Termination due to illness in Germany – is this permissible?

Many employees take extended sick leave at some point in their careers – or are frequently absent due to health problems. In such cases, some fear that they will be dismissed due to illness. But when is an employer permitted to terminate an employment contract due to illness? In this article, we clarify when dismissal due to illness is legally permissible and what rights you have. Find out everything you need to know about workplace integration management (BEM), your entitlement to severance pay, receiving unemployment benefits and important tips on how to defend yourself against dismissal due to illness.

The most important information at a glance

• Dismissal due to illness is only permissible under the following three conditions: negative prognosis, operational impairment and weighing of interests.
• Sick leave, on the other hand, does not protect against dismissal. Dismissal during incapacity for work is possible if the requirements are otherwise met.
• A company integration management programme (BEM) is not a prerequisite for dismissal. However, if the employer does not implement the BEM, this weakens their position. This can increase the chances of continued employment or a high severance payment.
• A severance payment is not required by law, but is often paid nonetheless.
• If you receive a dismissal due to illness, you must file a lawsuit within 3 weeks.

According to the Unfair Dismissal Protection Act (KSchG), dismissal due to illness is only socially justified if its strict requirements are met: There must be a negative health prognosis, a significant operational impairment and a weighing of interests in favour of the employer. However, even here, high hurdles are set. In addition, the question arises as to whether dismissal during sick leave (AU) is permissible and how measures such as company integration management (BEM) affect the decision.

When is dismissal due to illness permissible?

In principle, dismissal due to illness may be permissible. However, high requirements developed by case law apply to the validity of a ‘sickness-related’ dismissal. In this case, the employer can terminate the employment relationship either

• due to frequent short-term illnesses or
• due to long-term illness(es).

For a legally effective dismissal, the employee must therefore no longer be able to fulfil their obligations under their employment contract due to their illness.

Under what conditions is dismissal due to illness lawful?

An employer cannot simply dismiss an employee because they are ill. According to case law, three conditions must be met for dismissal due to illness.

1. Negative health prognosis: It must be foreseeable that the employee will continue to be unable to work for more than 6 weeks per year in the future.
2. Significant operational impairment: The employer must prove that the absences lead to significant operational or economic burdens (e.g. high replacement costs).
3. Balancing of interests: The employer’s interests must outweigh the employee’s interest in continuing the employment relationship.

Example: A craftsman who is permanently unable to perform physical work after an accident and is unsuitable for office work could be dismissed on these grounds.

Negative prognosis

A negative health prognosis exists if it is to be expected that the employee will continue to be absent for more than six weeks per year due to illness in the future. This prognosis must be supported by medical reports. The decisive factor is therefore whether the illness is ongoing or worsening to the extent that the employee is permanently unable to perform their work.

Examples of illnesses with a typically negative prognosis:

• Chronic illnesses such as slipped discs or long-term lung diseases
• Mental illnesses such as depression
• Frequent short-term illnesses that recur repeatedly

Disruption to work processes or economic burden

It is also necessary that the absences impair operational processes. This is the case, for example, when machines are idle or colleagues are overworked. However, even an economic burden on the employer is sufficient. Frequent short-term illnesses are usually associated with continued payment of remuneration because the health insurance fund only steps in with sick pay after six weeks. These absences can place a considerable financial burden on employers. If an employee is absent for more than six weeks in total per calendar year due to frequent short-term illnesses, dismissal may therefore be justified.

Balancing of interests in favour of the employer

Finally, the employer must weigh up the interests of both parties. The employer may only terminate the employment relationship if their interests in doing so outweigh the employee’s interests in continuing the employment relationship.

Factors in favour of the employee are:

• Length of service
• Age
• Social vulnerability (due to illness, age or accident)

Only when the weighing of interests leads to the conclusion that the considerable burdens caused by the illness are no longer reasonable for the employer can the employer effectively terminate the employment relationship.

Further reasons for the invalidity of dismissal on grounds of illness

Furthermore, dismissal on grounds of illness is invalid if:

• the works council has not given its consent (if applicable).
• There are formal errors, for example:
  • Verbal dismissal
  • Written dismissal without a proper signature
  • Incorrect notice periods

Special dismissal protection rights (e.g. for pregnant women or severely disabled persons) have not been observed.

What role does workplace integration management (BEM) play?

If an employee is unable to work for more than 6 weeks within a year, the employer must carry out a workplace integration management (BEM) process to examine options for restoring the employee’s ability to work. However, the employee is not obliged to participate in this process.

Important points regarding BEM:

• The employer must work with the employee and, if applicable, the works council or the representative for disabled employees to clarify how the incapacity to work can be overcome.
• Participation is voluntary: the employee can refuse to participate in BEM.
• If no BEM is carried out, this can be interpreted in favour of the employee in dismissal protection proceedings. This does not result in the dismissal being invalid. Note: If the employee has rejected the BEM, they cannot later invoke the fact that the employer did not carry it out in their favour in dismissal protection proceedings.

Is a warning necessary in the event of dismissal due to illness?

In principle, no – because in the case of dismissal due to illness, the employee is not accused of any ‘controllable’ misconduct. Due to their illness, the employee simply does not (or no longer) have the necessary personal aptitude and/or ability to perform the work owed.Therefore, according to case law, a prior warning is not necessary.

Sick during the probationary period – what applies?

The situation is different during the probationary period. Less strict dismissal rules apply here, as statutory protection against dismissal only applies after the probationary period. During the probationary period, the employer can dismiss the employee without giving reasons. This means that even illness, even if only short-term, can lead to dismissal. During this period, dismissal due to illness is generally always possible with 14 days’ notice.

Is there severance pay in the event of dismissal due to illness?

There is no legal entitlement to severance pay. However, employers often offer severance pay voluntarily in order to avoid an action for unfair dismissal. A frequently used formula is:

Severance pay = ‘factor’ × gross monthly salary × years of employment

Example: With a monthly salary of €4,000 and 10 years of service, a ‘factor’ of 0.75 results in severance pay of €30,000. However, depending on the individual circumstances – and the negotiating skills of your solicitor – more may be negotiated in individual cases.

What can employees do if they are dismissed due to illness?

Upon receiving a dismissal due to illness, you should consult a lawyer specialising in employment law. It is important to act quickly, as an action for unfair dismissal can only be brought within three weeks of receiving the dismissal. It is important that an expert in employment law carefully checks whether the dismissal due to illness is valid. Even if you are not interested in continuing to work for the company, the invalidity of the dismissal will definitely affect the amount of severance pay.

In summary, you should take these 5 steps:

1. Check the termination letter for formal errors (e.g. missing signature, incorrect notice period).
2. Collect medical evidence and all documents relevant to the three conditions mentioned above.
3. Bring an action for unfair dismissal: This is only possible within 3 weeks of receiving the dismissal.
4. Consult a lawyer specialising in employment law, a trade union or the works council.
5. Consider whether continued employment or a severance payment is possible in the event of an invalid dismissal.

Consequences of dismissal due to illness on unemployment benefits

As a rule, employees can immediately receive unemployment benefits I after dismissal due to illness, provided that all other requirements are met. A waiting period can only be imposed if misconduct is proven (e.g. feigning illness).

Frequently asked questions (FAQ)