German employers bear annual costs of 77 billion euros for continued payment of remuneration in the event of illness. At average 14.8 days of illness For each employee in 2024, the correct handling of continued payment of wages by law is not only a legal obligation, but a significant cost factor. However, studies show that Payroll errors appear in every second company. The Continued Pay Act sets clear rules on how employers must proceed in the event of illness among their employees. But many HR teams and managing directors underestimate the complexity of the correct calculation and the legal consequences of errors.
This article explains in practice what the Continued Pay Act regulates, which requirements must be met and how the six-week continued payment of wages is correctly calculated. You will learn what obligations employers have, which special cases must be considered and how modern HR software helps to avoid costly mistakes.
What does the Continued Payment Act regulate?
Definition and regulatory framework
that Continued Payment Act (EFZG) has been the central legal basis for continued payment of wages in Germany since 1994. The Act regulates two main areas: payment of pay on public holidays and continued payment of pay in the event of illness. Both regulations apply equally to workers, employees and trainees.
In essence, the law obliges employers to continue to pay their full salary for up to six weeks if an employee is absent due to illness. This regulation ensures that workers are financially secure during illness and can concentrate on their recovery.
Accrual to sickness benefit
After the six-week continued payment of pay, the statutory health insurance covers the sickness benefit. However, this amounts to only 70 percent of the gross salary, but not more than 90 percent of the net salary. The clear separation between continued payment of employer wages and sickness benefits is essential for payroll.
Scope and aim of the Act
The EFZG applies to all employees, regardless of working hours or type of contract. Mini-jobbers, part-time workers and fixed-term workers are also entitled to continued payment of pay. Self-employed people, on the other hand, are not protected by law and must make private provisions. The law aims to create social balance and protect employees from financial emergencies in the event of illness.
Requirements for entitlement to continued payment of remuneration
The four-week waiting period
A central requirement for entitlement to continued payment of remuneration is the four-week waiting period. According to Section 3 (3) EFZG, the claim only arises after an uninterrupted period of four weeks of employment. That means: If an employee falls ill in the first four weeks of employment, he is not yet entitled to continued payment of wages from the employer.
This rule also applies during the trial period. Many employers are surprised that the trial period is not a special case. As soon as the four weeks have elapsed, you are fully entitled to continued payment of remuneration.
Immediate sick leave as a duty
The employee must immediately inform the employer of the inability to work. “Immediately” usually means on the first day of illness before the start of work. Late reporting can have consequences under employment law, even if the right to continued payment of remuneration does not automatically expire as a result.
Many employment contracts also include the obligation to present a medical certificate on the first day of illness. Without a specific provision in the employment contract, the employer may require a certificate from the fourth day of illness.
Incapacity for work and innocence
The incapacity to work must be caused by illness and prevent the employee from carrying out his contracted activity. The decisive factor is that the inability to work occurs through no fault of his own. In the event of self-inflicted illnesses, for example due to gross negligence in sports accidents or intentional infliction of the illness, the claim may be waived.
Duration of continued payment of pay in the event of illness
The six-week continued payment of wages in detail
The basic rule is clear: The employer continues to pay the full salary for six weeks, i.e. 42 calendar days. It is important that these are calendar days, not working days. Weekends and holidays are included.
The six-week period starts on the first day of incapacity for work. If an employee falls ill on Monday, the continued payment obligation ends after six weeks, even if there were weekends or public holidays during this period.
Recurrent illnesses and interruption periods
It becomes particularly complex in the case of repeated illnesses. The law distinguishes between new cases and continuing cases. In the case of the same illness, the following applies: If the employee is unable to work again due to the same illness after recovery, there is only a new claim for six weeks of continued payment of pay if one of the two conditions is met:
- The employee was unable to work as a result of the same illness for at least six months before being unable to work again.
- A period of twelve months has elapsed since the start of the first incapacity for work as a result of the same illness.
Practical classification for payroll
For the HR department, this means that careful documentation of periods of illness and diagnoses is essential. modernism Time recording systems can significantly contribute to reducing errors here by automatically tracking the connections between sick reports and providing warnings in critical situations.
Calculation of continued payment of remuneration
Statutory basis for calculation
According to Section 4 EFZG, the employee must continue to pay the remuneration that he would have received without being unable to work. This sounds simple, but it becomes a challenge in practice, especially when it comes to variable salary components.
Determine regular pay
For employees with a fixed monthly salary, the calculation is simple: They continue to receive their regular gross salary. Things get more complex when it comes to hourly wages or variable components.
For employees with irregular working hours, the following applies: Continued pay is based on the amount of pay that was accounted for on average per week in the last 13 billed weeks before the start of the incapacity for work.
Variable components and surcharges
In practice, this is where most mistakes occur: Supplements for night, Sunday and public holidays, shift allowances, overtime pay and commissions must be correctly taken into account.
