New rules on temporary staffing - are you compliant?

Your most important To Do’s are the following:

Do check your agency work agreements

Under the new provisions the agency work agreement needs to explicitly reflect and state that it is an agency work/supply of temporary staff arrangement (Arbeitnehmerüberlassung). A relevant written (ie originally signed) agreement needs to be in place prior to the start of the assignment. Also the name of the individual worker needs to be explicitly stated - at least in a fax or email - prior to the assignment.

Non-compliance may result in an administrative fine of up to €30,000. In addition - and more importantly - non-compliance will result in an employment relationship between the agency worker and the client. The latter may also have consequences regarding the obligation to pay social security contributions and in a worst case scenario may result in criminal liability of the management.

Please note that these provisions also apply to agreements already in place - therefore do check these agreements and amend them if need be.

Keep track of your agency workers and how long they stay with you

In the past the supply of agency workers had to be “temporary”. It was never really clear what such term means in practice and there was a level of uncertainty in the market in this respect.

Under the new law this has become clear:

Temporary supply of staff is permissible for up to 18 months, CBAs may extend this period to up to 24 months. The 18 month period applies to the specific worker rather than the position and will also apply to assignments of the same worker with the same client, even by different agencies. A new 18 month period will start to run after three months have passed since the last assignment of the same worker with the same client.

The first 18 month period will only start running from 01 April 2017, ie any assignment periods prior to that will not count. Therefore the earliest point in time when you could possibly exceed the maximum assignment period will be on 01 October 2018.

If you regularly employ agency workers you should definitely consider setting up an effective system to monitor and control maximum assignment periods, possible assignment breaks etc.

The consequence of non-compliance with the maximum period will yet again be a fine of up to €30,000 plus a possible employment relationship between worker and client.

Provide the agency with details necessary to grant equal pay

The equal pay principle will now in principle have to kick in (at the latest) nine months into the assignment, even if a relevant CBA exists. This will of course result in a higher cost of temporary staffing arrangements.

Do provide the agency with all the necessary information of benefits for your comparable workers to ensure compliance.

Non-compliance with the equal pay principle can result in a fine of up to €500,000!

Check whether your service agreements with third party providers are indeed service agreements

The terms used in a contract will not be decisive for the nature of an agreement, but instead its implementation. If in practice your agreement with a third party provider turns out to be supply of temporary staff rather than a service agreement, this will have severe consequences. In the past such “disguised supply of temporary workers” was usually backed up by a relevant state license for supplying staff so that even in a worst case scenario such backup solution avoided significant legal consequences of such misqualification.

Under the new law your contracts will need to explicitly state that they relate to the supply of temporary workers rather than the provision of services.

Furthermore the law now explicitly states that a state license as a backup solution is no longer permissible.

Again, non-compliance may cost you up to €30,000 and may give you an additional undesired headcount employed by your company rather than by the third party provider.

It will be key that anyone working with third party providers is aware of these possible legal consequences and is properly trained in how to handle third party service contracts - ie ensure that the implementation is in line with the type of agreement in place. For example, detailed work instructions should not come from your team but from the third party provider’s team if a service agreement is in place.

Finally, two further points to bear in mind:

Fines may also be imposed on individuals responsible for the implementation of the law - first and foremost the German management. Also, if your organisation does not comply with the new law, your management may be considered as “unreliable” - if you are a regulated company this may even have an impact on the reliability of the individual manager for regulatory purposes!