What’s labor leasing in Germany?
Labor leasing in Germany (often abbreviated ANÜ or AÜG) is defined as a situation where employees are hired out by an employer (staff leasing agency or supplier) to a third party (client) for a limited period of time against payment. The staff leasing agency remains the employee’s employer.
Labor leasing is often referred to in German as ‘Zeitarbeit’, ‘Leiharbeit’ or ‘Personalleasing’ (temporary work, subcontracted labour or personnel leasing).
This creates a triangle situation that is not typical under German labour law.
Whilst the temporary employee works for the client and receives his instructions (as if he were the hirer’s employee), no contractual relationship exists between the hirer and the temporary employee. The temporary employee remains an employee of the temporary employment agency which pays his salary, continued remuneration, etc. The temporary employment agency, in turn, invoices the hirer for the temporary employee’s work.
German law uses the term ‘Arbeitnehmerüberlassung’ for this process. It may happen that companies themselves do not consider their activities as temporary employment because they believe that the temporary employee’s work merely constitutes a ‘project assignment’ or ‘payrolling’ situation, for example.
However, this distinction does not exist in German law. Whenever an employee receives his salary from one company and simultaneously works for another company (customer) and is subject to the customer’s right of instruction, this can constitute temporary employment under German law.
Pursuant to sec. 1 of the Law on Temporary Employment (AÜG, Arbeitnehmerüberlassungsgesetz), an AÜG-license issued by the Federal Employment Agency (Bundesagentur für Arbeit) is a precondition for operating a temporary employment agency.
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