The establishment of a transfer company

lasts only a few days

As soon as the works council and the employer agree, the establishment of a transfer company by an experienced provider such as KARENT takes only a few days. This is because a transfer company does not have to be registered or approved. All that is required is registration with the employment agency on the prescribed form.

What are the requirements for a transfer company?

In simplified terms, it can be said that any restructuring that requires a social plan or a mass dismissal notice generally also meets the requirements for a transfer company. Thus, at least six employees or 5% of the workforce must be affected by a restructuring in order for a transfer company to be set up - even if only a single employee then transfers to the transfer company.

What is a transfer company?

A transfer company offers employees who lose their jobs a temporary employment contract. The employees leave their old employer and become, legally speaking, employees of the agency. However, the employees do not work, but are on short-time work. The executing agency therefore pays them short-time allowance and usually tops this up to 80-90% of their last net salary. In addition, it offers the employees the possibility of further vocational training and finds them new jobs. The employees leave the transfer company as soon as they have either found a new job.

Costs Financing and Legal

The costs of a transfer company consist of the costs for the wages and salaries of the employees on the one hand and the costs of the agency for qualification, administration and placement on the other hand. The Federal Employment Agency bears a large part of the wage and salary costs via the transfer short-time allowance, while the sponsor of the transfer company must bear all other costs and pass these on to the old employer. The following rule of thumb serves as an initial estimate: a typical transfer company costs the employer about half as much per month of operation as a month of regular employment.

Remanence costs

The transfer short-time allowance from the employment agency amounts to 60-67% of the regular net pay. However, it is not paid for public holidays or vacation days. The costs for these days, the ancillary wage costs as well as a top-up of the net salary to mostly 80-95% are borne by the old employer. These costs are referred to as remanence costs.

The costs for wages and salaries account for around 70-80% of the total costs of a transfer company. They are independent of the provider of a transfer company, but are always calculated from the starting salaries and the agreed protection level in % of the original net amount of the employees before transfer to the transfer company.

The best utilization rate of the subsidies in the form of the transfer short-time allowance is achieved with a protection level of 80%.

The transfer company registers short-time work 0 for the employees, which means that the employees no longer work and thus receive the maximum rate of the transfer short-time allowance according to §111 SGBIII. The transfer short-time allowance is equal to the regular unemployment allowance - 60% of the last net amount for childless persons and 67% for parents - but it is not paid for holidays and vacation days. For holidays and vacation days, the institution must pay 100% of the original net.

In addition, there are the costs of social insurance, namely for pensions, health and long-term care insurance and the employers' liability insurance association. Only the costs of unemployment insurance are not due in the case of a transfer company. It is important to know that the transfer company does not only have to bear the costs for the employers, but also for the employees, because the employees are promised a net salary from which no further deductions can be made.

The social security costs in a transfer company are always calculated on the basis of at least80% of the initial gross salary. It therefore makes sense to top up the employees' short-time allowance to at least 80% of their last net pay. This is because this net top-up causes only low costs overall. Only a top-up to more than 80% then increases the non-wage costs accordingly.

Therefore, wage top-ups to 80% of the net amount are the rule for a transfer company.

Administrative costs

The transfer company usually charges a lump sum of 90-100 Euro per month and employee for the administration and processing of the transfer company.

The correct handling of a transfer company requires a comparatively complex payroll, which has to be recalculated every month, as the location of holidays and public holidays affects the salary and the wage and salary statements also cause repeated queries on the part of the employees. In addition, the short-time allowance has to be applied for every month and the eligibility requirements have to be checked.

At KARENT, we process the payrolls via DATEV, each employee has a fixed contact person in the personnel department and can turn to us at any time with his or her questions.

Since, paradoxically, months with few vacation days and holidays would lead to a lower payment to the employees, we fictitiously distribute the vacation days over the months in such a way that the salary for the employees remains as constant as possible and can therefore be planned.

For this service of administration and personnel support we charge 90-100 Euro per month and employee depending on the size of the project.

