We offer legal advice to foreign enterprises planning to either run a national or transnational temporary work agency or to post workers to Germany.
We provide complete consultation including the choice of legal form for your business, the procurement of a work permit as well as the application for issuing a license to supply temporary workers and finally the legal assistance in the daily personnel management.
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What foreign enterprises need to know about temporary work in Germany
What is temporary agency work?
Temporary work is a form of employment where workers are employed by agencies (temporary work agencies) which in turn hire them out to a third party (the client company) where they work temporarily under the client company’s direction and supervision. The temporary worker is considered an employee of the temporary work agency, not of the hiring company. During his employment relationship the temporary worker can be hired out to several client companies. Once such work is performed cross-border, it represents a transnational temporary work agency.
What is the legal basis for temporary agency work in Germany?
Overall, temporary work in Germany is governed by federal laws, regulations in collective agreements as well as agreements between the works committee and management.
The most important body of laws regulating temporary work agencies on federal-level is the Temporary Agency Work Act (Arbeitnehmerüberlassungsgesetz, AÜG). Collective agreements regulate specific pay and working conditions. Furthermore, the works agreement may include establishment-specific rules for the use of temporary agency workers.
The German Federal Employment Agency (Bundesagentur für Arbeit, BA) is the supervisory authority of all temporary work agencies operating in Germany. It regularly publishes information sheets concerning key provisions of the Temporary Work Agency Act.
Are there any restrictions of temporary agency work in Germany?
According to the AÜG a temporary work agency intending to make the service of temporary workers available to third parties on a commercial basis, requires a license issued by the respective regional directorate of the German Federal Employment Agency. In case a temporary work agency supplies a temporary worker without the required license the employment contract between the agency and the worker is null and void. Instead, an employment relationship between the client company and the temporary worker comes about which begins on the date agreed upon by the agency and the client company (Sec. 10 (1) 1 AÜG).
The license is initially issued for one year only (Sec. 2 (4) 1 AÜG). An application for extension of the license shall be substituted no later than three months before the end of the year (Sec. 2 (4) 2 AÜG). After a period of three years an unlimited license can be issued (Sec. 2 (5) 1 AÜG).
In addition, the construction industry is subject to special restrictions: Hiring out temporary workers to companies in the construction industry for the purpose of performing work usually carried out by workers is permitted, (Sec. 1 b AÜG). Exceptions to this rule apply in certain circumstances.
What legal requirements apply to the employer-employee relationship?
The employment relationship between agency and temporary agency worker is governed by labour law including all regular social security provisions. In addition, the principle of equality (Equal Treatment/ Equal Pay) applies to all employment relationships on a temporary basis. According to this principle, temporary workers are entitled to be given the same basic working conditions, including the same salary, as a similar employee within the hiring company. Other working conditions may be agreed upon by the agency and the worker as long as the minimum wage applicable to temporary work is met.
Basic working conditions include:
- duration of working time, overtime, breaks, rest periods, night work, holidays,
- remuneration (e.g., annual bonuses, allowances, bonuses, rewards, employer-side subsidies to occupational pension schemes)
Temporary work agencies are exempt from the obligation to equality if:
- The application of an effective collective agreement was agreed upon in an employment contract.
- The hourly wage of the collective agreement does not fall below the minimum wage. The hourly minimum wage rate is currently at 8.50 €.
If all these conditions are fulfilled, the provisions of the collective agreement apply to both periods of assignment and periods without assignment.
In practice, this exception has become the rule as it provides advantages for all parties affected: The client company does not have to disclose its remuneration system, the employees are not exposed to changes in their working conditions and the temporary work agency has a reduced administrative expenditure since the working conditions of its employees do not change constantly.
English language version of the German Federal Employment Agency (Bundesagentur für Arbeit)