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.
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).