What is equal pay?
Equal pay refers to the principle that the temporary employee must be paid at least the same amount of remuneration as the customer’s comparable regular employees for the duration of their assignment to the customer. In a nutshell: equal work, equal pay.
Pursuant to sec. 8 (1) of the Law on Temporary Employment (AÜG, Arbeitnehmerüberlassungsgesetz), the temporary employment agency is obliged ‘to grant the temporary employee for the period of assignment to the hirer the essential working conditions including remuneration applicable in the hirer’s business for a comparable employee of the hirer’.
Compliance with this principle is very difficult for many temporary employment agencies, especially in the case of short-term assignments. In order to calculate the equal-pay wage, the temporary employment agency must first ask the hirer for the exact salary for a comparable employee. However, many customers are reluctant to disclose this information. At the same time, the customer is informed of the wage of the temporary employee employed, which makes it easy for the hirer to calculate the temporary employment agency’s margin. This can enormously weaken the temporary employment agency’s negotiating position.
At the same time, the temporary employment agency must re-calculate the temporary employee’s salary for each assignment, which involves considerable administrative and error-prone work.
However, a violation of the equal-pay principle can lead to withdrawal of the temporary employment agency license and usually results in fines.
At the same time, however, the law also provides for an exception to this principle.
When applying a collective agreement to temporary work, it is possible to pay a wage that differs from the equal-pay wage for a period of nine months. This enables the temporary employment agency to pay the temporary employee a constant wage.