Regularly paid allowances are included in the calculation. Irregular benefits such as Christmas bonus or vacation pay is not part of continued pay. The delimitation of what is regular and what is not is often a subject of dispute before labor courts.
Overview of calculation methods
Sample calculation for full time and part time
Example 1: full-time employee with a fixed salary
Mr. Müller earns 3,500 euros gross per month. He falls ill on March 15th. For the entire duration of his six-week disability, he continues to receive his full salary of 3,500 euros, regardless of how many working days are spent during the illness period.
Example 2: Parttime worker with hourly pay
Ms. Schmidt works in retail on an hourly basis for 15 euros per hour. Your working week varies between 15 and 25 hours. In the last 13 weeks before she became ill, she worked an average of 20 hours a week and earned 300 euros a week. While she is unable to work, she receives 300 euros a week, regardless of how many hours she would actually have worked without the illness.
Employer obligations and risks in case of errors
Documentation and storage requirements
Employers must systematically document and store certificates of incapacity for work. This not only serves to ensure correct billing, but also as proof to social security institutions and in the event of any employment law disputes.
The storage period for payroll tax-relevant documents is generally six years. There are sometimes longer deadlines for social security documents.
Billing deadlines and penalties
Continued payments paid out too late or incorrectly can have significant consequences. For 14 percent of companies Have faulty payrolls has already led to lawsuits and other legal consequences.
Employers are responsible for the correct calculation and payment. In the event of underpayments, employees can make back payments within statute of limitations of three years claim. Employers can reclaim overpayments, but must comply with garnishment exemptions.
Liability risks in case of incorrect calculation
Systematic errors in continued payment of wages can be expensive. In addition to the additional payment obligation, there is a risk of:
- Labour court lawsuits
- Compensation claims
- Reputational damage
- loss of trust among the workforce
Importance of accurate time recording data
A clean database is a prerequisite for correct calculations. modernism Time recording systems Record not only pure working hours, but also additional times, shifts and overtime automatically. This data is the basis for calculating continued payment of remuneration in variable compensation models.
Professional Services Automation (PSA) Software such as ZEP enables companies to systematically record working hours and automatically link them to payroll. The integration of time recording and payroll significantly reduces sources of error and ensures that all relevant surcharges and variable components are correctly taken into account.
Special features and special cases in the EFZG
Illness while on vacation
A common special case: The employee falls ill while on vacation. The following applies here: The vacation days that fall on the period of the physician-certified incapacity for work are not counted as vacation. The employee is entitled to additional payment of these vacation days.
The prerequisite is that the employee immediately reports the incapacity to work and presents a medical certificate. This must also be done during stays abroad, ideally even while on vacation.
Continued payment of remuneration after termination
In principle, the right to continued payment of remuneration persists even during the notice period. However, if the employment relationship is terminated, the right to continued payment of pay also ends, even if the six-week period has not yet expired.
In the event of dismissal by the employer during incapacity for work, special protective regulations apply. A termination is not ineffective per se, but is subject to increased justification requirements.
No claim in case of gross negligence
The right to continued payment of remuneration does not apply if the employee has caused the incapacity to work through gross negligence. Classic examples include:
- Involvement in a brawl
- Influence of alcohol or drugs as a cause of accident
- Gross negligence in road traffic
- Disregard of medical instructions
The burden of proof of gross negligence lies with the employer. In practice, this is often difficult to prove.
Repeated illnesses and block periods
In the case of frequent brief illnesses, the question is often whether there is a continuation of the disease or whether each disease needs to be reassessed. The medical diagnosis is decisive. Different conditions result in new six-week periods, while the same illness requires the interruption periods described above.
Practical examples for employers and HR teams
Common misconceptions in continued payment
Misconception 1: “Mini-jobbers have no claim”
Wrong. Mini-jobbers are also fully entitled to continued payment of pay after four weeks of employment.
Misconception 2: “There is no continued payment of wages during the trial period”
Wrong. The trial period is not an exclusion criterion. After four weeks of employment, the claim exists.
Misconception 3: “Overtime does not count as continued payment of pay”
Wrong. Regular overtime must be taken into account.
Misconception 4: “After six weeks, the employer pays nothing more”
Partially correct. After six weeks, health insurance pays, but only for the same illness. In the case of a new illness, a new six-week period begins.
Automating the calculation
Companies with more than 50 employees quickly reach limits when it comes to manual calculation. Complexity increases exponentially when different working time models, shift schedules and variable compensation components are taken into account.
Modern HR software not only automates the calculation, but also checks whether the requirements for continued payment of remuneration have been met. It detects continuing illnesses, calculates interruption periods and warns of critical constellations.
Using a clean database for correct calculations
The basis for any correct continued payment of pay is a complete and precise recording of working hours. If data is missing or incorrect, this necessarily leads to incorrect calculations.
An integrated system that time recording, Project controlling and connects payroll, minimizes sources of error. For companies with project-based work, how IT service providers, consulting firms or agencies, the precise allocation of working hours to projects is also essential for customer invoicing.
