First ruling on COVID-19 compensation
Background to the disputes that have arisen
If, on the basis of the Infectious Diseases Protection Act [Infektionsschutzgesetz, IfSG] or the respective directive, an employee is officially ordered to isolate in quarantine and, as a result, incurs a loss of earnings, their employer is able to claim compensation for the relevant time period. This is initially calculated on the basis of the amount of the loss of earnings.
The Infectious Diseases Protection Act provides for the employer to first pay the employee the amount of compensation and then apply to have it reimbursed. If the competent authority refuses to reimburse the amount then the employer can appeal against the refusal before the competent administrative court. The reason that is frequently provided for refusing an application for a compensation payment is that the loss of earnings that arose was either not at all because of or not due to having to isolate.
How a loss of earnings that has to be compensated originates
Under employment law, the “no work, no pay” principle generally applies - those who do not perform any work will also not be entitled to any remuneration. There are exceptions to this that provide for employees, in certain cases, to be able to claim their wages (or compensation payment) from their employers even if the employees are not able to do their work. For example, wage and salary payments during a period of illness would constitute benefits in lieu of income. In such a case, the loss of earnings that occurs is not due to having to isolate but due to illness. The entitlement to compensation that emanates from the IfSG would then not apply because it would fail to satisfy the criterion of loss of earnings that occurred ‘as a result of’ (due to having to isolate). The payment would be made under the Continued Payment of Wages and Salaries Act.
Another regulation that constitutes an exception to the “no work, no pay” principle is Section 616 sentence 1 of the Civil Code (Bürgerliches Gesetzbuch, BGB). This stipulates that an employee retains their entitlement to remuneration even with ‘no work’ if: ”for a relatively insignificant period of time, for a reason that is attributable to the employee personally, through no fault of their own they are prevented from performing their duties”. Insofar as the employer would have to continue paying wages under this regulation then the employee would precisely not incur a loss of earnings so that the entitlement to compensation under the IfSG would then also not apply. For employers, the legal disputes were therefore about clarifying that Section 616 BGB did not apply.
It was (and is) thus questionable - and a major point of contention - if and when the conditions under Section 616 sentence 1 BGB are met. The “reason that is attributable to the employee personally” does not usually cause any problems; in the case of having to isolate, normally, the reason is individual risk of infection. The employees generally bore this risk through no fault of their own insofar as they had complied with the hygiene regulations.
However, due to the lack of a definition of “a relatively insignificant period of time” there have been fierce disputes about what period of time can still be regarded as being insignificant - what periods of absence are thus short enough in order to establish an entitlement to remuneration under Section 616 sentence 1 BGB so that it could be deemed that there was no loss of earnings. However, in the legal literature and court decisions, time periods ranging from a few days and up to six weeks have been discussed. To some extent, the time period should also be set in relation to the duration of the existing employment relationship, i.e., in cases of long-standing service, a longer period of time (e.g.,14 days) could still be “relatively insignificant” (and therefore remunerated by the employer under Section 616 sentence 1 BGB). It has also been discussed that, irrespective of the period of service, only short periods of absence should be included under Section 616 sentence 1 BGB during which, for one or a few days, employees would be prevented from doing their duties because of, e.g., accidents in the family, weddings, births or urgent appointments at government offices. At any rate, there is agreement that not even partial entitlement would arise if, from the outset, the period of time is insignificant. Up to now, there have been hardly any court rulings that could resolve the dispute discussed above, in any case, not on the instances of having to isolate, usually for 14 days, in connection with the COVID-19 pandemic. Another feature of these proceedings was that administrative courts have had to grapple with profound employment law issues.
Decisions of the courts of first instance
In the meanwhile, the first rulings in this connection are available (Administrative court in Münster, rulings of 1.12.2022, case references:5a K 92/22, 5a K 165/22, 5a K 5797/21, 5 K 106/22, 5 K 156/22 and 5 K 164/22). In this respect, the court positioned itself to the effect that twelve days of isolation can no longer be regarded as “a relatively insignificant period of time” so that the conditions under Section 616 sentence 1 BGB cannot be fulfilled and, therefore, the court affirmed that there had been a loss of earnings that had to be compensated. The rulings are legally binding to some extent. However, in some cases, appeals have been lodged. It remains to be seen whether or not the appeal court confirms the above decisions.
Disputes with authorities about these issues can be avoided if, in their employment agreements, employers ensure that Section 616 sentence 1 BGB is excluded from the outset for cases of official isolation and quarantine orders. It should however be borne in mind that, under employment law, it is not possible to effectively exclude Section 616 BGB in its entirety, but instead, only under certain circumstances.
Please note: It is possible to apply for compensation in connection with a quarantine directive within a period of two years following the issue of a prohibition notice with an instruction to stop work.