German Court Rejects Partial Sick Leave Claim as Major Reform Looms

A German appeals court has shut down a doctor’s bid for partial injury benefits, reaffirming that current law does not recognize “partial incapacity for work” — even as lawmakers prepare to introduce exactly that concept in 2028.

The State Social Court of Baden-Württemberg ruled against an assistant physician who had been certified with COVID-19 as an occupational disease. She returned to work in June 2022 at 40 hours per week but stopped taking on-call shifts, losing associated bonuses. When she sought injury compensation for those lost earnings, judges dismissed the claim. Under existing rules, working one’s full contractual hours means the employee is not incapacitated, regardless of which specific duties they can no longer perform (case number L 10 U 135/25).

Parliament greenlights tiered system for 2028

That legal landscape will shift dramatically in under two years. On July 10, 2026, the Bundestag passed the Statutory Health Insurance Contribution Rate Stabilization Act, which inserts Section 44c into the Social Code Book V. Starting January 1, 2028, genuine partial incapacity for work becomes possible.

The new model offers three tiers: 25, 50, or 75 percent incapacity. Employees qualify only if their illness is expected to last more than four weeks and their employer voluntarily agrees. During the first six weeks, full continued wage payment remains intact. After that, workers receive proportional salary from their employer plus partial sick pay from their insurer — 70 percent of the lost gross earnings, capped at 90 percent of the net shortfall. The regulation applies exclusively to statutory health insurance members.

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Sick pay cut for partial pensioners from 2027

The same legislation includes a tightening for older workers. Starting in 2027, anyone receiving an old-age partial pension loses their sick pay entitlement entirely — provided the pension exceeds two-thirds of a full retirement benefit.

This catches even models where the partial pension sits at 99.99 percent of a full pension. The federal government estimates annual savings of roughly €30 million. Cabinet approved the draft on April 29, 2026.

Spanish ruling sets limits on detective surveillance

International case law is drawing boundaries around employer monitoring during sick leave. Spain’s Labour Court in A Coruña voided the dismissal of an employee who had been on sick leave for over two years following a stroke. A private detective had surveilled her, but judges ruled that routine activities like grocery shopping do not prove fitness for work. The court awarded her €5,000 in damages.

German law similarly restricts detective use. The Federal Labour Court ruled on July 25, 2024 (case 8 AZR 225/23) that investigators may only be deployed when a concrete, fact-based suspicion exists.

Austria highlights time-off trap

A separate legal nuance emerged in Austria, where the Supreme Court clarified that falling ill during agreed compensatory time off does not pause that time — unlike annual leave. While sick days during vacation are credited back after three days, any time banked for compensatory leave simply expires when the employee becomes incapacitated. A labour law expert noted that many workers remain unaware of this gap in protections.

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