Temporary employment is a practice where one company (the provider) temporarily assigns workers to another company (the recipient). The assigned employees remain contractually bound to the provider but work under the direction and supervision of the recipient. This staffing arrangement allows companies to respond flexibly to peak workloads, staffing shortages, or seasonal business demands without having to hire permanent staff. The underlying employment contract between the provider and the assigned employees forms the basis of this relationship, with the recipient acting as a third party in this arrangement.

The provider handles personnel selection, contract management, and payroll for the assigned employees. They enter into an employee leasing agreement with the recipient, outlining the terms and conditions of the lease. Assigned employees receive their wages from the provider and are covered by social security. The recipient pays the provider a fee for the assigned workers and is responsible for their deployment, supervision, and occupational safety.

The Temporary Employment offers numerous benefits to your company. It allows you to flexibly respond to peak workloads and seasonal fluctuations without needing to increase your core workforce. By utilizing temporary employees, you can bridge staffing gaps while also relieving your core team. This leads to higher efficiency and productivity within your company.

Another advantage of Temporary Employment is risk reduction in workforce planning. You are not obligated to long-term commitments and can adjust the number of temporary employees according to current workload. Additionally, you benefit from the expertise and specialized knowledge of the leased workers, who often have experience from various companies and projects. This can enrich your team and bring new insights to your company.

The Temporary Employment Act (AÜG) forms the legal basis for the providing of workers in Germany. It regulates the relationships between providers companies, recipient companies, and provided employees. The AÜG protects the rights of provided workers and ensures that employee provided is not misused to circumvent labor standards or replace regular employment. Exceptions to the licensing requirement apply in certain situations, such as when the employee is not hired and employed for the purpose of providing. This particularly applies to internal company transfers within the same industry, transfers within corporate groups, occasional employee transfers, and international placements within joint ventures.

The key aspects of the AÜG include:

• Licensing requirement for providers companies
• Principle of equal treatment (Equal Pay and Equal Treatment)
• Maximum duration of providing and providing prohibitions
• Information obligations towards provided employees
• Co-determination rights of the works council in the recipient company

As a recipient company, you must be aware of and comply with the provisions of the AÜG to work legally with provided employees and minimize liability risks.

To legally offer Temporary Employment as a company, you need a special license. This license is issued by the relevant Employment Agency, provided you meet the legal requirements. These requirements include having an adequate organizational structure, the reliability of the provider, and compliance with labor law regulations.

The Temporary Employment license is time-limited and must be regularly renewed. As a provider, you are required to display the license in your business premises and provide a copy to provided employees upon request. Violations of the licensing requirement can result in substantial fines and even a ban on employee providing. Therefore, it is essential to thoroughly understand the legal requirements and adhere to them diligently.

When designing temporary employee agreements, it is crucial to consider several important points to ensure a legally sound and fair collaboration between the provider, the recipient, and the temporary employees. A key aspect is the clear designation of the contract as a temporary employee agreement to avoid confusion with other types of contracts, such as service contracts. Additionally, the rights and obligations of all parties involved must be clearly defined, particularly regarding authority, working hours, and vacation regulations.

The contract should also include details on the duration of the lease, compensation, and potential options for permanent employment. Adhering to the principle of equal treatment (Equal Pay and Equal Treatment) should be explicitly stated in the contract to prevent any disadvantage to provided employees compared to the recipient company’s regular staff. Careful and comprehensive contract design creates transparency and security for all parties and forms the foundation for successful collaboration within the framework of temporary employee.

The temporary employment fundamentally differs from service contracts. In a service contract, the contractor owes the client the creation of a specific work or the provision of a service. The contractor operates independently and bears the entrepreneurial risk. In contrast, in temporary employee, the provider supplies workers to the recipient, who are integrated into the recipient’s operations and are subject to their instructions. Here, ‘work performance’ refers to the temporary provision of employees by an employer to perform work for a third party, as opposed to the result-oriented nature of service contracts.

To ensure a clear distinction between temporary employee and service contracts, the following criteria are crucial:

• Right of Direction: In temporary employee, the provided worker is subject to the instructions of the recipient, whereas in service contracts, the contractor operates independently.
• Integration into Operations: provided employees are integrated into the organizational structure of the recipient, whereas contractors in service contracts work independently.
• Entrepreneurial Risk: In service contracts, the contractor bears the entrepreneurial risk, while in employee leasing, the risk lies with the provider.

Careful contract design and adherence to these criteria are essential to minimize legal risks.

In employee providing, the rights and obligations of the involved parties, including employees, are clearly defined. The provider is responsible for the selection, hiring, and compensation of the provided employees. They must ensure that legal regulations are followed and that the provided employees possess the necessary qualifications. The recipient is obligated to provide suitable working conditions and to ensure that the provided employees receive the same level of occupational safety and health protection as the recipient’s regular staff.

Provided employees are entitled to the same working conditions and pay as the recipient company’s regular workforce. They are required to perform their assigned tasks diligently and adhere to the operational regulations of the recipient. At the same time, they maintain an employment relationship with the provider, who remains responsible for wage payments, social security contributions, and other labor law aspects.

