Temporary Agency Work

Temporary Agency Work under German Law​

Temporary agency work (also known as labor lease, temporary work, dispatch labor) in Germany is increasingly used by businesses to dispose of highly specialized professionals. This legal instrument allows some flexibility despite the high level of regulation under German Employment Law. Throughout the European Union (EU) one can observe that especially high-paying IT services and engineering services, as well as activities like audit, tax, and legal advice, are increasingly carried out by temporary agency workers. This also applies to expats in Germany.

International agency work

Temporary agency work is used increasingly often in cross-border contexts within Europe. Some international businesses are not aware that using the workers on German territory can already put the mandatory obligations of the German Arbeitnehmerueberlassungssgesetz (AUG) into effect. Under this German statute of Employment Law, a permit issued by the Federal Employment Agency (Bundesagentur für Arbeit – BAA) is required. If you are looking to place an employee in Germany, contact us to know how we help with drafting employment contracts and navigating German bureaucracy. 

Coronavirus effect on Temporary Agency Work

The Coronavirus crisis has had a severe impact on the general German employment market, with temporary agency workers and the agencies themselves being hit hard by the ensuing economic fallout. The German government has moved quickly to extend Kurzarbeitergeld to those in temporary employment. Should you work for, or own such an agency, please review our article on this topic, advising on the rights and entitlements of employers and employees in this sector.

Posting of workers

The posting of workers in a cross-border context is typically used by companies to establish new management and expertise structures in a particular location. The most frequent problems that occur are related to German Employment Law (non-compliance with the minimum standards as laid down in the German Arbeitnehmerentsendegesetz – AEntG and MiArbG) and German Social Security Law (A-1 form, E-101 form). Under certain circumstances, the strict rules of the German AUG apply in addition.

Violations of AUG and AEntG

Violations of permit requirements under the AUG (Temporary Agency Work) and non-compliance of minimum working conditions under the AEntG (Posting of Workers) result in investigation proceedings by the German Customs (Hauptzollamt). Such proceedings often end with a fine notice (Bußgeldbescheid) or a forfeiture notice (Verfallbescheid) that can be tremendously costly. The violation of Social Security obligations regularly leads to serious legal charges or even forced reversals of a complete employment relationship by order of the competent social security institution (in most cases, Deutsche Rentenversicherung – DRV).