Germany's Continued Pay Act (Entgeltfortzahlungsgesetz, EFZG) requires employers to continue paying employees their full salary for up to 6 weeks when they are unable to work due to illness – provided the employment relationship has existed for at least 4 weeks. The EFZG also governs pay on public holidays. Once the 6-week period expires, the statutory health insurance fund takes over with sickness benefit (Krankengeld).
Definition: What Is the German Continued Pay Act (EFZG)?
The Continued Pay Act (Entgeltfortzahlungsgesetz, EFZG) is a German federal law that regulates the continuation of pay during incapacity for work due to illness and on statutory public holidays. It applies to all employees in Germany – regardless of employment type, working hours, or whether the contract is fixed-term.
The EFZG replaced the previous Wage Continuation Act (Lohnfortzahlungsgesetz) in 1994, consolidating its provisions with the separate law on continued pay for public holidays. Its purpose is to protect employees from loss of income due to illness through no fault of their own. For employers, the law creates a clear legal obligation that must be implemented in a legally compliant manner.
Entitlement to Continued Pay – Requirements
The 4-Week Waiting Period (§ 3 Para. 3 EFZG)
The right to continued pay does not arise on the first day of employment. Under § 3 Para. 3 EFZG, entitlement only arises after an uninterrupted employment relationship of at least four weeks. This waiting period starts from the first day of employment.
If an employee falls ill before the four weeks have elapsed, they have no entitlement under the EFZG. In that case, the statutory health insurance fund typically pays sickness benefit from the first day of illness.
Does the EFZG Apply During the Probationary Period?
Yes – the EFZG explicitly applies during the probationary period as well. The probationary period does not exclude the right to continued pay. The only decisive factor is the 4-week waiting period: an employee who falls ill in their second week of probation has no entitlement yet; one who falls ill in their sixth week already does.
This rule is frequently misunderstood in practice – employers should be familiar with it to avoid disputes or incorrect payroll calculations.
Entitlement for Marginally Employed (Minijob) and Part-Time Workers
The EFZG makes no distinction based on working hours. Marginally employed workers (so-called Minijobber) and part-time employees are generally entitled to the same continued pay as full-time staff – once the waiting period has been served, for up to 6 weeks, at the level of the lost remuneration. For many small businesses employing marginally employed workers, this is a financial obligation that is frequently underestimated.
Duration and Amount of Continued Pay
The 6-Week Period (§ 3 EFZG)
Employers are required to continue paying remuneration for a maximum of 6 weeks (42 calendar days) per illness. This period applies per illness – not per calendar year.
The rules for repeated illness due to the same cause are particularly important: a new 6-week period only begins if at least 6 months have passed since the end of the last period of continued pay for that illness, or if the illness recurs for the first time at least 12 months after the start of the first incapacity for work due to that illness.
Amount of Payment – the Loss of Earnings Principle (§ 4 EFZG)
The amount of continued pay is determined by the so-called loss of earnings principle (Ausfallprinzip, § 4 EFZG): employees receive exactly the remuneration they would have earned had they not been ill. The basis is the regular remuneration – i.e. the basic wage or salary plus any regularly paid allowances.
Generally not to be included are: overtime pay, irregular bonus payments, and one-off benefits. In individual cases, the calculation can be complex – consultation with payroll or an employment law specialist is advisable.
What Happens After 6 Weeks? Transition to Sickness Benefit
Once the 6-week period expires, the employer's payment obligation ends. From that point on, the statutory health insurance pays sickness benefit (Krankengeld) pursuant to § 44 et seq. of the German Social Code V (SGB V). Sickness benefit is generally 70% of gross remuneration, up to a maximum of 90% of net remuneration – and is therefore lower than the regular salary. Employers should proactively inform employees of this transition to avoid misunderstandings.
Continued Pay on Statutory Public Holidays (§ 2 EFZG)
The EFZG covers not only illness but also statutory public holidays: under § 2 EFZG, employees are entitled to continued pay for statutory public holidays on which they do not work. The same loss of earnings principle applies here – meaning the pay that would have been earned without the holiday.
If a public holiday falls on a regular working day, pay must still be made for that day. This provision of the EFZG is particularly relevant for employers in sectors with public holiday or shift work (e.g. hospitality, healthcare, manufacturing).
Exceptions and Special Cases
Self-Inflicted Illness – When Does the Entitlement Lapse?
Under § 3 Para. 1 Sentence 1 EFZG, the entitlement only exists if the employee did not cause the incapacity for work themselves. According to case law, "self-inflicted" requires gross negligence or intent – i.e. a particularly serious disregard for the required standard of care.
Typical cases that may exclude the entitlement include: a road accident caused by drink-driving, injuries sustained in a self-provoked altercation, or driving without a licence. Ordinary sporting or leisure accidents – even higher-risk activities such as skiing or mountain biking – generally do not constitute grounds for exclusion. The burden of proof lies with the employer.
Termination During Illness
A notice of termination during illness does not automatically extinguish the entitlement to continued pay. Under § 8 EFZG, the entitlement remains in place for the duration of the 6-week period as long as the employment relationship has not yet ended. This means: even after notice of termination has been given, continued pay must be made until the employment relationship actually ends.
If the ill employee themselves gives notice, the entitlement also generally remains – except where the illness was feigned in response to an imminent termination (which is notoriously difficult to prove).
Recurring Illness – the 6-Month Rule
Where someone repeatedly falls ill due to the same condition, the key question is: does a new 6-week period begin? Yes – but only if at least 6 months without further incapacity for work due to that condition have passed since the last absence, or if at least 12 months have elapsed between the start of the first and the start of the new incapacity for work due to that condition. This rule protects employers against an indefinite payment obligation in cases of chronic illness, but can be complex to apply in individual cases.
