Companies that offer payrolling in Germany require a license to operate temporary employment agency.

Payrolling means that the service provider co-ordinates the contract and wage administration for employees who may be recruited and selected directly by the customer’s HR department. The employees work directly at the customer. The service provider assumes all legal obligations in conjunction with wage payments and deductions as well as unemployment and industrial accident insurance for the employee concerned.

According to German law, the payrolling service provider is the employee’s employer. If this employee works for a customer, this is defined as temporary employment under German law. A license to operate temporary employment agency is required for this form of assignment.