Changes to the Temporary Employment Act (AÜG)

By Ingo Prang, KPP Steuerberatungsgesellschaft mbH

The reform of the Temporary Employment Act (AÜG) has been in force since 1 April 2017. The transfer of temporary employees into companies is subject to new legal regulations from then on. The aim of the reform is to prevent malpractice concerning temporary employment. Employee transfer (also called temporary employment) is on hand whenever the temporary worker is transferred by an employer (distributor) to a third party (borrower) for a limited period of time.

Changes starting 1 April 2017

Prohibition of chain-transfer – Until now, it was controversial whether the borrower was allowed to lend the temporary worker to another borrower (chain transfer). The legislature has now given a clear rejection of this chain-transfer. In the future any kind chain-transfer is prohibited.

Maximum period of transfer: 18 months – With the new legislation a maximum period of transfer enters into force. In the future, the distributor may not leave the same temporary worker for more than 18 consecutive months to the same borrower. However deviations from the limit can be agreed upon in collective labour agreements (Tarifvertrag).

Prohibition of hidden employeetransfers – In order to avoid malpractice, distributors and borrowers must explicitly state that the transfer of temporary workers is in fact a temporary employment transfer, starting from 1 April 2017. The new § 1 clause1 sentence 5 (AÜG) regulates: ‘Distributors and borrowers shall express the transfer of temporary workers in their contract as a temporary employment transfer before assigning the temporary workers or allowing them to start working’.

Equal Pay – Another significant change is the right to Equal Pay. After nine months, the temporary employee is entitled to a wage, which equals the wage of comparable permanent employees (Equal Pay).

Employers of temporary employees may only differ from this if there is a (sectoral) collective labour agreement in force, which provides equal pay within 15 months at the latest.

Information of the works council on the employment of temporary workers – If a works council is in force, the council must be informed in a timely and comprehensive manner about the employment of temporary workers, on the temporal scope of the transfer, the place of employment and the area of work.

International application – In Germany the assignment of employees has to be permitted. Also, temporary employment agencies from abroad, which transfer employees to German clients, have to get this permit. The only exception concerning the permit is made whenever the transfer is decided via contract abroad and the employees are working abroad. This does not include the building industry.

Specifics in the building industry – Transferring employees in the building industry is prohibited. An exception exists only for companies that are a building company themselves and who transfer employees to another building company. The reason for this is the application of the same collective labour agreements, or in case of foreign companies the application of a comparable collective labour agreement. A permit concerning the employee assignment is also necessary.

What happens in the event of a violation?

In the event of a violation of the legal obligation, there is a penalty with fines of up to EUR 30,000. Also, the permit to transfer employees may be revoked.

If the distributor does not have the required permit or the maximum period of transfer is exceeded, a contract of employment is automatically established between the borrower and the temporary worker.


Ingo Prang

Ingo Prang

KPP Steuerberatungsgesellschaft mbH, Kleve, Germany
T: +49 2821 72 04 0
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Ingo Prang is a German certified tax advisor and Partner of KPP. In addition, he lectures on comparative business taxation at the Rhine-Waal University of Applied Sciences.

During the past 20 years, KPP has become one of the leading tax consultancy offices in Lower Rhine region of Germany. The company offers taxation, legal and consulting services. As KPP is close to the Netherlands, the company has acquired considerable expertise in advising on cross-border matters, especially for foreign companies investing in Germany.
 


Published: November 2017 l Photo: industrieblick - Fotolia.com

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