28. April 2015

How to run a temporary work agency in Germany?

Welcome to the website of the AMETHYST law firm in Berlin

We are a law firm spe­cial­ized on tem­po­rary agency work and inter­na­tion­al staff deploy­ment. Our attor­neys 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.

For fur­ther infor­ma­tion or legal advice, please do not hes­i­tate to con­tact us via e‑mail (hennig@amethyst-recht.de), phone (+49 (0)30 27 89 00 20), tele­fax (+49 (0)30 27 89 00 10) or by using this form.

 

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 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 rates are cur­rent­ly at 8.15 € in the west and 8.22 € in the east includ­ing Berlin (as of 2016).

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.

Application procedure

How do I apply for the temporary agency work license?

For the ini­tial issue of a license the fol­low­ing doc­u­ments must be sub­mit­ted to the respec­tive Fed­er­al Employ­ment Agency:

• Arti­cles of association 
• Cer­tifi­cate of good conduct
• Infor­ma­tion from the com­mer­cial cen­tral reg­is­ter about the appli­cant and legal rep­re­sen­ta­tives of the enterprise
• Trade reg­is­ter excerpt
• Cer­tifi­cate from the health insur­ance in which most of the employ­ees are insured, as far as con­tri­bu­tions have been paid
• Dec­la­ra­tion of con­sent for the request of infor­ma­tion from the tax office
• Cer­tifi­cate from the employ­ers’ lia­bil­i­ty insur­ance association
• Proof of liq­uid assets such as all bank deposits held on demand or cred­it con­fir­ma­tion regard­ing tol­er­at­ed over­draft. In order to proof its cred­it­wor­thi­ness, an agency that intends to hire up to five employ­ees must proof liq­uid assets of at least EUR 10.000. With an intend­ed employ­ment of more than five employ­ees, the amount increas­es to EUR 2.000 per employee.
• Sam­ple employ­ment con­tract and sam­ple employ­ee leas­ing agreement

Depend­ing on where the reg­is­tered office of the for­eign enter­prise is locat­ed, the comepe­tence for issu­ing a license differs.

Scope of testing

When estab­lish­ing a tem­po­rary work agency, the Fed­er­al Employ­ment Agency par­tic­u­lar­ly exam­ines the com­pa­ny owner’s per­son­al reli­a­bil­i­ty. If cer­tain facts or cir­cum­stances indi­cate that the appli­cant will not com­ply with the applic­a­ble law and statutes, the Fed­er­al Employ­ment Agency may deny the grant­i­ng of a license. Exam­ples of such facts, enu­mer­at­ed in Sec­tion 3 (1) Nr.1 AÜG, include non-com­pli­ance with:

• pro­vi­sions of social secu­ri­ty leg­is­la­tion,
• pro­vi­sions of the SGB III on place­ment ser­vice as well as on the employ­ment of for­eign­ers (§ 284 ff. SGB III),
• pro­vi­sions of employ­ment pro­tec­tion legislation,
• oblig­a­tions under employ­ment law.

Fees

For issu­ing or extend­ing a lim­it­ed license, the Ger­man Fed­er­al Employ­ment Agency charges the appli­cant EUR 1.000. The fee for an unlim­it­ed license amounts to EUR 2.500.

Helpful Links

Eng­lish lan­guage ver­sion of the Ger­man Fed­er­al Employ­ment Agency (Bun­de­sagen­tur für Arbeit)