Germany: New legislation for temporary agency workers

Effective 1 April 2017, the legislator has made several amendments to the German Act on Temporary Work (Arbeitnehmerüberlassungesetz). The changes have been awaited for quite some time now and bring several amendments and clarifications of high relevance to all companies that make use of agency workers. The key changes are:

• The maximum time period for agency work is limited to 18 months; deviations are possible by collective bargaining agreement only, but such deviations are also restricted. If the maximum duration is exceeded, there will be deemed an employment relationship between the hirer and the temporary worker unless the employee objects.
• Agency workers and fixed employees must have equal pay within nine months. However if equal pay is accomplished by gradual harmonisation of working conditions under collective agreements, then this time limit is extended to 15 months.
• Temporary workers cannot be used as strike-breakers; fines of up to EUR 500,000 apply.
• Agency workers count when calculating thresholds for co-determination and participation rights from the first day of their employment.
• There is a prohibition on allowing agency workers to work for third parties.

The fact that the employment relationship is a temporary one needs to be explicitly stated to the agency worker and in the contract between the hirer and the lender. It is therefore not possible anymore to obtain a license to supply agency workers 'just in case' while working under other forms of contracts (eg, service contracts) as a fallback solution. Furthermore the names of the agency workers that are supplied have to be explicitly stated before the contract is in effect.

While temporary employment in Germany is already strictly regulated, the amendments are likely to further decrease the attractiveness of temporarily hiring agency workers, since working conditions have to be increasingly equal to those of regular employees, and employment of agency employees will now also have a deeper impact on co-determination rights thresholds. It remains to be seen if collective agreements with trade unions can be concluded to mitigate the effects.

Written by Dr Tobias Brinkmann, Associate