HR-Glossar
Entgeltfortzahlung (continued remuneration)
Why German employers pay six weeks of full salary during sickness, how the qualifying period works and what recurring illness means for the entitlement.
1. What is Entgeltfortzahlung (continued remuneration)?
Entgeltfortzahlung means that employees continue to receive their pay although they are not working. The practically important case is incapacity for work due to illness; the same principle also covers public holidays and certain other personal impediments. The governing statute is the Entgeltfortzahlungsgesetz (EFZG).
For companies used to statutory sick pay at a reduced flat rate, or to short employer-paid periods, the German rule is the single largest cost difference: the employer pays the full salary for up to six weeks, from the first day of illness, and only then does the statutory health insurance take over with a lower benefit.
Section 3(1) EFZG sets three conditions: incapacity for work caused by illness, absence of fault on the employee's part, and – under Section 3(3) EFZG – an employment relationship that has existed without interruption for four weeks. "Fault" here means a serious disregard of one's own interests, not ordinary carelessness; it is a high threshold and rarely relieves the employer.
Payment follows the Entgeltausfallprinzip (Section 4 EFZG) – the loss-of-earnings principle: what would have been earned but for the incapacity, including regular premiums and allowances. Expressly excluded are additional pay for overtime and reimbursement of expenses that were not in fact incurred.
2. Origin and development
The entitlement grew historically out of the employer's duty of care and was extended over decades – first for salaried staff, later uniformly for all employees. It is now consolidated in the Entgeltfortzahlungsgesetz.
Because six weeks of full pay can hit a small business hard, a parallel equalisation scheme exists: small establishments pay a levy to the health insurance funds and are reimbursed part of the continued pay when an employee falls ill. This is the U1-Umlage. It spreads an unpredictable individual risk across all small establishments rather than leaving it with one.
For an international group two points follow. First, the six weeks are a direct payroll cost, not an insured benefit – they appear in the German entity's personnel costs and not in any insurance line. Second, the U1 reimbursement applies only below a statutory establishment size, so most foreign-owned German entities of any scale carry the cost in full.
A note on sources: there is no official English version of the EFZG. The German text quotes the statute verbatim; this English version summarises it rather than offering an unofficial translation as if it were the text.
3. Core principles and how it works
Six weeks per illness
The entitlement runs for up to six weeks. After that the statutory health insurance generally takes over with Krankengeld – a social insurance benefit, not an employer payment, and materially lower than previous net pay.
Four-week qualifying period
The entitlement arises only after the employment relationship has existed without interruption for four weeks. During the first weeks the health insurance steps in instead.
Loss-of-earnings principle
The measure is the pay that would have accrued but for the incapacity. With variable pay it is therefore necessary to establish what would actually have been worked – not to apply a flat average.
Recurring illness does not reset the clock
Where someone falls ill again from the same cause, a fresh six-week entitlement does not arise automatically. Prior periods of incapacity and statutory time limits decide; the assessment is made case by case using information from the health insurance fund.
Notification and evidence
Incapacity must be notified without delay. For members of a statutory health insurance fund the medical certificate is retrieved electronically by the employer rather than handed in on paper – a change that surprises groups still expecting a sick note.
4. Who is Entgeltfortzahlung (continued remuneration) relevant for?
- Foreign parent companies budgeting German personnel costs – six weeks of full pay is a direct cost, not an insured one. - Small establishments – for them the U1 equalisation scheme is the decisive buffer. - Payroll teams – calculation, time limits and prior periods of incapacity are daily practice. - Employees – the entitlement secures income during the first six weeks of an illness. - Line managers – they are usually where the sickness notification arrives first.
5. How it differs from related terms
- Entgeltfortzahlung and Krankengeld – the employer pays for the first six weeks; thereafter the health insurance fund pays sickness benefit, which is lower than previous net pay. The step down is the moment employees notice. - Entgeltfortzahlung and Kurzarbeitergeld – continued pay concerns an individual sick employee; short-time working allowance concerns an operational loss of work. - Entgeltfortzahlung and paid leave – holiday entitlement accrues independently and is not consumed by incapacity. Days of certified illness during leave are credited back. - Entgeltfortzahlung and care of a sick child – time off to care for a sick child follows separate rules, and the benefit is generally paid by the health insurance fund, not the employer.