The principle of equal treatment is a central aspect of employee providing. Provided employees are entitled to the same pay and working conditions as the regular staff of the recipient company. This principle, known as Equal Pay and Equal Treatment, aims to ensure fair treatment of all employees and to prevent discrimination.

Implementing Equal Pay and Equal Treatment requires close collaboration between the provider and the recipient. The provider is responsible for informing the provided employees about their rights and ensuring they receive the same pay as comparable employees in the recipient’s company. The recipient must, in turn, ensure that the provided employees are employed under the same conditions as the regular staff, including access to shared facilities and services.

Employee providing is subject to specific regulations and considerations in various industries. For instance, additional rules apply in the construction industry, healthcare, and aviation that must be observed when providing personnel. These industry-specific requirements are generally aimed at protecting employees and ensuring fair working conditions. Using employees through providing offers companies the flexibility to effectively respond to the unique staffing needs of different industries, offering benefits such as cost savings, administrative relief, and strategic personnel flexibility.

For companies, it is crucial to familiarize themselves with the specific requirements to deploy personnel legally and efficiently. Factors such as qualification requirements, occupational safety regulations, and collective bargaining agreements play a decisive role. We support you in navigating industry-specific regulations and finding tailored solutions for your staffing needs.

The use of provided employees in healthcare allows your facility to respond flexibly to staffing shortages and ensure continuous care for patients. By collaborating with experienced personnel service providers, you benefit from qualified and motivated healthcare professionals who support and relieve your team. Employee providing enables you to respond promptly to absences or peak workloads while maintaining high-quality standards in care.

However, the use of provided employees in healthcare also brings certain challenges. It is essential to ensure the integration of external staff into existing teams and to facilitate smooth communication among all parties involved. Additionally, the specific requirements and needs of the patients must be considered to ensure trustworthy and empathetic care. By carefully selecting personnel service providers and working closely together, these challenges can be successfully managed.

In employee providing, the works council plays a crucial role, possessing extensive co-determination rights that must be observed. For instance, the works council must be informed and consulted about the use of provided employees. Additionally, it has a say in the design of working conditions and the integration of provided employees. Therefore, close collaboration between the recipient company, the provider, and the works council is essential.

To ensure smooth employee providing and respect the rights of all parties involved, as a recipient company, you should proactively seek dialogue with the works council. Inform them early about planned deployments of provided employees and involve them in the processes. By maintaining transparent communication and considering the co-determination rights, you create a foundation for successful collaboration and avoid potential conflicts. The works council can offer valuable insights for the integration and well-being of provided employees.

The maximum assignment duration limits the period during which an employee can be provided to a recipient company. Currently, this limit is set at 18 months. After this period, the provided employee must either be permanently hired by the recipient company or replaced by another worker. However, there are industry-specific exceptions that allow for longer assignments.

Assignment prohibitions prevent the use of provided employees in certain situations. These include, for example:

Using provided employees as strikebreakers during labor disputes at the recipient company

Providing employees to construction industry companies for tasks typically performed by workers

Providing employees to companies in the meat industry for slaughtering and processing activities

As a recipient, it is crucial to be aware of and comply with these regulations to operate within legal boundaries.

Employee provision proves to be an effective tool to counteract the shortage of skilled workers and attract qualified personnel for your company. By collaborating with experienced personnel service providers, you gain access to a wide pool of skilled workers who meet your specific requirements. This allows you to respond flexibly to peak demands and simultaneously relieve your core team. Employee provision enables companies to adapt to the fluctuating demands for qualified personnel over time by temporarily employing skilled workers.

Another advantage of employee provision is the opportunity to get to know potential employees before permanent hiring and assess their suitability for your company. Through this “try-and-hire” option, you minimize the risk of incorrect placements and ensure that new employees fit optimally into your team. Additionally, you benefit from the expertise and networks of personnel service providers in recruiting and selecting suitable skilled workers.

The onboarding and integration of provided employees in the client company are crucial for the success of employee provision. By implementing a structured onboarding program and fostering an open communication culture, you can quickly integrate new employees into your team. Ensure that the provided employees receive all relevant information, such as workflows, safety regulations, and contact persons. Additionally, grant them access to necessary resources and work tools.

Promote collaboration between your core staff and the provided employees through joint meetings, team-building activities, and knowledge exchange. Treat the provided employees as full-fledged members of your team and include them in decision-making processes and training opportunities. Successful onboarding and effective integration significantly contribute to the motivation, productivity, and retention of provided employees, thereby supporting the success of your company.

Employee provision enables companies to adapt flexibly to the demands of the global market. However, when deploying employees across borders, it’s crucial to consider legal and practical aspects, including social security, labor laws, and taxes.

Our experienced team supports you in planning and executing your international staff deployments. We provide guidance on country-specific regulations and assist you in fulfilling necessary formalities. This ensures that your cross-border employee provision runs smoothly and compliantly, allowing you to benefit from the advantages of flexible staffing.