Continued payment of wages: Employers pay 82 billion due to illness

High levels of sickness absence and increased employment in Germany have driven up employers' expenses for sick employees to around 82 billion euros in 2024. The German Economic Institute (IW) has determined that costs have risen by 10 billion euros within three years.

Tax and social security expert Jochen Pimpertz of the employer-friendly IW (Institute for Economic Research), points to various proposals for limiting this cost factor. For example, waiting days: "Salary payments would be suspended for a few days at the onset of illness." Alternatively, waiting periods could be defined during which salary would be paid at a reduced level, says Pimpertz. In any case, relief is urgently needed.

The duration of the obligation to continue paying wages could also be limited, according to the IW expert. This could be achieved, for example, by restricting the duration of continued salary payments in the event of changing diagnoses. Currently, salary is paid for a maximum of six weeks per year – except in the case of another sick note due to a different diagnosis. According to Pimpertz, in the future, employers could not be required to pay salary for more than six weeks per year, even in the event of changing diagnoses.

According to the study, total expenses for sick employees have increased 2.2-fold since 2010. The IW summarizes employers' expenses for continued salary payments – a total of €69.1 billion according to the 2024 social budget – with employers' share of social security contributions, which the IW estimates at €13.0 billion. This does not include continued salary payments during maternity leave.

If an employee is absent from work due to illness, the Continued Remuneration Act obligates the employer to continue paying their salary. For longer absences, the statutory health insurance provider pays sick pay after continued salary payments. Until the end of the 72nd week, employees on long-term sick leave are entitled to 70 percent of their gross salary. Last year, employer expenses exceeded the costs of sick pay fourfold, according to the IW.

According to the IW, the cost increase in recent years has been driven by wage increases and growing employment. "In addition, sick leave has been rising steadily for around two decades," emphasizes Pimpertz. He explains that absenteeism is increasing with the aging of the workforce.