High Burdens for Dismissals of Employees on Long-Term Sick Leave

Extended periods of absence due to illness do not automatically justify dismissal

A recent case at the Regional Labor Court of Schleswig-Holstein underscored this issue (LAG Schleswig-Holstein, judgment of 10.01.2024 - 3 Sa 74/23). The plaintiff had been intermittently sick since October 2021 and permanently unable to work since December 2021, with no expected recovery for at least two years. Initially, the defendant employer attempted to redistribute the workload among several employees, but this proved unsuccessful. Consequently, the defendant permanently reassigned the plaintiff's tasks to another employee.

Subsequently, the defendant unilaterally terminated the employment relationship with the plaintiff in November 2022 by issuing a notice of termination with a period of notice. Prior to this, the defendant had consulted its works council regarding the intended termination in accordance with Section 102 of the Works Constitution Act, and the works council had approved it.

In the detailed hearing letter, the defendant justified its decision by stating that the plaintiff's ability to work could no longer be expected to be restored due to the prolonged absence, and the workplace's functioning was unreasonably compromised due to the uncompensated loss of working capacity. Moreover, the defendant argued that it had offered the plaintiff a so-called site reintegration management (Betriebliches Eingliederungsmanagement – BEM) twice, but she had declined both times.

The plaintiff contested this, arguing that there was no negative prognosis regarding her health, and her doctors had confirmed she would be fully fit for work by October 2024. She also claimed that the offers of site reintegration management had been made at inopportune times due to her hospital stays, a fact incorrectly stated in the hearing letter.
The Elmshorn Labor Court had initially upheld the dismissal (3 Ca 1330 d/22).

Permanent replacement options should be avoided

However, the Schleswig-Holstein Higher Labor Court dismissed the appeal, affirming that the dismissal was legally flawed and socially unjustified. The dismissal was invalid pursuant to Section 1 (1) Act Against Unfair Dismissals Act (Kündigungsschutzgesetz) as it was not socially justified. A dismissal for personal reasons due to long-term illness is socially justified within the meaning of Section 1 (2) Act Against Unfair Dismissals if:

1. there is a negative prognosis with regard to the expected duration of the illness;
2. a significant impairment of the interests of the site due to the inability to work;
3. a weighing of interests makes it clear that the adverse effects on the site lead to a burden on the employer that is no longer reasonably acceptable.

In the case of long-term absences from work, it can regularly be assumed that there is a significant impairment of the interests of the site. If an employee has no certain knowledge of when he or she will be able to work again, this is equivalent to a permanent incapacity to work if recovery is not expected for at least the next 24 months. On the other hand, however, employers could typically bridge a temporary replacement with a fixed-term employment relationship for a period of up to 24 months without difficulty in accordance with Section 14 (2) sentence 1 Act on Part Time and Term Work (Teilzeit- und Befristungsgesetz).

The defendant had not (sufficiently) submitted any significant impairment on site (2nd stage). The defendant only referred to the fact that a "future (...) restoration of the ability to work is (not) to be expected.". Although such a statement fulfils the requirements for a negative prognosis, it is not clear why this would also lead to considerable restrictions on the site for the period in question. It therefore follows that the long-term incapacity was not the reason for the dismissal.

Instead, operational impairments would result from the fact that the defendant had permanently assigned the plaintiff's tasks to another employee. The workplace was therefore double staffed. The hiring of a permanent employee or the permanent assignment of such an employee would likely be justified if temporary employees could not be found. For such an argument, however, the defendant would have had to prove corresponding efforts, such as the unsuccessful search for a temporary employee.

The works council hearing was also incorrect. Since the defendant had reassigned a permanent employee, the plaintiff's workplace was now permanently double-staffed. This was the actual reason for the dismissal. However, the defendant had not reported this fact sufficiently or at all in the hearing. The defendant had itself created the reason for the dismissal by double staffing and left it unmentioned. Therefore, the works council was not in a position to review the validity and weight of the reasons for termination.

High demands on practice

The decision of the Schleswig-Holstein Higher Labor Court illustrates the high standards that case law sets for dismissals on the grounds of illness. The rejection of a reintegration management in the site is by no means sufficient to justify a dismissal. The hiring of at least temporary replacement staff should be carefully examined. If the current difficult labor market situation does not permit the use of temporary staff, these recruitment efforts should be recorded in detail and only then should permanent staff be sought.

To avoid the failure of a dismissal due to the works council hearing, it must be prepared carefully and with sufficient detail and background information. The employer's subjective (obvious) motivation for the dismissal must also be mentioned.