We support your employees and colleagues during restructuring. We advise HR managers and works councils. We are AZAV certified and apply for funding from the employment agencies for our clients.

Transfer information

Profiling

Before transferring to the transfer company, the employees must undergo so-called profiling in accordance with §110 SGBIII.

he legislator stipulates that only employees who have undergone profiling or outplacement with profiling in accordance with §110 SGBIII are entitled to transfer short-time allowance. These measures are subsidised by the employment agency up to 50% of the costs incurred. Profiling or outplacement can only be subsidised if it takes place before the transfer to the transfer company and a binding counselling appointment has been agreed with the relevant employment agency before the social plan is concluded.

How and to what extent we carry out profiling therefore depends on the operational situation and the planning horizon.

In the case of a plant relocation, the employees' work performance is often required until the last day before transfer to the transfer company. In these cases, we conduct a two-day profiling workshop or, if necessary, even profiling in one-on-one interviews during ongoing production. In individual cases, profiling can also take place after the transfer to the transfer company. This, however, leads to additional costs of approx. 300 Euros per employee, since the support according to §110 is lost and for the time of the profiling workshop there is also no entitlement to short-time allowance with support according to §111 SGBIII.

Maximizing the promotion through a transfer agency

If the employee counselling can be started two or more months before the transfer to the transfer company, the combination of subsidised outplacement and subsequent transfer company often makes sense. The outplacement is subsidised up to €2,500 per employee and the costs for the overall project are significantly reduced. This combination of outplacement and transfer company is called a transfer agency.

Support, advice and mediation

In order for employees to successfully find a new job, they are prepared for the application process, accompanied in their applications and receive placement offers for suitable vacancies. In this point, transfer companies differ considerably in the range of services they offer.

Basically, the employees have to pass the profiling according to §110 SGBIII, after which the support in the transfer company begins. At KARENT we offer two variants for this. In the more cost-effective PUR transfer company, employees are supervised and trained in groups of 12-20 employees, while in the KLASSIK transfer company, individual support is provided as in outplacement.

The efficiency of a transfer company is particularly evident in the area of employee counselling and placement. Depending on the company's initial situation, different consulting concepts have proven their worth.

KLASSIK transfer company

In the KLASSIK transfer company, we provide each employee with comprehensive and individual support. We conduct application workshops in client groups of about eight to ten participants each. As each consultant only looks after an average of 25 clients, the advice is individual and intensive and can also be optimally adapted to individual problem situations. Employees who do not wish to be advised at the company location are given the opportunity to receive advice at a KARENT location of their choice. The search for vacancies by our Jobsearch team can also take into account the individual requirements of each employee.

The costs for counselling in a 12-month transfer company KLASSIK start at approx. 4.500,-€ per employee.

Transfer company PUR

In the PUR transfer company, each consultant looks after around 40-50 clients. The application workshops are held in groups of 15-20 employees each. In addition, consultations on special topics are carried out in small groups of 3-5 employees each. Individual consultations are also available. When searching for vacancies, our Jobsearch team focuses on the larger groups of employees.

The costs for consulting in a 12-month transfer company PUR are about 2.800,-€ per employee.

Transfer agency

Both the KLASSIK transfer company and the PUR transfer company can be combined with an outplacement consultancy, subsidised in accordance with §110, to form a transfer agency. In this way, the total costs can usually be significantly reduced by optimising the subsidy.

Qualification

The time in the transfer company should be used for further vocational training. For this purpose, the sponsor offers the employees appropriate training and courses. It is advisable to provide a separate budget for this so that these costs remain transparent.

Employees whose chances on the labour market are lower because of gaps in their qualifications should use the time in the transfer company to gain professional qualifications. But even for employees who have completed their training and have many years of experience in their profession, further training can make sense in order to bring their specialist knowledge up to date.

As a matter of principle, we work out a proposal for further training for each employee.

We compare the current level of experience and qualification with the desired target position and search the market for suitable further training offers.

The costs of further training measures vary greatly in individual cases. Some employees do not need any further training, others need a budget of several thousand Euros.

