Coming soon: the electronic certificate of incapacity for work – information and recommendations for employers

After numerous delays, the electronic certificate of incapacity for work is scheduled for introduction on 1 January 2023. What do employers in Germany need to consider?

The relevant legislative amendments date back to 2019, and apart from the date of entry into force, hardly any changes have been made since then. Since 1 October 2021, doctors under contract with statutory health insurance funds in Germany have been required to transmit information relating to incapacity for work electronically to health insurers.

A new duty is now also being imposed on employers. From 1 January 2023, they will have to retrieve electronic medical certificates from health insurers. This is a paradigm shift, away from the current system whereby employees must present a medical certificate, instead shifting the burden onto employers.

The new legal situation raises a number of unresolved questions, relating in particular to the handling of disruptions, employees' notification duties and works councils' co-determination rights. Nonetheless, employers would be well advised to prepare for the introduction of the new procedure by informing their employees and modifying employment contracts, internal processes and company rules.

Electronic certificates of incapacity for work: a paradigm shift towards employer's duty to retrieve medical certificates

Under section 5 German Act on Continued Payment of Remuneration (EFZG), all employees will in future still have a duty to notify their employer without undue delay of any incapacity for work and its anticipated duration (Anzeigepflicht). There is no change for employees with private health insurance cover, either. Privately insured employees must submit a medical certificate (in paper form) documenting their incapacity for work to their employer on the fourth day at the latest, unless the employer requires this sooner, either contractually or by instruction on a case-by-case basis (Vorlagepflicht).

When it comes to employees with state health insurance, by contrast, the German legislator is breaking new digital ground. In future, these employees will no longer have a duty to notify their employer. The only requirement for them will be to have a doctor certify any incapacity for work and its expected duration no later than on the fourth day, and to obtain (for themselves) a paper certificate. The duty to provide a medical certificate, as it has existed to date, will be moot as the doctor will transmit the relevant information to the health insurance in electronic form. Based on this medical information, the health insurer then prepares a report for the employer, containing the employee's name, the start and end date of the incapacity for work, the date of the medical diagnosis, whether it is a first-time or follow-up report, and any indications of an accident. The employer must actively retrieve this notification electronically from the health insurer (Holschuld).

Employers can also commission a third party (e.g. the external payroll provider) to do this. Either way, secure and encrypted data transmission must be ensured. Moreover, employers may only ever retrieve a medical certificate if an employee has previously notified their employer of an incapacity for work and its anticipated duration; the system is therefore not intended to allow speculative retrieval. If the health insurer establishes that the continued payment of wages has lapsed due to creditable periods of previous illness, it will automatically send a corresponding notification to the employer, meaning the employer does not actively have to retrieve it.

The new rules largely also apply to employees under the German "EUR 450 Regulations", but expressly not to those employed in private households. Nor does the new procedure apply where a non-fund doctor certifies an employee's incapacity for work (when abroad, for example). In these cases, the tried and tested procedure under section 5 (1) and (2) German Act on Continued Payment of Remuneration (EFZG) remains in force.

It is still unclear whether the employer's duty to retrieve medical certificates is compatible with the employee's duty to present documentation under German law

Only at first glance does the legal situation seem settled in the event of disruptions, for example if electronic transmission fails. The explanatory notes on the legislation state that employees still bear the burden of proof that they are not fit for work. Indeed, this explains the continuing obligation in future for employees to receive a paper certificate.

However, it is completely unclear how this can be reconciled with section 7 German Act on Continued Payment of Remuneration (EFZG). This still stipulates that an employer is entitled to refuse continued payment of wages as long as an employee does not present the medical certificate, "to be provided by him". However, this duty to present documentation will cease to apply to employees with statutory health insurance from 1 January 2023. This raises the question of who will bear the risk of resulting disruptions. Employers might therefore deem it wise to continue the practice of contractually requiring their employees to submit certificates of incapacity for work in paper form. However, it is currently unclear whether the certificate to be issued by the doctor will in future contain information on the health diagnosis. If the certificate does contain such sensitive data, employees are likely to refuse to submit it for this reason alone. Moreover, the provisions set out in the German Act on Continued Payment of Remuneration (EFZG) cannot be contracted away to the employee's detriment. The courts will therefore presumably have to decide (quickly) whether employers can invoke a right to refuse performance in the event of disruptions or whether they must simply continue to pay wages.

Possible duty to name the certifying doctor

It also remains to be seen whether the courts will infer a notification duty incumbent on employees with regard to the identity of the certifying doctor. Unlike in the past, employers are no longer informed of this in the electronic notification by the health insurers. Such a duty would appear commensurate, given that without it, employers hardly have any options to challenge the high evidential value of a medical certificate. This can be relevant where the incapacity for work has been certified by a doctor who has become conspicuous for frequently issuing medical certificates.

Consider works council's right of co-determination in technical solutions for retrieving electronic medical certificates

Finally, there is also the issue of whether the introduction of electronic sickness certification and the necessary creation of an IT interface between the employer and the health insurers (for example with the employer's payroll programme) trigger a right of co-determination of the works council under section 87 (1) no. 6 German Works Constitution Act (BetrVG), or whether the new procedure merely implements a statutory requirement, leaving no room for a right of co-determination.

Conceivable relevant issues would be access authorisation and permissible use cases. On the other hand, German lawmakers have stipulated that the corresponding IT system must go live on 1 January 2023, without making this conditional on a prior participation procedure.

Employers should prepare now for electronic medical certificates

Irrespective of these unresolved legal issues, employers should now prepare for the introduction of the new electronic procedure by informing their employees of the new rules as usual.

Employers should also adapt their model employment contracts for new hires to the new regulatory regime. It is important to bear in mind that in future the law will distinguish between employees with private and statutory health insurance and that this insurance status may change during the employment relationship. In this respect, note also the exemptions envisaged, especially where incapacity for work is certified by a non-fund doctor. A mere reference to the German Act on Continued Payment of Remuneration (EFZG) might be deemed to constitute a breach of the EU Directive on Transparent and Predictable Working Conditions.

In contrast, there is no urgent need to amend existing contracts with employees covered by statutory health insurance. Clauses that reflect the old legal situation will simply become null and void at the turn of the year, to be replaced by the new statutory provisions as already included in section 5 (1a) German Act on Continued Payment of Remuneration (EFZG). However, it should be noted that those statutory provisions only impose the obligation on employees to obtain a medical certificate from the fourth day of illness. Employers wishing to request proof of incapacity for work from the health insurer sooner might consider an individually negotiated contractual provision to that effect. When imposing such a duty on their employees, companies with a works council must observe employees' co-determination rights under section 87 (1) no. 1 German Works Council Constitution Act (BetrVG).

The technical implementation, in particular the creation of the necessary IT interface with the health insurers, should also be initiated now, if this has not already been done. To ensure a smooth transition to the new procedure, employers should contact their software provider and discuss with them how to handle the works council's conceivable co-determination rights. HR processes also need to be adapted. A renewed postponement of the introduction of the electronic certificate of incapacity for work cannot be completely ruled out at present. However, employers should be prepared and initiate the switch promptly, especially in light of the possible risk of confusion in payroll accounting.