Dismissal due to mental illness or burnout – is it possible?

A dismissal due to mental illness or burnout is not uncommon. According to health insurance reports, the number of sick days caused by mental illnesses has more than tripled over the past decades. A termination due to mental illness or burnout follows the same rules as a dismissal on grounds of physical illness. This article explains the legal requirements for such a termination.

Key facts at a glance

• A dismissal due to a mental illness is a form of illness-related termination. The employer must prove: (1) a “negative health prognosis,” (2) significant disruption of business operations or financial strain, (3) that termination is the “last resort” and that the balance of interests favors the employer.
• Employees are not legally required to disclose the specific reason for their illness.
• Before signing a termination agreement or resigning due to mental illness, employees should check if the employment agency may impose waiting periods (“Sperrzeiten”).
• After receiving a dismissal due to burnout or another mental illness, the employee can file an unfair dismissal claim within three weeks.

Requirements for dismissal due to mental illness

According to health insurance data, mental illnesses are the third most common reason for workplace absences. The most frequent diagnoses are depression, anxiety disorders, stress-related conditions, and adjustment disorders. Burnout (exhaustion) is not classified as an independent medical condition but is often the underlying cause of these illnesses.

An employer can issue a dismissal on grounds of mental illness, but strict requirements apply:

1. Negative health prognosis

The employer must show a “negative health prognosis.” This means it must be foreseeable that the employee will remain unable to work for more than six weeks per year due to the illness.

Past absences play a major role in this assessment. For example, if an employee has had above-average sick leave over several years, the employer may use this to argue future long-term absences. In addition, employers must show the resulting wage continuation costs.

Other factors can influence the prognosis:

• Therapy progress: If absences decrease after treatment, this may indicate a positive outlook.
• Assessments by the medical service: A positive medical opinion may speak against termination.
• Expert statements: With the employee’s consent to release medical confidentiality, such opinions may also support a positive prognosis.

2. Operational or financial impact

The employer must also prove that the illness-related absences significantly disrupt business operations or cause economic strain (e.g., continued wage payments, hiring replacement staff, or overburdening colleagues).

The type of absence matters:

• Frequent short absences (e.g., recurring depressive episodes) make planning difficult for the employer.
• Long-term absences over six weeks often cause less financial strain, as wage continuation ends, and replacements can be planned more easily.

All such circumstances must be substantiated by the employer.

3. Termination as the last resort

Termination is only lawful if no less severe option is available. Alternatives may include:

• Offering a suitable alternative position that is reasonable for both sides. Courts set stricter standards if the illness is work-related, such as depression caused by workplace stress.
• Adjusting working hours (temporary part-time, eliminating shift work, etc.).
• Implementing workplace reintegration management (BEM). If the employee was sick for more than six weeks in a year, the employer must offer BEM. While failing to do so does not automatically make a dismissal invalid, courts view it negatively when weighing interests. If the employee refuses BEM, this does not harm them legally.

4. Balancing of interests

Finally, a careful balancing of interests must take place. If continuing the employment relationship is unreasonable for the employer, termination may be valid. Otherwise, it must be rejected.

Can the employer ask about health conditions?

Employers may ask about an illness during employment, but employees are not legally obliged to disclose the cause.

Employees may voluntarily share information, which could allow workplace adjustments that prevent dismissal. However, this decision should always be discussed with a doctor and lawyer in advance.

In dismissal proceedings, the employer must prove a negative health prognosis based on absences. If the prognosis seems negative, the employee may release their doctor from confidentiality – but only if the doctor can confirm a positive outlook. Timing matters: only the situation at the time of dismissal counts.

Immediate termination due to mental illness

It is usually not possible to dismiss someone immediately due to mental or physical illness. Courts generally expect employers to wait until the end of the ordinary notice period.

The exception: employees who are contractually “non-terminable” (ordinarily not dismissible). In such cases, extraordinary dismissal with a “social expiration period” (equivalent to the normal notice period) may be allowed. However, the legal threshold is very high, as protection would otherwise become meaningless.

Waiting periods when ending the employment relationship

If the employer dismisses due to mental illness, the employment agency usually does not impose waiting periods.

However, if the employment ends through a termination agreement or voluntary resignation, waiting periods of up to 12 weeks may apply. This reduces unemployment benefits and delays payments.

To avoid penalties, employees should always provide a medical certificate proving that the termination due to burnout or another mental illness was health-related.

First steps after receiving dismissal

If you receive a dismissal due to mental illness, act quickly:

• Consult a labor lawyer or union immediately to assess the chances of an unfair dismissal claim.
• Observe the strict three-week deadline for filing.
• Because mental health conditions often make prognosis assessments difficult, employees often have strong negotiation leverage. The higher the employer’s risk in court, the higher the likelihood of receiving a better severance package.

Frequently asked questions (FAQ)