Workforce planning in Germany: new rules for temporary agency work
On 1 April 2017, a new law governing temporary agency work came into effect in Germany (the “Act”). Businesses operating in Germany, whether suppliers or end users of agency workers, must take note of the new rules under the Act in their workforce planning, as they create significant new risks and restrictions in the use of agency workers.
What are the new rules?
Hire periods for temporary agency workers are now restricted to 18 months:
- Hire times prior to coming into force of the Act are excluded;
- If a temporary worker is hired by the same end-user company all hire periods will be counted towards the 18 month threshold (unless there is a gap between hire terms of at least three months);
- A longer maximum hire period can be agreed under a collective bargaining agreement.
Equal pay and working conditions for temporary workers:
- Temporary workers are entitled to equal pay and working conditions compared to permanent employees of the end-user (hiring) company from the first day of rendering services to it;
- Contractual arrangements may deviate from this basic principle for a period of nine months if the parties agree the application of a collective bargaining agreement that determines a different salary. After this nine month period, the salary and working conditions of the temporary worker must be identical to employees of the end-user company;
- Different arrangements can also be made under further collective bargaining agreements providing surcharges for specific sectors (“Branchenzuschlagstarifverträge”). In these cases equal pay and working conditions (compared to other employees in the sector, rather than of the specific end-user) have to be granted only after 15 months. The collective bargaining agreement must provide a gradual increase towards equal pay, beginning not later than after a training period of six weeks.
End to precautionary permit protections for supply of temporary workers:
- Over past years there has been a practice whereby written contracts were put in place that claimed to provide for the performance of services, whereas the agreement was in reality for supply of temporary workers. Until now it was possible to have a precautionary permit to hire temporary workers, making it possible to cover up these false employment arrangements.
- Precautionary permits no longer protect agencies from the consequences of such arrangements. Now the contract between supplier and hirer has to specify the identity of the temporary worker and he/she must be informed that such a permit exists.
Striking employees of the hiring company may not be replaced by temporary workers
Consideration of temporary workers for employee participation thresholds:
- Temporary employees have to be taken into account in determining thresholds for the purposes of employees’ participation on an establishment and company level.
What does this mean for employers and agencies?
The Act brings new risks for both the supplier and the hirer of temporary workers:
- If the maximum hire term of 18 months is exceeded, an employment relationship between the temporary worker and the hiring company may be created, unless the temporary worker formally objects to such a relationship being formed;
- Violation of the maximum hire term can be punished by a fine of up to €30,000 for the hirer or agency or both;
- If a temporary worker is not informed about the temporary work situation and that his employer holds a temporary work permit, an employment relationship between the temporary worker and the hiring company may be created unless the temporary worker formally objects to such a relationship being formed within a one month period;
- Violations of equal pay, the use of precautionary permits as well as the use of temporary workers for striking employees of the hiring company may be punished by a fine of up to €500,000 for the hirer or agency or both and / or revocation of the hiring company’s temporary work permit.
It is therefore essential that businesses take account of these new rules in workforce planning, and dealing with existing arrangements, as they place significant new risks on the use of agency staff.
For further information or to discuss any of the issues raised, please contact Stefanie Andrelang on +49 (0) 89 2422300, Keller Menz.
German Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz (AÜG)).
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.
Circular 230 disclosure
To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.