6. Variants and adaptations
- In case of illness – the practically important case: six weeks per illness. - On public holidays – where work is lost because of a statutory public holiday, pay continues. Note that public holidays differ by federal state. - During preventive medical care and rehabilitation – in principle treated in the same way as incapacity for work. - On temporary personal impediment – a separate and narrower entitlement, which may be shaped or restricted by contract or collective agreement. - Improvements by collective agreement – collective agreements may provide longer periods of continued pay or top-up payments to sickness benefit.
7. Advantages and challenges
Advantages
- Employees are financially secure during the first six weeks of an illness
- Small establishments are relieved of an unpredictable risk through the equalisation scheme
- The six-week rule is clear and predictable for everyone involved
- Electronic retrieval of the certificate removes the paper route
Challenges
- With longer or recurring absences the cost to the employer is substantial and falls directly on the German entity
- Assessing recurring illness is laborious and contested in individual cases
- With variable pay the loss-of-earnings calculation is error-prone
- The levy is payable even where no case of illness arises
- The step down into sickness benefit often surprises employees – income drops noticeably
8. Best practices for implementation
Query prior periods of incapacity as standard
On renewed incapacity, information from the health insurance fund belongs to the standard process, not to the exception. Without it, pay is continued too long in cases of doubt – and the cost is not recoverable.
Set notification and evidence routes clearly
Who is to be informed, when, and how? A written rule saves the recurring discussion and supports the payroll run.
Establish variable pay components properly
Where shift premiums, allowances or commission are involved, the calculation route belongs on record – it is requested in queries and audits.
File reimbursement claims promptly
Reimbursement under the equalisation scheme does not arrive by itself. It belongs in the monthly close, not in a folder for later.
9. Tips for employers and employees
For employers
- **Six weeks is a direct cost** – budget it in the German entity, not as an insured benefit
- **Always check for recurring illness** – a fresh six-week entitlement does not arise automatically
- **Document the calculation route** – particularly for premiums, commission and variable hours
- **Consider integration management early** – for longer absences it is a separate statutory duty, not a courtesy
For employees
- **Notify incapacity immediately** – the duty to notify exists regardless of when the medical certificate is issued
- **Plan for the step into sickness benefit** – after six weeks income falls noticeably
- **Watch the cause on renewed illness** – the same cause can limit the entitlement
- **Your holiday entitlement remains** – certified sick days during leave are not counted against it
10. Conclusion
German continued remuneration is one of the clearest rules in employment law – six weeks, full pay, after four weeks' service – and for companies operating from abroad it is the largest single cost difference in German employment. The six weeks are a direct payroll cost of the German entity, not an insured benefit, and the reimbursement scheme applies only to small establishments.
The work lies not in the rule but at its edges: recurring illness, variable pay, reimbursement claims. The assessment of recurring illness in particular deserves attention – a fresh six-week entitlement does not arise automatically when someone falls ill again from the same cause, and paying it out unchecked is money that cannot be recovered.
For employees the moment that matters is the step into Krankengeld after six weeks: sickness benefit is materially lower than previous net pay, and it comes as a surprise unless someone has said so in advance.
A note on sources: there is no official English version of the EFZG. The German entry quotes the statute verbatim; this version summarises it, and the German text is cited below.
Sources
- Section 3 EFZG – Entitlement to continued remuneration in case of illness (German original; no official English version) (opens in a new tab)
- Section 4 EFZG – Amount of remuneration to be continued (German original) (opens in a new tab)
- Section 5 EFZG – Notification and evidence obligations (German original) (opens in a new tab)
- Section 1 AAG – Employer reimbursement claim (U1 levy; German original) (opens in a new tab)
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