Application for a license to operate a temporary employment agency

A license is required in order to oper­ate a tem­po­rary employ­ment agency in Ger­many. This applies to indi­vid­u­als, asso­ci­a­tions with­out legal per­son­al­i­ty and com­mu­ni­ties of heirs, i.e. so-called groups of per­sons, part­ner­ships, such as gen­er­al part­ner­ships (‘OHG’) and lim­it­ed part­ner­ships (‘KG’) as well as legal enti­ties, such as pub­lic lim­it­ed com­pa­nies (‘AG’) or pri­vate lim­it­ed com­pa­nies (‘GmbH’).

In short: All tem­po­rary employ­ment agen­cies need a license.

The Fed­er­al Employ­ment Agency (Bun­de­sagen­tur für Arbeit) issues the licens­es.

The appli­ca­tion must be accom­pa­nied by the fol­low­ing doc­u­ments (in Ger­man):

  • Com­plet­ed appli­ca­tion form for a license to oper­ate a tem­po­rary employ­ment agency
  • Up-to-date extract from the com­mer­cial reg­is­ter
  • Part­ner­ship agree­ment
  • Busi­ness reg­is­tra­tion
  • Evi­dence of appli­ca­tion for an extract from police records for sub­mis­sion to the pub­lic author­i­ty
  • Infor­ma­tion from the cen­tral busi­ness reg­is­ter
  • Cer­tifi­cate from the employer’s lia­bil­i­ty insur­ance com­pa­ny (acci­dent insur­ance com­pa­ny)
  • Cer­tifi­cates of the health insur­ance com­pa­nies where the major­i­ty of employ­ees are ensured
  • Proof of liq­uid funds, such as imme­di­ate­ly avail­able cred­it bal­ances or bank con­fir­ma­tion of exist­ing cred­it facil­i­ties. Proof of min­i­mum funds of €10,000.00 must be sub­mit­ted to prove cred­it­wor­thi­ness. This applies to cas­es where up to five tem­po­rary employ­ees are to be employed. If more than five tem­po­rary employ­ees are to be employed, proof of liq­uid funds of €2,000.00 must be fur­nished for every employ­ee.
  • Work con­tract mod­el
  • Tem­po­rary employ­ment con­tract mod­el

If the appli­cant agency does not have its reg­is­tered place of busi­ness in Ger­many, fur­ther doc­u­ments must be sub­mit­ted from case to case, such as police records from the home coun­try or a license to oper­ate a tem­po­rary employ­ment agency under the laws of the home coun­try or infor­ma­tion that such a license is not required there.

Term of validity of the license

The term of the license is lim­it­ed to one year (sec. 2 (4) sen­tence 1 of the Ger­man Law on Tem­po­rary Employ­ment (AÜG, Arbeit­nehmerüber­las­sungs­ge­setz). The appli­ca­tion for renew­al must be sub­mit­ted no lat­er than three months before the license expires (sec 2 (4) sen­tence 2 AÜG).

Dur­ing the first three years, the Fed­er­al Employ­ment Agency (Bun­de­sagen­tur für Arbeit) audits the agency reg­u­lar­ly, often once a year.

If the tem­po­rary employ­ment agency has oper­at­ed cor­rect­ly and with­out com­plaints for three years, the Fed­er­al Employ­ment Agency can issue an open-end license (sec. 2 (5) sen­tence 1 AÜG).

Notwith­stand­ing the fact that minor vio­la­tions of legal oblig­a­tions do not oppose this, the Fed­er­al Employ­ment Agency pur­sues a more restric­tive prac­tice.

Practical tip

It is often a mat­ter of luck whether an open-end license is grant­ed at the first attempt since there is no such thing as com­plete­ly unob­jec­tion­able work. In the event of dis­putes, it is often advis­able to sub­mit a detailed state­ment before the hear­ing rather than rely­ing on the out­come of appeal pro­ceed­ings after an open-end license was denied. If good rea­sons are giv­en in the hear­ing, there is still a chance that some offi­cials may change their mind which is usu­al­ly no longer pos­si­ble in appeal pro­ceed­ings. A law­suit is not an alter­na­tive, because a new appli­ca­tion for an open-end license after anoth­er year has expired is a much faster option.

The tem­po­rary employ­ment agency is not oblig­ed to apply for an open-end license after three years. For cost rea­sons alone, many com­pa­nies do not apply for an open-end license. How­ev­er, an open-end license is also an indi­ca­tion of the agency’s good stand­ing for many cus­tomers, so that most agen­cies con­sid­er such a license to be desir­able.

 

The open-end license expires if the tem­po­rary employ­ment agency has not made use of it for three years (sec. 2 (5) sen­tence 2 AÜG).