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Staff Leasing in Germany

Staff leasing in the high-wage sector

Staff leasing in Germany (also employee leasing or temporary work) is an important instrument for making highly regulated labor markets more flexible. Whereas in Germany it was initially mainly jobs in the low-wage sector that were "flexibilized" by temporary work, the labor market is now showing a strong tendency to shift even highly specialized and highly remunerated activities to temporary workers.

Particularly for technical activities such as engineering services and in the IT sector, temporary employment agencies offer a wide range of highly specialized temporary workers who, depending on the order situation, are deployed selectively or more broadly by companies with demand. However, consulting services from economists and lawyers are also increasingly in demand on a project basis - and are accordingly offered by the market. Labor leasing is also common practice in the healthcare sector.

Temporary workers in charitables and professional associations

The nonprofit sector in Germany as well as professional associations and professional organizations often make ​​use of temporary work force. Unfortunately, many times these organizations operate either in a legal grey zone or - worst case scenario - in illegal ways without even knowing. These illegal operations often result in sensitive legal consequences for all responsible parties.

Since the reform of the German Personnel Leasing Act (Arbeitnehmerüberlassungesetz, AÜG) from 2011, temporary employees are in fact often subject to authorization in the third sector. This applies to all nonprofit operating organizations as well as for professional associations. Unfortunately, many facilities in the third sector have not yet implemented these legal changes, nor have they taken these changes as an opportunity to adapt their current structure to existing law. The temporary work and employee leasing situation in these organizations must either be completely reorganized, or a temporary employment permit is required immediately.

Labor Leasing in Germany:

A summary of ten important points to keep in mind when leasing staff in Germany

Cross-border employee leasing

Particularly in the area of technical activities, it is often the case that the corresponding personnel service providers are based outside Germany. In such cases of temporary employment with a cross-border element, there are a large number of mandatory German regulations (in particular in the German Personnel Leasing Act (Arbeitnehmerüberlassungesetz, AÜG) and the German Employee Posting Act (Arbeitnehmerentsendegesetz, AEntG)) that must always be observed if an assignment is planned on German territory.

Compliance with these legal standards is not only in the interest of the German company, but in the interest of all parties involved - although many foreign staff leasing agencies are not aware of their obligations under German law and thus run considerable legal risks. Conversely, cross-border employee leasing and employee secondments are also conceivable abroad and must likewise be carefully structured in terms of employment law.

Violations of AÜG and AEntG are expensive

Temporary employment generally requires a corresponding permit, which is issued by the German Federal Employment Agency. If a permit is not obtained or other obligations are violated in the case of secondments (e.g. minimum working conditions are not complied with), corresponding temporary employment relationships end with severe fines against the responsible parties or forfeiture notices of considerable amounts. The employment agency usually checks at regular intervals whether all obligations are being complied with.

German customs (as the competent authority) also initiates investigation proceedings against foreign participants and ensures that payment obligations are enforced in (often European) foreign countries. Even nonprofit organizations and professional associations are not handled with kid gloves by customs. They are subject to the same regulations as all other companies.

Our services for labor leasing

We advise German and international

  • companies,
  • personnel service providers,
  • nonprofit organizations, and
  • third sector associations

on the development of legally secure concepts for (cross-border) temporary employment and draft appropriate employee leasing contracts or alternative structures.

If the customs authorities have already initiated preliminary proceedings for a violation of the law, we conduct these proceedings and examine to what extent a fine or the forfeiture of a sum of money can be reduced. In many cases, this is possible if the company or organization reports the legal violation to customs itself.

Individual legal staff leasing advice

You want to lease staff to a German company or are interested in an AUG license? Whether you are a highly skilled professional seeking advice with regard to German employment law or you want to hire a temporary worker for your German company, we can assist you. Your expert for employee leasing services is Attorney Dr. Eric Uftring. He speaks English fluently and will be delighted to legally advise you on all issues of staff leasing in Germany. You can either contact us via e-mail (info@winheller.com) or phone (+49 69 76 75 77 80).

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Awards

Juve AwardLegal 500 Germany 2019
azur100: Top Employer for Lawyers 2021

Handbook German Employment Law

Specialist for Employment Law Dr. Eric Uftring contributed a detailed chapter on staff leasing agreements. Order here

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