  

• Educational leave also offers opportunities: employees can continue their education and the company saves costs, so a win-win situation is created.

• Another possible solution is to require employees to use their vacation during quiet periods. Even if vacation leave must be agreed, employees cannot refuse to take part of their outstanding vacation entitlement during periods of low workload. This allows companies to control the use of vacation days during periods of low workload, thereby reducing costs arising from vacation compensations. 

 At the same time, employees are given the opportunity to recover.

Control personnel costs under control through a hiring freeze

• When employees leave voluntarily or temporary contracts expire, there is an opportunity to reorganize tasks instead of replacing every position immediately. This keeps the team small and can increase efficiency. A hiring freeze provides room for individual development within the existing team.
• •    However, changes of tasks must be permitted under the employment contract. If there is no corresponding provision in the employment contract, companies can also agree on new tasks together with the employees. In the event of a replacement, the works council (if present) must also be involved as part of the co-determination rights.  

Reconsider voluntary benefits, keep salaries stable

• There are possibilities to reduce voluntary benefits such as bonuses, premiums or anniversary bonuses, or to revoke contractually agreed remuneration components, such as a company car, to reduce the financial burden. It is important to comply with employment law provisions and to communicate clearly and transparently to maintain the trust of employees.
• Another option is the freezing of salaries that exceed the minimum salaries according to the collective bargaining agreements. This can create short-term stability without major restrictions. The first step is to evaluate whether the applicable collective bargaining agreement provides for increases of the actual salaries and whether the measure can be implemented. An "absorption clause" ("Aufsaugklausel") creates clarity and transparency for new staff joining the company with remuneration above that agreed in the collective bargaining agreement: it can be agreed directly in the employment contract that the overpayment covers future increases for at least up to three years.

Smartly adjust working hours

• Less work requires less working hours and this can be agreed with employees. During periods of low utilization, a temporary part-time solution can provide relief without tying the company into a long-term commitment. It is always important to find a solution together with the employee, as the company cannot unilaterally reduce working hours. 

• Older employees can benefit from partial retirement, which allows for a smooth transition to retirement. Compensation from the state ensures that no one suffers a financial loss. 
• Employees who wish to educate themselves during a reduction in working hours can arrange for part-time training and apply to the employment office for a training allowance.   

Manage overtime hours and avoid costs

• A structured management of overtime hours can prevent additional costs for the company that could arise through overtime surcharges. Overtime hours should only be performed upon explicit instruction to avoid a financial burden on the company.

Short-time work as a solution in difficult times

• In times of economic crisis, short-time work can be a useful solution. It makes it possible to reduce working hours while receiving financial support from the state if the economic problems are due to external circumstances. Short-time work offers the flexibility to deal with temporary challenges without the loss of personnel.
• However, when applying, companies must plausibly demonstrate that the economic situation is only temporary and that an improvement to the situation is foreseeable. Another prerequisite is the conclusion of a social partner agreement with the works council or the individual employees if there is no works council.  

Conclusion: Let's shape the future of your company together 

Reducing costs does not necessarily mean separating from employees. There are many positive and effective ways to achieve financial stability without weakening the team. Smart adjustments and clear communication can help guide the company through challenging times. With creative solutions and strong collaboration, companies and employees can overcome challenges and look to the future with strength. We can help you develop a comprehensive strategy. 

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