Labour Leasing Without an AÜG Licence in Germany

Pro­vid­ing employ­ees to anoth­er com­pa­ny (labour leas­ing) with­out the required Ger­man AÜG licence can expose both the per­son­nel provider and the client com­pa­ny to sig­nif­i­cant legal risks.

The licens­ing require­ment gen­er­al­ly applies when employ­ees are sup­plied to anoth­er com­pa­ny, inte­grat­ed into its organ­i­sa­tion and sub­ject to its work-relat­ed instruc­tions. The rules can affect staffing agen­cies, pay­rolling providers and oth­er busi­ness­es — even where their con­tracts describe the arrange­ment differently.

If your com­pa­ny may be engag­ing in labour leas­ing with­out the nec­es­sary autho­ri­sa­tion, ear­ly legal advice can help clar­i­fy your posi­tion and iden­ti­fy the appro­pri­ate next steps.

When Is Labour Leasing Without a Licence Unlawful?

Under Sec­tion 1 of the Ger­man Tem­po­rary Employ­ment Act (Arbeit­nehmerüber­las­sungs­ge­setz – AÜG), labour leas­ing gen­er­al­ly requires autho­ri­sa­tion from the Fed­er­al Employ­ment Agency (Bun­de­sagen­tur für Arbeit).

The deci­sive fac­tor is how the per­son­nel arrange­ment oper­ates in prac­tice — not sim­ply the contract’s title. Pay­rolling, out­sourc­ing or a ser­vice con­tract may fall with­in the AÜG if the statu­to­ry cri­te­ria for staff leas­ing are met.

A licence must gen­er­al­ly be in place before the assign­ment begins. Apply­ing after an assign­ment has start­ed does not ret­ro­spec­tive­ly autho­rise the pre­ced­ing period.

Some statu­to­ry excep­tions exist, but they apply only where their spe­cif­ic require­ments are fulfilled.

Learn more about Who Needs an AÜG Licence in Ger­many? and the Appli­ca­tion for an AÜG Licence.

Resolve AÜG Risks with Experienced Legal Support

Labour leas­ing has been a cen­tral focus of our prac­tice for many years. AMETHYST Recht­san­wälte advis­es com­pa­nies nation­wide on AÜG licens­ing, per­son­nel struc­tures and dis­putes involv­ing the Fed­er­al Employ­ment Agency.

Our expe­ri­ence includes over 1,000 AÜG cas­es and more than 25 years of pro­fes­sion­al expe­ri­ence.

We assist com­pa­nies with:

• Legal assess­ment: Deter­min­ing whether a per­son­nel arrange­ment falls with­in the AÜG and whether an autho­ri­sa­tion is required.
• Risk analy­sis: Review­ing exist­ing assign­ments, con­tracts and oper­a­tional prac­tices to iden­ti­fy poten­tial com­pli­ance issues.
• Licens­ing strat­e­gy: Advis­ing on appli­ca­tions and the steps need­ed to estab­lish a com­pli­ant structure.
• Reg­u­la­to­ry pro­ceed­ings: Review­ing notices and cor­re­spon­dence from the Fed­er­al Employ­ment Agency and advis­ing on appro­pri­ate responses.
• Licence dis­putes: Rep­re­sent­ing com­pa­nies in mat­ters involv­ing the denial, with­draw­al or revo­ca­tion of an AÜG licence.

Our advice is tai­lored to your busi­ness struc­ture and the facts of your case. The aim is to estab­lish your legal posi­tion clear­ly and iden­ti­fy real­is­tic options for mov­ing for­ward.

Fines, Legal Exposure and Licence Risks: What’s at Stake?

The con­se­quences depend on the cir­cum­stances and the pro­vi­sions that have been breached. Poten­tial risks include:

• Admin­is­tra­tive fines: Vio­la­tions of the AÜG can result in fines. For cer­tain offences involv­ing unau­tho­rised labour leas­ing, the statu­to­ry max­i­mum is €30,000.
• Employ­ment law con­se­quences: The AÜG pro­vides for cir­cum­stances in which employ­ment or leas­ing agree­ments may be legal­ly inef­fec­tive, poten­tial­ly affect­ing the employ­ment rela­tion­ship between the work­er and the client company.
• Reg­u­la­to­ry scruti­ny: The Fed­er­al Employ­ment Agency may exam­ine the arrange­ment and whether the busi­ness com­plies with the applic­a­ble licens­ing requirements.
• Con­se­quences for an exist­ing licence: Depend­ing on the facts, vio­la­tions may affect the sta­tus of an exist­ing authorisation.

The applic­a­ble con­se­quences must be assessed indi­vid­u­al­ly. A fine is not auto­mat­ic in every case, and the legal posi­tion depends on the spe­cif­ic con­duct, the par­ties involved and any rel­e­vant statu­to­ry provisions.

For fur­ther infor­ma­tion, see our page on Fine Pro­ceed­ings for Tem­po­rary Employ­ment.

Already Started an Assignment? Know Your Options.

A com­pa­ny should not assume that sub­mit­ting an appli­ca­tion after the start of an assign­ment will rem­e­dy an ear­li­er peri­od of unli­censed staff leas­ing.

Where a licence is required, the busi­ness should clar­i­fy the legal posi­tion prompt­ly and deter­mine how to pro­ceed law­ful­ly. The appro­pri­ate steps depend on whether assign­ments have already begun, whether an appli­ca­tion is pend­ing and whether the com­pa­ny holds any exist­ing authorisation.

If your com­pa­ny has already received ques­tions or notices from the Fed­er­al Employ­ment Agency, the cor­re­spon­dence and under­ly­ing per­son­nel arrange­ments should be reviewed with­out delay.

See our guide to the AÜG Licence Appli­ca­tion Process and our advice on AÜG Licence Denial or Revo­ca­tion.

Address AÜG Risks Before They Escalate

If you sus­pect that your com­pa­ny has sup­plied or engaged per­son­nel with­out the required licence, do not rely on the con­tract word­ing alone. A prompt review can help clar­i­fy the poten­tial expo­sure and deter­mine which steps are appropriate.

Con­tact AMETHYST Recht­san­wälte for advice on unli­censed labour leas­ing and AÜG com­pli­ance in Germany.

Consequences of Labour Leasing Without an AÜG Licence — Example

The Ger­man Law on Tem­po­rary Employ­ment (AÜG, Arbeit­nehmerüber­las­sungs­ge­setz) pro­vides for fines to be imposed in a host of cases.

These are laid down in sec. 16 AÜG.

One case, for instance, is the assign­ment of employ­ees with­out a license. This is called ille­gal tem­po­rary employ­ment with­out a license.

A per­son who assigns a tem­po­rary employ­ee or allows a tem­po­rary employ­ee to work at cus­tomers on a pay­rolling or staffing basis needs a license to oper­ate a tem­po­rary employ­ment agency. A per­son who car­ries out these activ­i­ties with­out a license com­mits ille­gal assign­ment of tem­po­rary employees.

This can be pun­ished by fines of up to €30,000.

The law does not per­mit a tem­po­rary employ­ment agency to be oper­at­ed and the license to be applied for retroac­tive­ly. This also con­sti­tutes ille­gal oper­a­tion of a tem­po­rary employ­ment agency and is pun­ished by fines of up to €30,000 and revo­ca­tion of the license granted.