U1 Reimbursement Scheme – Cost Relief for Employers
For many small and medium-sized businesses, continued pay represents a significant financial burden. The U1 reimbursement scheme (U1-Umlageverfahren) provides a measure of relief: employers with up to 30 employees can have a portion of their continued pay expenditure reimbursed by the statutory health insurance fund.
The reimbursement rate ranges between 40 and 80% of actual expenditure, depending on the chosen tariff. In return, employers pay a monthly levy (U1) via the relevant statutory health insurance fund. The amount of the levy depends on the payroll and the chosen reimbursement rate.
Reimbursement is claimed directly from the statutory health insurance fund of the ill employee. Employers should be aware of this scheme and use it consistently – particularly in sectors with above-average absence rates, participation in the U1 scheme can be significantly cost-effective.
Practical Implementation for HR
Checklist: Acting in Compliance with the EFZG
- Request a medical certificate (Arbeitsunfähigkeitsbescheinigung, AU) from the first day of sick leave or in accordance with internal policy (since 2023, the electronic certificate, eAU, applies)
- Document the 4-week waiting period for each new hire in the HR system
- For new starters, monitor when the entitlement arises and inform payroll accordingly
- Calculate continued pay using the loss of earnings principle (§ 4 EFZG) – do not include overtime or irregular bonus payments
- Document the 6-week period per illness and per employee without gaps
- Proactively communicate the transition to sickness benefit (after 6 weeks) with the employee
- Submit U1 reimbursement claims to the health insurance fund in good time (where company size is ≤ 30 employees)
- In cases of suspected abuse: seek legal advice – taking unilateral action carries significant legal risk
Comprehensive documentation is not only important for payroll purposes: in the event of a dispute, the burden of proof frequently lies with the employer.
Frequently Asked Questions about the EFZG
How long must an employer continue to pay salary during illness?
Generally a maximum of 6 weeks per illness (§ 3 Para. 1 EFZG). Once this period expires, the statutory health insurance fund pays sickness benefit. A new 6-week period for the same illness only begins after a 6-month break free from incapacity for work due to that condition, or after 12 months from the start of the first incapacity for work due to that illness.
When does the entitlement to continued pay arise?
Only after an uninterrupted employment period of at least 4 weeks (waiting period, § 3 Para. 3 EFZG). If an employee falls ill before this period has elapsed, there is no entitlement under the EFZG – instead, the health insurance fund pays sickness benefit from the first day.
Does continued pay apply during the probationary period?
Yes. The EFZG applies during the probationary period. However, the 4-week waiting period applies: employees who fall ill within the first four weeks of employment have no entitlement yet. Full entitlement exists from the fifth week of employment.
How much is the continued pay?
100% of the regular remuneration that would have been earned without the illness (loss of earnings principle, § 4 EFZG). The basis is the basic wage or salary plus regular allowances. Overtime pay and irregular bonus payments are generally not included.
Are marginally employed (Minijob) workers entitled to continued pay?
Yes. The EFZG applies without restriction to marginally employed workers. The same conditions apply: 4-week waiting period, then up to 6 weeks of continued pay at the level of lost remuneration. This is frequently overlooked by employers in practice.
What is the U1 reimbursement scheme?
A statutory reimbursement system for employers with up to 30 employees. The statutory health insurance fund reimburses 40–80% of expenditure on continued pay during illness. In return, employers pay a monthly levy. The reimbursement must be actively claimed from the health insurance fund.
What happens to the entitlement upon termination?
The entitlement remains in place as long as the employment relationship has not yet ended (§ 8 EFZG). Where the employer gives notice, continued pay applies until the employment relationship actually ends – even if this is several weeks after notice was given. Where the ill employee gives notice themselves, the entitlement also generally remains intact.
What rules apply in the case of a self-inflicted accident?
Gross negligence or intentional conduct can exclude the entitlement to continued pay (§ 3 Para. 1 EFZG). Examples include injuries sustained in a self-provoked altercation or an accident under the influence of alcohol. Ordinary sporting and leisure accidents generally do not constitute grounds for exclusion. The burden of proving fault lies with the employer.
Conclusion
The Continued Pay Act is fundamental employment law knowledge for HR professionals. The core rules – 4-week waiting period, 6-week continued pay obligation, loss of earnings principle – may appear straightforward at first glance, but in practice they regularly give rise to questions: around probationary periods, marginally employed workers, recurring illness, or the transition to sickness benefit. Comprehensive documentation and consistent use of the U1 reimbursement scheme protect businesses from unnecessary costs and legal risks.
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Sources
- Continued Pay Act (Entgeltfortzahlungsgesetz, EFZG). Federal Republic of Germany, current version 2024.
https://www.gesetze-im-internet.de/efzg/ - Information on Continued Pay Law. Federal Ministry of Labour and Social Affairs (BMAS), 2024.
https://www.bmas.de/ - U1 Reimbursement Scheme – Information for Employers. GKV-Spitzenverband / AOK, 2024.
https://www.aok.de/ - German Social Code V (SGB V), § 44 et seq. – Sickness Benefit. Federal Republic of Germany, current version 2024.
https://www.gesetze-im-internet.de/sgb_5/ - Fehlzeitenreport 2024 [Absenteeism Report 2024]. AOK-Bundesverband, 2024.
https://www.aok.de/ - Schaub, G. (2024). Arbeitsrecht für die Praxis [Employment Law in Practice]. C.H. Beck.
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