The three review stages of a dismissal due to illness
A dismissal due to illness is a sub category of dismissal for reasons relating to the person under § 1 para. 2 KSchG. The ground for dismissal is the effect of the absences on the employment relationship. The Federal Labour Court (BAG) requires the employer to establish three cumulative conditions (BAG, judgment of 13 May 2015, 2 AZR 565/14). If one is missing, the dismissal is socially unjustified.
First stage: negative health prognosis. At the time of the dismissal, objective facts must exist that indicate further substantial absences to come. Past sick days alone serve only as an indication. The employer must explain why comparable absences are to be expected in future as well.
Second stage: substantial impairment of business interests. The absences must disrupt operations or place an economic burden on the business. This is the case where the prognosed continued pay costs exceed, on an annual basis, the amount owed for six weeks under §§ 3, 4 EntgFG (BAG, judgment of 22 July 2021, 2 AZR 125/21).
Third stage: balancing of interests. The employer’s interest in ending the relationship must outweigh the employee’s interest in keeping the job. In the employee’s favour count the length of previously undisturbed service, age, maintenance obligations, poor prospects on the job market and whether the illness was caused by the work itself (BAG, judgment of 25 April 2018, 2 AZR 6/18).
BEM obligation and consent of the integration office
Before a dismissal due to illness, the employer must offer a company integration management procedure (BEM). The obligation under § 167 para. 2 sentence 1 SGB IX arises as soon as an employee has been unfit for work for more than six weeks within one year, whether continuously or repeatedly. The employer must take the initiative.
If the employer fails to carry out the BEM, the burden of presentation shifts. It must then show the objective futility of workplace related measures and additionally demonstrate that future absences could not have been avoided to a relevant extent even through benefits from rehabilitation providers (BAG, judgment of 20 November 2014, 2 AZR 755/13).
A BEM procedure is open to challenge where the invitation was missing or incomplete, where there was no explanation of its aims and the scope of the data involved, where the works council or the representative body for severely disabled employees was not involved, and where workplace adaptation, transfer and retraining were only discussed as a formality.
A second test applies to severely disabled employees and those treated as equivalent. Under § 168 SGB IX, the dismissal requires the prior consent of the integration office. This protection applies once the employment relationship has existed without interruption for more than six months at the time the dismissal is received (§ 173 para. 1 no. 1 SGB IX).
Frequent short illnesses and long-term illness
Case law distinguishes two main scenarios of dismissal due to illness, each placing different demands on the employer.
Frequent short illnesses
For repeated short absences, the employer must establish a negative prognosis for the future. The reference period covers the preceding three years (BAG, judgment of 22 July 2021, 2 AZR 125/21). Absences of more than six weeks a year within this period indicate comparable future absences.
This indicative effect can be challenged. If the employee shows that the causes of the earlier absences have been resolved, for example after a completed operation or course of treatment, the burden of proof remains with the employer under § 1 para. 2 sentence 4 KSchG.
Long-term illness and permanent incapacity for work
For uninterrupted long-term illness, what matters is the prospect of recovery. A period of up to 24 months is regarded as foreseeable (BAG, judgment of 20 November 2014, 2 AZR 664/13). If the restoration of the capacity to work remains uncertain beyond this period, the prognosis can be negative.
Where permanent incapacity for work is established, the balancing of interests still takes place, but under the case law of the Federal Labour Court it regularly comes out against the employee. The employee then lacks a legitimate interest in maintaining the employment relationship. What still needs to be examined is whether employment suited to the employee’s condition is available.
Unfair dismissal claim, deadline and severance pay
Anyone who wants to assert that the dismissal is invalid must file an unfair dismissal claim with the labour court within three weeks (§ 4 sentence 1 KSchG). The deadline begins on the day the written dismissal is received by the employee. If the deadline expires, the dismissal is deemed under § 7 KSchG to have been legally effective from the outset.
Severance pay, settlement and application for dissolution
There is no statutory entitlement to severance pay for a dismissal due to illness. § 1a KSchG ties the entitlement to a dismissal for urgent operational reasons and therefore does not apply here. A severance payment as a rule arises only through a settlement between the parties in the unfair dismissal proceedings.
There is also the application for dissolution under § 9 KSchG. If the court finds that the employment relationship continues to exist but that its continuation cannot reasonably be expected of the employee, it dissolves the employment relationship and sets a severance payment. § 10 KSchG caps this at twelve months’ salary, and at up to 18 months’ salary for older employees with long service.
Sickness benefit and unemployment benefit after the dismissal
The entitlement to sickness benefit does not end with the employment relationship. Under § 48 para. 1 SGB V, sickness benefit for the same illness is paid for a maximum of 78 weeks within any three year period. Membership of the statutory health insurance is maintained under § 192 para. 1 no. 2 SGB V for as long as this entitlement exists.
A suspension period for unemployment benefit under § 159 para. 1 sentence 2 no. 1 SGB III requires that the unemployed person ended the employment relationship themselves or gave cause for its ending through conduct in breach of the employment contract. A dismissal due to illness issued by the employer does not meet this requirement.
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