Illness-related termination

When health suddenly becomes a problem

First of all: you are not alone in this situation. When sick days pile up or incapacity for work lasts longer, fears about job security quickly arise – which is completely understandable. It's not just about money, but often also about stability and self-esteem.

The key message is that being sick is not a free pass for dismissal. Employers cannot simply dismiss employees based on gut feeling. There are significant legal hurdles to overcome. This makes it all the more important to know your rights and to understand when dismissal due to illness can actually be effective.

What you need to know now

Finding a termination letter in your mailbox is initially a shock. At the same time, deadlines are ticking away, and practical questions immediately arise. Here is an overview of the most important points:

Salary during the notice period

During the notice period, the employment relationship generally continues. Whether you continue to receive continued pay or sick pay depends on how long you have been unable to work (keyword: continued pay for up to six weeks per illness) and whether sick pay applies after that.

Sick pay generally continues

If you receive sick pay, your entitlement does not automatically end just because of a termination. The decisive factor is whether the health insurance fund's requirements continue to be met.

Health insurance remains covered

During ongoing employment, the usual insurance conditions generally continue to apply. After the end of the employment relationship, coverage depends on whether sick pay, unemployment benefits, or other circumstances apply.

Psychological pressure is a factor

Termination due to illness has a double impact: health problems plus existential fear. If the situation is taking a heavy psychological toll on you, talk to your doctor about it. This is not "exaggerated," but can be medically and legally relevant.

First steps after receiving the termination

Step 1: Record the date of receipt. Make a note of the date on which you received the termination notice. The three-week period for filing an unfair dismissal suit begins on this date.

Step 2: Secure your documents. Collect everything that may be important later: employment contract, letter of termination, sick notes, BEM invitations/correspondence, warnings, emails, meeting notes.

Step 3: Inform relevant parties.

• Health insurance company (if sick leave/sick pay is relevant)
• Employment agency (observe deadlines – especially if the end is foreseeable)
• Legal advice/lawyer or trade union
• Legal expenses insurance (if available)

Step 4: Do not sign anything hastily. Termination agreement, settlement agreement, "severance offer" – have everything checked first. Once signed, it is often difficult to rescind the agreement.

When does protection against dismissal apply?

Whether dismissal due to illness must be socially justified depends on whether the Unfair Dismissal Protection Act (KSchG) applies. Typically, the following applies:

• Employed by the company for more than 6 months (waiting period)
• Company with usually more than 10 employees (threshold)

The KSchG does not usually apply to small businesses. However, this does not mean a "free pass." Even there, minimum requirements (e.g., form), special protection against dismissal (e.g., pregnancy, severe disability), and limits such as good faith or prohibitions on discrimination apply.

The three-step test: your legal shield

Courts typically review dismissals due to illness in three steps. If one step is missing, the dismissal is overturned.

Step 1: Negative health prognosis ("Will it happen again?")

It must be probable that significant illness-related absences or restrictions will continue to occur in the future. A single illness—even if it lasts a long time— is often not enough if a stable recovery is foreseeable.

Your leverage: current medical opinions, successful treatments, rehabilitation reports, improvements in prognosis.

Stage 2: Significant operational impairment ("Does this have a noticeable impact on the business?")

The employer must demonstrate specific burdens, such as:

• Significant disruptions to business operations
• Uncompensable absences
• Economic burdens (e.g., high continued pay costs, organizational expenses)

General statements such as "this is bad for the team" are not sufficient.

Your leverage: substitution arrangements, redistribution, documenting actual processes, identifying ways to reduce the burden.

Stage 3: Balancing of interests ("Is the termination really fair?")

Even if there is a prognosis and impairment, the following must be weighed up: How important is your interest in protection compared to the employer's interest?

Typical factors in favor of employees:

• Long period of service
• Advanced age / poorer placement opportunities
• Maintenance obligations
• Previous conduct/performance
• Proximity to retirement
• Special personal circumstances

Your leverage: Gather everything that proves your vulnerability and the unreasonableness of alternative solutions. Ultimate recourse: Use milder means first

Ultima ratio: milder measures first

Termination is only permissible if there are no reasonable alternatives. The employer must seriously consider whether, for example:

• transfer to a suitable job is possible
• Workplace adjustments would help (ergonomics, aids, reorganization)
• Flexible working hours/part-time/flexitime are possible
• Working from home or other forms of work provide relief
• Qualification/redesign of the job is an option

If this assessment is missing or is only carried out pro forma, this is a classic point of attack.

Small businesses with fewer than 10 employees: What applies there?

Even without the KSchG, "anything goes" does not apply. Although the hurdles are often lower, the following still applies:

• Formalities must be correct (written form, notice periods, etc.).
• Special protection against dismissal remains in place (e.g., pregnancy, severe disability).
• Arbitrariness and discrimination are taboo.
• Proportionality and fair treatment also play a practical role—especially when reasons appear to be pretextual.

Formal requirements: This is often where the weak points lie

For a termination to be legally effective, key points must be correct:

• Written form: Only the signed original counts
• Notice period: Section 622 of the German Civil Code (BGB) or contract/collective agreement
• Works council: If there is one, it must be consulted in advance
• Receipt: Receipt must be verifiable

Terminations can often be challenged, especially in the case of formal errors.

What types of termination due to illness are there?

Typical case groups are:

• Frequent short-term illnesses: Many individual absences over a longer period of time
• Long-term illness: Prolonged sick leave with no foreseeable end
• Permanent incapacity: Medically certified inability to work
• Reduced performance: Permanent significant reduction in performance (e.g., over 30%)
• Permanent incapacity to work: Possibly leading to reduced earning capacity/pension

The burden of proof and the burden of presentation vary significantly depending on the group.

Company integration management (BEM)

The purpose of BEM is to find ways back to work before termination occurs. It should clarify:

• How can renewed incapacity for work be prevented?
• What adjustments/support are needed?
• Are there alternatives to termination?

If BEM is not offered despite the requirements being met, or is only implemented half-heartedly, this is often a strong argument against termination – especially because it shows that less severe measures have not been properly examined.

Financial security during and after termination

Unemployment benefits

Entitlement and amount depend on the insurance periods and status (fit for work/unfit for work). In many cases, it is approximately 60% of the flat-rate net income (often 67% with children).

Waiting period

In the event of termination by the employer, there is usually no waiting period solely due to the termination. It becomes more critical in the event of voluntary resignation or a termination agreement if no important reason is recognized.

Legal protection and costs

Legal protection insurance: inform immediately. Without legal protection, counseling assistance/legal aid or fixed initial consultations may be considered.

Your options: More than many people think

• Keep an eye on the deadline, but don't panic: three weeks to file a lawsuit – that's tight, but doable.
• Severance pay is often negotiable: not automatically, but often achievable in a settlement.
• Continued employment/transfer may be the better solution: especially if your health and job can be "repaired" together.
• Seek advice early: The sooner you sort out your strategy and evidence, the better the negotiations or proceedings will be.