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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