PSA systems Like ZEP, not only record pure working hours, but also project-related data. This makes it possible not only to calculate the correct continued payment of wages in cases of illness, but also to analyze the effects on project capacities and customer projects. resource planning and payroll are seamlessly intertwined.
Practical tip: Checklist for HR managers
Conclusion: Mastering the Continued Payment Act in Practice
The Continued Pay Act creates clear rules for continued payment of wages in the event of illness. However, the correct application requires detailed knowledge and careful processes. With a Sickness rate of 5.4 percent and costs of 77 billion euros per year, the issue is highly relevant for every employer.
The biggest risks lie in incorrect calculation of variable compensation components, incorrect classification of recurrent illnesses and inadequate documentation. A precise time recording forms the basis for correct billing and protects against costly errors.
companies that rely on integrated software solutions, time recording, Project controlling and combine payroll, significantly reduce sources of error. They not only gain legal certainty, but also efficiency in their HR processes. The Continued Payment Act is complex but easy to control with the right tools and processes.
FAQs
How do you calculate continued payment in the event of illness exactly in accordance with Section 4 EFZG?
The calculation is carried out in three steps: First, you determine the reference period of 13 weeks before the onset of illness. Then add up all paid components of these 13 weeks (basic wage plus regular supplements) and divide by 13. Multiply this weekly average salary by 6 for the six-week continued payment.
Example: An employee earned a total of 5,200 euros (basic wage) plus 780 euros in shift allowances in 13 weeks. Average per week: 460 euros. He receives continued payment of 2,760 euros for six weeks. Critical: One-off payments such as Christmas bonuses do not count, but regular monthly allowances do.
What effect does shift allowance or overtime have on continued payment of pay?
Regular overtime and shift allowances increase continued pay, as they are part of average pay. Regularity is decisive: If a shift worker has worked an average of 8 night shifts of 25 percent in the last 13 weeks, these surcharges are fully included in the calculation. The following applies to overtime: If it is carried out structurally and according to plan (for example, contractually agreed 5 hours of overtime per week), it is included. Spontaneous, irregular overtime is excluded. A production employee with a basic wage of 2,400 euros and an average of 320 euros in monthly shift allowances receives 2,720 euros during the period of incapacity for work, not just the basic wage.
What mistakes do companies make when calculating continued payment of wages?
The most common mistake is not taking variable components into account: Employers often only continue to pay the basic wage and forget regular commissions or allowances.
Second classic: Wrong application of the 13-week rule for hourly wages by using current instead of average hours. Third critical point: Confusion of gross and net methods when offsetting. Practical example: A sales representative receives 3,000 euros in fixed sum plus an average of 800 euros in commission. If the employer only continues to pay 3,000 euros, there is an underpayment of 800 euros per month. In the case of six weeks of illness, this amounts to 1,200 euros in additional claim plus possible default interest. Such mistakes often end up before labor courts.
Can I receive continued payment of my salary during the notice period?
Yes, the right to continued payment of remuneration persists throughout the notice period, even if dismissed by the employer. The only decisive factor is that the employment relationship still exists.
Specifically: If an employee is terminated on March 1 with a three-month period to May 31 and falls ill on April 15, he will receive full payment of remuneration until May 31, even if the six-week period does not end until May 27. When the employment contract is terminated on May 31, the claim also automatically ends. Special feature: In the event of self-termination during incapacity for work, the employer may be able to claim compensation if this results in planning difficulties. However, this is rarely enforceable and requires concrete evidence.
What is the difference between continued payment of pay and sickness benefit from health insurance?
Continued payment amounts to 100 percent of the salary and is paid by the employer for a maximum of 42 calendar days. The health insurance company's sickness benefit amounts to only 70 percent of the gross salary, a maximum of 90 percent of the net salary, and starts from the 43rd day of illness.
Specific calculation example: With 4,000 euros gross salary and 2,600 euros net, the employee receives 4,000 euros gross (around 2,600 euros net) from the employer during the first six weeks. From week seven, health insurance pays 2,800 euros gross (70 percent), which corresponds to around 2,340 euros net. The loss of income is therefore around 260 euros net per month. Additional difference: Sickness benefit is paid for the same illness for a maximum of 78 weeks within three years, while continued payment starts anew for each new illness.
What does an employer have to pay particular attention to when it comes to EFZG?
Three areas of compliance are critical: First, the complete documentation of all certificates of incapacity for work with diagnosis recording of recurrent illnesses. Use a system that automatically checks whether the same condition is present and monitors the six-month or twelve-month deadlines. Second, the correct handling of the three-month rule for social security contributions: Failure to make up contributions may only be made up for the next three payslips, after which the employer also bears the employee's share. Thirdly, compliance with cut-off periods in employment or collective agreements: While the statutory limitation period is three years, contractual cut-off periods can take effect after just three or six months. An overlooked claim is then irrevocably lost.
