Provision of temporary workers in contrast to other forms of contract

Tem­po­rary employ­ment is a con­stel­la­tion where a tem­po­rary employ­ee is hired out (in oth­er words: lent out) by his tem­po­rary employ­ment agency to a cus­tomer (hir­er).

In a nut­shell, an employ­ee is a per­son who is sub­ject to anoth­er per­son­’s right to issue instruc­tions on the basis of a (work) con­tract and owes such oth­er per­son the pro­vi­sion of labour for payment.

Pur­suant to sec. 1 (1) sen­tence 2 of the Law on Tem­po­rary Employ­ment (AÜG, Arbeit­nehmerüber­las­sungs­ge­setz), a tem­po­rary work­er is a per­son who is inte­grat­ed as an employ­ee into the hirer’s organ­i­sa­tion and bound by the hirer’s instruc­tions. The right to issue instruc­tions is there­fore key to the ques­tion as to whether or not a per­son is a tem­po­rary employ­ee. A con­stel­la­tion con­sti­tutes tem­po­rary employ­ment as soon as the real employ­er is no longer enti­tled to issue instruc­tions to the employ­ee for a giv­en task, i.e. when this right has been trans­ferred to a third par­ty (for exam­ple, the employ­er’s cus­tomer and hence the hirer).

The revised AÜG con­tains a def­i­n­i­tion of the term ‘tem­po­rary work­er’ in sec. 1 (1) sen­tence 2 AÜG. This must be read togeth­er with the new­ly intro­duced sec. 611a of the Ger­man Civ­il Code (BGB, Bürg­er­lich­es Geset­zbuch), which now defines the term ‘employ­ee’ indi­rect­ly via the legal def­i­n­i­tion of the employ­ment contract.

Sec. 611a BGB

The employ­ment con­tract oblig­es the employ­ee, in the ser­vice of anoth­er per­son, to per­form work that is sub­ject to instruc­tions and is deter­mined by a third par­ty in per­son­al depen­dence. The right to issue instruc­tions can be relat­ed to the con­tent, imple­men­ta­tion, time and place of the activ­i­ty. A per­son is bound by instruc­tion if this per­son is not essen­tial­ly free to organ­ise their activ­i­ties and deter­mine their work­ing hours. The degree of per­son­al depen­dence also depends on the nature of the respec­tive activ­i­ty. In order to deter­mine whether an employ­ment con­tract exists, an over­all assess­ment of all cir­cum­stances must be made. If the actu­al per­for­mance of the con­trac­tu­al rela­tion­ship indi­cates that an employ­ment rela­tion­ship exists, the des­ig­na­tion in the con­tract is irrelevant.

This new def­i­n­i­tion includ­ed in the BGB basi­cal­ly reflects only pre­vi­ous jurispru­dence of the Fed­er­al Labour Court (Bun­de­sar­beits­gericht).

Example of temporary employment

A car man­u­fac­tur­er urgent­ly needs more per­son­nel due to ris­ing demand, but can­not find new employ­ees. He there­fore hires tem­po­rary employ­ees from a per­son­nel ser­vice provider (tem­po­rary employ­ment agency) and employs these tem­po­rary employ­ees in his com­pa­ny. The car man­u­fac­tur­er issues spe­cif­ic work instruc­tions to the tem­po­rary work­ers which they car­ry out, but the tem­po­rary work­ers are paid by the tem­po­rary employ­ment agency.

Distinction from service contracts and contracts to produce a work

Exter­nal per­son­nel can also work for a cus­tomer on the basis of a ser­vice con­tract or a con­tract to pro­duce a work (read more…). The con­trac­tor owes the cus­tomer the con­trac­tu­al­ly agreed ser­vices and/or the eco­nom­ic suc­cess. The contractor’s employ­ees assigned remain bound by the contractor’s instructions.

A del­i­cate sit­u­a­tion exists in the case of ser­vice con­tracts and con­tracts to pro­duce a work in con­junc­tion with tem­po­rary employ­ment because if a con­tract, albeit described as a ser­vice con­tract or a con­tract to pro­duce a work, actu­al­ly con­sti­tutes tem­po­rary employ­ment, it can become expen­sive for both the cus­tomer and the con­trac­tor(read more…).