When an employer terminates employment due to frequent illness, many employees feel uncertain about whether a sickness related dismissal is lawful. The question of when a dismissal on health grounds is valid occupies labor courts again and again. Many affected workers fear that after several sick notes they can be fired immediately, but the legal situation is more complex: a dismissal because of illness is only permissible under strict conditions.
This article explains the three pillars of a dismissal due to illness, the applicable notice periods and formalities, and how those affected should act. It also shows when a severance payment may be discussed and how a litigation funder can assist.
Sickness Related Dismissal: The Three Pillars
The Federal Labour Court has developed three requirements in its standing case law that the employer must allege and prove for a dismissal due to illness. If any pillar is missing, the dismissal is ineffective.
First pillar: negative health prognosis. At the time of dismissal the employer must expect that the employee will continue to be substantially incapacitated in the future. Mere repetition of sick periods is not enough; what matters is whether a lasting condition exists or whether new, independent illnesses keep occurring. With a chronic disease the prognosis may differ from that of many isolated infections.
Second pillar: substantial impairment of business interests. The expected absences must cause a noticeable disruption to workflow. Examples include production stoppages, replacement problems or an unreasonable burden on colleagues. A certain number of absence days alone is insufficient – the concrete impact on the business decides.
Third pillar: balancing of interests. The court weighs the employer’s interest in ending the employment relationship against the employee’s social considerations. Length of service, age, maintenance obligations and the severity of the illness play a role. The longer the employment and the heavier the social consequences, the higher the hurdles the employer must overcome.
These three pillars apply to all dismissals, not only those based on illness. The legal foundation is found in section 1 of the Dismissal Protection Act, which governs the social justification of terminations.
When Does a Negative Health Prognosis Apply?
The negative health prognosis is the core of any sickness related dismissal. The employer must, based on objective circumstances, show that the employee is likely to be absent to a significant extent in the future. This can be supported by medical certificates, occupational‑health opinions or the employee’s sickness record.
A common mistake by employers is to terminate because the employee was sick for 120 days over the last two years. Without a prognosis for the future this is not sufficient. What matters is whether the past illnesses indicate a lasting health impairment. After a single operation with a long recovery period the prognosis is often lacking because there is no risk of recurrence.
Employees can rebut a negative prognosis by submitting medical attestations that document improvement or successful treatment. A rehabilitation measure can also positively influence the prognosis. Demonstrating ongoing therapy increases the chance that the court will not assume permanent incapacity.
When Is There a Substantial Impairment?
The substantial impairment of business interests is assessed by courts on the basis of the number of absence days and the operational effects. There is no fixed threshold above which a dismissal automatically becomes permissible. In practice, however, courts refer to empirical values.
If an employee is absent for more than six weeks per year over an extended period, an impairment may be present. Crucial is whether the business can compensate the loss through substitutes, overtime or reorganization. In a small firm with few staff, absences weigh more heavily than in a large company with reserve personnel.
Employees should verify whether the employer has taken reasonable steps to mitigate the effects. This includes, for example, the possibility of adapting the workplace or reducing working hours – often within the framework of an occupational integration management (BEM), whose omission can additionally render the dismissal challengeable. If the employer has not examined such options, the dismissal may be ineffective due to lack of proportionality.
Interest Balancing: What Counts for the Court?
In the interest balancing the court sets the employer’s operational interests against the employee’s social interests. All circumstances of the individual case must be taken into account. A dismissal is only effective if the operational interests clearly outweigh the social ones.
Factors that speak for the employee include a long period of service, a high age, maintenance obligations for children or relatives, and a severe disability. Prospects on the labor market also matter: someone who is difficult to place because of age or qualification has a better chance that the dismissal will be deemed socially unjustified.
For the employer, a high rate of sickness, lack of replacement possibilities and financial losses count. The more serious the impairment, the more likely the employer’s interest prevails. In practice many sickness related dismissals fail because of an insufficient interest balancing.
Dismissal Due to Illness and Severance Pay
Many employees wonder whether they are entitled to a severance payment after a dismissal due to illness. There is no statutory right to severance as a rule; a payment is usually made only if it is agreed in a settlement contract or in a court‑approved settlement.
In practice many dismissal protection proceedings end with a settlement in which the employer pays a severance amount. The amount depends on the individual circumstances, such as length of service, salary and the prospects of success of the claim. A rule of thumb is half to one month’s salary per year of employment, but this is not a fixed entitlement.
Those seeking a severance payment should not rely on verbal promises but insist on a written agreement. The tax consequences of a severance payment should also be considered, as they can considerably affect net income. A lawyer specializing in employment law can help to obtain the best possible outcome.
Deadlines and Formalities: What You Must Observe
A dismissal based on illness must be given in writing and received by the employee. The notice period follows from the employment contract or the law. For an extraordinary dismissal a serious reason must exist that makes continuation of the employment relationship unreasonable – in the case of illness this occurs only in exceptional circumstances.
Important is the limitation period: whoever wishes to file a dismissal protection lawsuit must do so within three weeks of receiving the dismissal. This deadline also applies to dismissals for health reasons. If the employee misses the period, the dismissal is considered effective even if it was substantively unfounded.
Employees should therefore consult an employment‑law lawyer immediately after receiving the dismissal. The lawyer assesses the chances of success, files the lawsuit and represents the employee before the court. If the costs cannot be borne personally, the support of a litigation funder can be enlisted, which assumes the financial risk.
What to Do After Receiving a Dismissal Due to Illness?
If you receive a dismissal because of illness, do not panic but proceed step‑by‑step. First check whether the dismissal meets formal requirements: Was it given in writing? Was the notice period respected? Was the works council consulted?
Seek advice from an employment‑law lawyer, ideally before the three‑week deadline expires. The lawyer can estimate the prospects of success and recommend a sensible strategy. In dismissals for health reasons the chances of success are often good when the negative prognosis is not clear‑cut.
As a litigation funder, RechtStark can cover the costs of a dismissal protection procedure when the prospects of success are sufficient, for example in a case of sickness related dismissal. This way you do not have to take a financial risk to enforce your rights. It is essential to keep the deadlines and not rely on informal agreements.
Conclusion: Illness‑Related Dismissal Is Not Automatic
A dismissal because of illness is only effective under strict preconditions. The employer must demonstrate a negative health prognosis, a substantial impairment of business interests and an overriding interest balancing. In many cases the dismissal fails at one of these hurdles.
Affected employees should strictly observe the three‑week limitation period and seek legal advice in good time. A severance payment is not automatic but can be negotiated in a settlement. Those who wish to avoid costs can turn to a litigation funder to limit the financial risk. Do not be discouraged – your rights can be upheld.
Note: This article is for general information purposes only and does not replace individual legal advice. For a free initial assessment of whether litigation funding may be an option for your case, you can contact RechtStark.