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Employment Law

Continued Pay Act: What Employers Need to Know

The Continued Pay Act (Entgeltfortzahlungsgesetz, EntgFG) governs one of the most expensive items in the payroll budget. Anyone who carefully checks the qualifying period, offsetting rules and recurring illness will pay neither a day too much nor a day too little.

Updated August 2026 · 8 minutes read

Employment contract documents with glasses and a pen on a bright table

The principle: six weeks of full pay

Under § 3 EntgFG, employees who are unable to work through no fault of their own are entitled to continued payment of their wages for up to six weeks, i.e. 42 calendar days. This entitlement applies to all employees, including part-time staff, mini-jobbers and apprentices.

Calendar with six marked weeks, thermometer and a sick employee at home: continued pay during illness
The employer continues to pay for up to six weeks once employment has lasted at least four weeks.

Four-week qualifying period

The entitlement only arises after four continuous weeks of employment. If an employee falls ill before that, the health insurance fund pays sickness benefit (Krankengeld) — the employer is not obliged to continue paying wages. The qualifying period runs from the contractually agreed start date, not from the first actual day of work.

Calculation: the "loss of earnings" principle (Lohnausfallprinzip)

The pay to be continued is the amount the employee would have received had they not been unable to work. This includes surcharges and allowances that are regularly paid, as well as variable components on average. Overtime pay and expense reimbursements, such as per diems or travel cost reimbursement, are not included.

Recurring illness and new illness

CaseConsequence
Same illness, break of less than 6 monthsCounted towards the 6-week entitlement
Same illness, fit for work for at least 6 monthsNew entitlement
Same illness, more than 12 months since the first boutNew entitlement
New, different illness during ongoing incapacity"Unity of the incapacity event" principle: no extension
Employer retrieves the electronic sick note from the health insurer and receives a U1 reimbursement
Since 2023 employers retrieve the electronic sick note (eAU) from the health insurer; small businesses get part of the cost back via the U1 levy. The illustration is schematic.

Notification and evidence obligations

The employee must notify the employer of their incapacity to work without delay. Medical certification is required by the fourth calendar day at the latest; the employer may demand it from the first day. For employees with statutory health insurance, the employer has retrieved the data electronically from the health insurance fund since 2023 (electronic certificate of incapacity to work, eAU). Privately insured employees and mini-jobbers in private households still submit a paper certificate.

Fault excludes the entitlement

Fault within the meaning of the Act means a gross violation of one's own interests as a reasonable person would see it. Examples include driving under the influence, involvement in a brawl, or particularly dangerous sports practised without protective measures. A sports injury sustained during ordinary leisure activity, or the consequences of cosmetic surgery, are matters to be assessed case by case.

The U1 levy scheme: reimbursement for small businesses

Businesses with generally up to 30 employees take part in the U1 scheme. Depending on the chosen rate, health insurance funds reimburse between 40 and 80 percent of the pay continued. Levy rates differ between funds, so a comparison is worthwhile.

Public holidays and rehabilitation

Pay must also be continued for statutory public holidays (§ 2 EntgFG). For medical prevention and rehabilitation measures, continued pay applies correspondingly if a social security institution has approved the measure.

Documentation

Keep an overview per employee of periods of incapacity, the connection between diagnoses where known, and the days for which pay was continued. If you refuse continued pay or point to evidence obligations, do so in writing — with a clear date and provable receipt.

Case study: when does a new six-week period start?

SituationConsequence (general rule)
New, different illness after recoveryNew entitlement of up to six weeks
Same illness returnsPeriods are added together (recurring illness)
Same illness after at least six months without itNew entitlement
Twelve months have passed since the first illness beganNew entitlement
New illness occurs during an ongoing oneNo new period (single incapacity)

Employers can ask the health insurer whether an illness is recurring. Individual cases are often disputed; seek advice if in doubt.

Payroll checklist

  • Record the sick report with date and retrieve the eAU from the health insurer.
  • For mini-jobbers the employer also retrieves the eAU; the Minijob-Zentrale handles U1.
  • Claim U1 reimbursement promptly — the rate depends on the insurer's statutes.
  • After six weeks, submit the earnings certificate for sickness benefit electronically.

Sickness benefit is covered in the guide to wage replacement benefits. Write notices to employees, for example about reporting duties, in the letter editor.

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