Who needs a temporary employment agency license in Germany?

All domes­tic or for­eign com­pa­nies require a tem­po­rary employ­ment agency license in Ger­many as soon as they per­form an activ­i­ty as con­tem­plat­ed in sec. 1 (1) sen­tences 1, 2 of the Law on Tem­po­rary Employ­ment (AÜG, Arbeit­nehmerüber­las­sungs­ge­setz).

Sec. 1 (1) sen­tences 1, 2 AÜG
Employ­ers intend­ing to hire out employ­ees (tem­po­rary work­ers) to third par­ties (hir­ers) for work with­in the frame­work of their eco­nom­ic activ­i­ty (tem­po­rary employ­ment) require a license. Employ­ees are assigned to per­form work if they are inte­grat­ed into the hirer’s work organ­i­sa­tion and bound by the hirer’s instruc­tions.

Ger­man law cov­ers not only the tra­di­tion­al hir­ing out of employ­ees as tem­po­rary employ­ees, but also all oth­er con­stel­la­tions in which an employ­ee is employed by one com­pa­ny and receives a salary, but works at anoth­er com­pa­ny and is bound by the latter’s instruc­tions. Even in the case of a short-term assign­ment, or if the com­pa­ny which pays the employee’s salary mere­ly per­forms the pay­roll account­ing  func­tion (so-called ‘pay­rolling’) for any oth­er rea­son, Ger­man law treats this con­stel­la­tion as tem­po­rary employ­ment for which a license issued by the Fed­er­al Employ­ment Agency (Bun­de­sagen­tur für Arbeit) is required.