As a rule, we recommend planning a qualification budget of between 1000 and 3000 euros per employee and releasing this on a case-by-case basis. We then apply to the employment agencies for the maximum possible subsidy.

Note: Occasionally, job application training is also referred to as "qualification". At KARENT, we distinguish between these two items in order to create transparency and clarity in the costs and planning of measures from the outset.

Financing models

As soon as you have received our calculation for your project, you should check the various financing options. Whether a transfer company can be financed depends on the company's framework conditions and the employees' preferences. In principle, an agreement should be reached on this between the employer and the works council before the social plan is signed. Therefore, let us advise you before concluding the social plan.

Additional social plan funds

In the case of financially sound companies, as much as possible of the costs of a transfer company should be financed from additional social plan funds. This is not always possible, so the following financing options must also be considered.

Notice periods of the employees

If the employees' work is no longer required during the notice period, they can transfer to the transfer company before the end of their individual notice period. The saved wage and salary costs for one month of regular employment can finance approximately two months in the transfer company.

Partial waiver of severance pay

Since transfer to the transfer company is generally voluntary, the social partners often agree that employees who transfer to the transfer company contribute part of their severance pay to the financing. This leads to a fairer financial balance between employees who accept the transfer company's offer and those who forego the transfer.

Individual terms and benefits based on age and length of service

A transfer company is more likely to be made possible if costs are reduced, e.g. by staggering the terms in the transfer company according to age and/or length of service, reducing the qualification budget or choosing a more cost-effective model of employee support.

We would be happy to advise you as a works council or HR manager on your upcoming project and give you an initial indication of the likely costs.

Give us a call!

Transfer Social Plan

Once you have clarified the costs and the options for financing a transfer company, this agreement should be set out as clearly and comprehensibly as possible in a social plan. We know from numerous projects that this can often lead to discrepancies or to unclear formulations due to a lack of knowledge about the details and thus to problems in the implementation. We would therefore like to provide you with some tips at this point.

Consider whether the employees affected should have a choice between different social plan benefits.

The starting positions of the employees are often very different. Some will quickly find new employment and attach particular importance to the severance pay. Others urgently need the support and security of a transfer company. A good social plan can do justice to both situations.

In the social plan, agree on as many details as possible regarding the implementation of the transfer company.

In addition to the duration and the level of protection, which can be found in every social plan, this also includes the amount of the qualification budget (if there is to be one). The provider of the transfer company should also be determined as far as possible. Another important question is how to deal with unused financial resources. Particularly if employees make a contribution of their own by waiving severance pay or contributing their notice period, they should be given a share of the funds saved by means of a sprinter bonus. This means that the funds saved by the transfer company as a result of the early departure are distributed to the employees with their last salary as severance pay.

If you are approaching the subject for the first time, we can provide you with legally non-binding sample social plans. Please feel free to call us.

Tripartite contract

Once the social plan is in place and the financing has been clarified, the agreements with KARENT as the sponsor of the transfer company must now be set out in a contract and a so-called tripartite contract must be agreed. The contract between KARENT and the old employer regulates the services that KARENT must provide for the employees and also contains, among other things, a provision on the collateralization of the wage and salary payments. Security must be provided for the total costs incurred (less short-time allowance). This can be done via a trustee, via a bank guarantee or - for smaller projects - via an advance payment.

The three-page contract is a termination and employment contract in one.

Before transferring to the transfer company, each employee must leave the previous company and conclude a temporary employment contract with KARENT. The first part of the three-page contract regulates the modalities of leaving the old employer: how much the severance pay will be, what will happen to pension entitlements, how working time accounts will be offset, etc. The second part of the three-page contract regulates how the severance pay will be handled. The second part of the tripartite contract regulates the temporary employment relationship and the amount of the salary between KARENT and the employee. Therefore, this contract is always agreed between three parties: the employee, the old employer and KARENT.

The content of the tripartite contract must always correspond to the social plan. We offer a first draft for this purpose, which, however, must always be adapted to the circumstances of the individual case.