Draft legislation regarding the reform of the German Act on the
Supply of Temporary Employees
(Arbeitnehmerüberlassungsgesetz – AÜG) has
been introduced by Germany's Federal Minister of Labor.
Although further amendments to this draft are likely and a final
version will not come into force before January 1, 2017, it is
important to know what this means for temporary employment agencies
and their customers, the host businesses.
Introduction of a maximum hire term of 18 months
According to the draft bill, the hirer of temporary employees
will be required to terminate the deployment of the temporary
employee after 18 months. Hire times prior to January 1, 2017 shall
be expressly excluded.
After 18 months, the provider may supply a different temporary
employee to the same hirer without the previous supply counting
towards the maximum period. He may not, however, supply the same
temporary employee even if the employee works for the same host
business in a succession of different positions.
A deviation from this maximum hire term up to 24 months is
possible by works agreement. Companies bound by collective
bargaining agreements even have bigger flexibility, as no maximum
term applies for them.
In case of breach: Employment relationship with host
In case of breach, a legal fiction of an employment relationship
with the hirer is created. According to the draft bill, an
employment relationship is deemed to arise if the maximum hire term
is exceeded, provided the temporary employee does not object to
Equal pay no later than after nine months
The principle of equal pay shall, in principle, apply directly
and in case of an (industry-specific) collective agreement no later
than after nine months. After this period, a temporary employee
must not be paid less than a comparable employee in the
organization of the hiring company. Under certain circumstances,
collective agreements can also provide for equal pay only after 15
Sanctioning the "hidden" supply of temporary
The present common practice to apply for a permit for the supply
of temporary employees by way of precaution in order to avert the
consequences of an illegal supply of employees will no longer work
in relation to ostensible Work Contracts and ostensible service
contracts. The "hidden" supply of employees with a
"precautionary permit" is to be treated the same way as a
supply of employees without a permit. In future, an employment
relationship with the supposed party commissioning the work or
entitled to a service shall arise in both cases – and this
party shall be liable as an employer for any social security
contributions and wage tax.
This corresponds to a new duty to provide information to the
temporary employee; prior to every supply of employees, the
provider must inform the temporary employee that he is going to be
working as a temporary employee.
Statutory definition of the term Employee
According to the draft bill, a new section 611a German Civil
Code (Bürgerliches Gesetzbuch) is to be implemented, legally
defining the term Employee. As the definition corresponds to
current case-law of the superior courts, this amendment is not
likely to bring any material changes.
New provisions regarding strikebreakers, work council's
right and co-determination
The draft bill provides for a prohibition of employment for
temporary employees if a business is directly affected by a labor
dispute. Currently, the temporary employee (merely) has a right to
refuse performance; the temporary employment agency is under an
obligation to notify the temporary employee of such right.
A general obligation will be implemented to inform the works
council to extend to "the term of the hire of temporary
employees, their place of work and their work
responsibilities." The documents to be submitted to the works
council shall also include the contracts on which the hire of
external temporary staff is based.
According to the draft bill, in principle, temporary employees
have to be taken into account in determining thresholds for the
purposes of co-determination on operational and company level. The
extension to the thresholds for co-determination seems logical as
recent case-law had clearly been moving in this direction.
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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