Empoyee Leasing
Temporary employment agencies are employment agencies with jobs at their clients’ premises, where temporary workers perform their work in accordance with their contracts. Temporary employment agencies are employers like any other employer; The special provisions of the German Temporary Employment Act (AÜG) apply. Every employee generally receives a written, permanent employment contract with the usual benefits such as pension, health, unemployment, nursing care, and accident insurance, paid vacation, continued payment of wages in the event of illness, statutory protection against dismissal, etc. Temporary employment agencies offer socially protected employment relationships.
Emloyee Leasing has become an indispensable part of the economy. Every year, more than half a million temporary workers are employed in companies. This gives companies greater flexibility and scope for action in their human resources management. Employee Leasing is a proven tool for bridging personnel shortages. Typical cases of need include deadline pressure, order peaks, illness, vacation, military service, pregnancy, and the like. Temporary work helps companies to secure their own jobs.
The special rights of Emloyee Leasing are regulated by the Temporary Employment Act (AÜG). Every temporary employment agency requires a license from the Federal Employment Agency. In addition, the general legal provisions such as the Continued Remuneration Act, Federal Leave Act, Maternity Protection Act, Severely Disabled Persons Act, etc.
Employee Leasing offers special opportunities for skilled workers and unskilled workers
- Secretaries, office clerks, etc.
- older job seekers
- mothers returning to work after maternity leave
- career starters
- students
- people returning to work after a long career break
Temporary work offers variety and qualifications. Assignments abroad are also possible. Flexible working hours can be agreed upon according to the wishes of the employee.
Temporary employment agencies conclude a written employment contract with the employee. Full-time employment is usually agreed upon. The employment contract is usually open-ended. Temporary employment agencies are normal employers like any other. All the usual provisions apply to temporary workers, such as pension insurance, health insurance, unemployment insurance, accident insurance, occupational safety, statutory protection against dismissal, etc. Temporary workers are also entitled to paid vacation, continued payment of wages in the event of illness, and continued payment of wages even if the temporary employment agency has no work for the temporary employee.
Approximately 65 percent of women and men employed in temporary work were previously unemployed. Temporary work helps to relieve pressure on the labor market and saves money for the Federal Employment Agency. Around one-third of temporary workers switch to conventional jobs with client companies.
Temporary work is a tool for flexible human resource management. It offers employees a wide range of career opportunities. Temporary work provides social stability, promotes the labor market, and contributes to economic growth. The federal government’s reports on temporary work state:
Temporary work “is moving in an orderly fashion. It is making a (…) contribution to reducing unemployment.“ It has ”proved its worth once again“ and is increasingly becoming ”a means of long-term personnel planning.”
Temporary work “has established itself on the market as a means of flexible personnel deployment,” according to the Federal Ministry of Labor and Social Affairs, and “contributes to creating additional employment opportunities.”
Source: Bundesverband für Zeitarbeit (German Federal Association for Temporary Work)
Maximum transfer period and minimum interruption
In principle, the current regulation stipulates a maximum assignment period of 18 months with a client company, unless there are deviating works agreements or collective agreements. The actual assignment period is relevant for the assignment period – an assignment is therefore also counted if a (formally valid) temporary employment contract is not yet in place. This includes vacation, sick leave, and public holidays, as well as scheduled breaks in employment such as weekends, free shifts, or days off in the context of part-time employment. However, it does not include periods without assignment (guaranteed periods) or assignments with other customers.
All assignment periods at the same client company are added together. Only after a minimum interruption of three calendar months plus one day is this addition canceled and the assignment period starts again from zero.
Failure to comply with the maximum assignment period may result in consequences for both the temporary employment agency and its client:
automatic termination of the employment relationship with the temporary employment agency and the legal establishment of an employment relationship with the client company. Only the employee has the option of revoking this automatic process by means of a so-called retention declaration. In this case, they remain an employee of the temporary employment agency. However, this does not remedy the violation of the law.
For the temporary employment agency: Fines of up to €30,000 and, in individual cases, withdrawal of the temporary employment license.
"Equal Pay" regulations
After nine months of employment with the same client company, the equal pay rule applies provided that a temporary employment collective agreement applies to the assignment. If an industry surcharge tariff applies, the regulation only takes effect after 15 months. The same rules apply to the calculation of the assignment period as to the maximum assignment period.
Violations of this provision are subject to even stricter penalties than those for exceeding the maximum assignment period: fines of up to EUR 500,000, the withdrawal of the temporary employment permit, and claims by the temporary worker for payment of the difference between the statutory or collectively agreed equal pay.
Labeling, specification, and information requirements
Strict rules also apply in the AÜG to temporary employment contracts: labeling and specification requirements stipulate that a temporary employment contract (AÜV) must be explicitly designated as such in the contract and the employee must be specified in the contract before the assignment (name, date of birth). Furthermore, the employee must have been informed before the assignment that he or she will be employed as a temporary worker.
Ban on strike action
This prevents temporary workers from being used as strike breakers during strikes organized by DGB trade unions. Client companies face fines of up to €500,000 for non-compliance. Different regulations apply to non-DGB unions.
AÜG (German Temporary Employment Act) deadline calculator
This tool allows you to calculate the maximum assignment period for a continuous employment relationship, the date on which statutory equal pay begins, and the subsequent minimum break until possible continued employment.*