Equal Pay

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.