Germany: Temporary Workers In Permanent Jobs: A Works Council’s Right To Withhold Consent?

Last Updated: 26 February 2013
Article by Franka M. Thomas

Since the revision of Section 1 of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz; AÜG), employers have increasingly been confronted with works councils' refusal to consent to the use of temporary workers in positions not established "on a temporary basis."

In court rulings and legal literature, two questions in particular have arisen in this context:

  1. How should the phrase "on a temporary basis" be interpreted?
  2. Can the works council refuse its consent to the use of temporary workers in permanent jobs?

Initial Situation

Since having been revised at the end of 2011, Section 1 AÜG reads, in part: "Leasing workers to companies that are not their formal employers shall be effected on a temporary basis." By means of this amendment, the federal government implemented into national law the European Temporary and Agency Work Directive (Directive 2008/104/ EC of the European Parliament and the Council of November 19, 2008, on temporary-agency work).

As the legislature did not define the phrase "on a temporary basis" in terms of time, considerable legal uncertainty arose, with judges providing different interpretations. This uncertainty is increasingly utilized by works councils to withhold consent when they believe the employer wants to hire temporary workers permanently.

The Meaning of "On a Temporary Basis"

Three opinions have evolved regarding how the phrase "on a temporary basis" is to be understood:

The first opinion assumes that the use of temporary workers is "temporary" and thus admissible only if the existence of a factual reason for a time limitation according to the German Act on Part-Time and Fixed-Term Employment (Teilzeit- und Befristungsgesetz) can be affirmed at the time the employee is hired for a certain job. This view holds that the permanent use of temporary workers is per se excluded.

The second opinion holds that the phrase "on a temporary basis" merely serves as a safeguard against the unregulated use of temporary employees, a situation that must be judged on an individual basis. Accordingly, the hiring is deemed to be temporary if it covers temporary labor requirements. However, if the job actually becomes a permanent position, the employee in question can no longer be considered a temporary worker.

The third opinion assumes that the phrase "on a temporary basis" was included only to point out that the German legislature implemented the European directive by means of the amendment. Therefore, no maximum duration for the hiring can be assumed from the phrase. However, the use of temporary workers does not have to be limited in time from the outset and can also occur in permanent jobs.

May a Hiring Company's Works Council Refuse to Grant Its Consent?

If one agrees with the first opinion—that the phrase "on a temporary basis" not only has a clarifying function but also constitutes a prohibition on the hiring of temporary workers for permanent jobs—the question arises whether this constitutes a basis for the hiring company's works council to withhold consent for the hiring.

One possible reason for withholding consent is the assumption that such a hiring would infringe a law (Section 99 Para. 2 No. 1 Betriebsverfassungsgesetz; BetrVG). In other words, the deployment of temporary workers would be illegal if it was not made on a temporary basis.

Some observers believe that Section 1 AÜG does not constitute a prohibition and that therefore the hiring company's works council is not entitled to refuse its consent. This follows from the fact that the AÜG does not provide for any sanctions against employers who ignore it. (The opposite opinion, of course, holds that Section 1 AÜG does indeed constitute a prohibition and is therefore a reason for the works council to withhold its consent.)

Still another opinion holds that Section 1 AÜG technically does not constitute a prohibition but that the existence of a prohibition is not necessary for the refusal of consent— which means the works council does have the right to refuse.

Outlook and Recommended Action

Complaints have been filed with the Federal Labor Court (Bundesarbeitsgericht; BAG) against many of the court decisions made since the revision of the AÜG, with a decision by the highest court expected in the near future. Due to the uncertain legal situation, it is expected that, until a decision has been made, the likelihood that works councils will refuse to consent to the deployment of temporary workers will only increase.

The employer has several options:

  1. The employer can conclude a shop agreement with the works council for the deployment of temporary workers until a decision by the highest court has been made. Although such an agreement does not preclude the withholding of the works council's consent, the potential for conflict is reduced if an agreement has been accepted by both sides before the problem arises in a specific case.
  2. The employer can abstain from using temporary workers in permanent jobs.
  3. If the employer intends to continue hiring temporary workers for permanent jobs and is not willing to conclude a shop agreement, the only option is to obtain a court order in lieu of the works council's consent for the provisional continued employment pursuant to Section 100 BetrVG. While this may provide a solution, it also poses a risk, depending on the court's decision. However, if there is a factual reason for the provisional continued employment pursuant to Section 100 BetrVG, the temporary worker can be retained, at least until a legally binding court decision has been made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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