Temporary Work Agencies |# Solutions

What does temporary employment /Sick, holiday & maternity leave in Germany imply?

Temporary employment, or staff leasing, implies that an employer contracts out his employee to a third party (hirer). Once contracted out, the employee will receive his wages from the employer, yet is subjected to the instructions issued by the party hiring the employee. This type of employment is governed by special rules and regulations in Germany and is only permitted to agencies that have been issued the respective license.

What’s temp work in Germany?

Tem­po­rary employ­ment (often abbre­vi­at­ed ANÜ) is defined as a sit­u­a­tion where employ­ees (tem­po­rary employ­ees) are hired out by an employ­er (tem­po­rary employ­ment agency) to a third par­ty (hir­er) for a lim­it­ed peri­od of time against pay­ment. The tem­po­rary employ­ment agency remains the tem­po­rary employee’s employer.

Tem­po­rary employ­ment 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 hir­er 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), a license issued by the Fed­er­al Employ­ment Agency (Bun­de­sagen­tur für Arbeit) is a pre­con­di­tion for oper­at­ing a tem­po­rary employ­ment agency.

Temporary Work Agencies in Germany

What Companies and Foreign Workers need to know about Temporary Workers in Germany

The use of temporary workers (temps) has been heartily embraced by German business in the past few years. There are hundreds of Temporary Workers Agencies (TWAs or, in German) throughout the country .Many agencies “find jobs for people” as well as “people for jobs”. TWAs provide virtually all of the temporary jobs to companies in Germany. Recently, agencies from outside of Germany have also been offering temporary workers to German companies.

As the EU moves forward with plans and policies to facilitate greater labor mobility between member countries, the use of temporary workers is most likely to increase. The use of these types of workers offers companies greater flexibility in responding to rapidly changing economic conditions. It is also seen by different governments as a way to help combat unemployment and to re-introduce the long term unemployed back into the active workforce as well as offering positions to those entering the work force for the first time.

Currently about three percent of the wage and salary workforce in Germany consists of “temps” supplied by these agencies. Agencies supply a wide range of workers and professionals covering a broad range of jobs and skills. Some agencies specialize in certain sectors while many others offer a full spectrum of qualified personnel covering everything from clerical help to specialized professions. The only sector not allowed to hire temporary workers is the building and construction industry.

Germany has a long history of strictly regulating labor and employment practices. This is mostly to protect workers and the labor markets and to provide companies with guidelines within which they must work. There has, indeed, been a loosening of some regulations in recent years, but Germany is not yet anywhere near the freewheeling labor markets of other countries around the world. The body of laws regulating TWAs in Germany is the Arbeitnehmerüberlassungsgesetz — AÜG.

Under the AÜG a TWA is required to register with and be licensed by the German government. This applies to German and foreign TWA companies alike and is done to keep dubious and suspect companies out of the marketplace. The laws detail the requirements that both the TWA and hiring company must meet in regards to length and type of employment contracts, responsibilities as to payment of required social benefits and taxes, compensation and other important matters.

It can get complicated. A temporary worker is usually considered an employee of the TWA, not the hiring company. A contract is normally made between the worker and the TWA. A separate contract may be made between the “hiring” company and the TWA to provide a certain number of personnel for a certain period of time. The TWA is responsible for meeting the German Labor Law requirements and should take care of making the necessary deductions for the social benefits (retirement, unemployment, health insurance etc.) and relevant German wage or income taxes. Deductions for health insurance may depend on the individual and on what insurance company is involved and whether or not the individual is insured privately or with one of the many national health insurance providers. Wage and salary payments are made by the TWA — not the “hiring” company. The hiring company is responsible for providing a safe workplace as well as providing the workplace protections that are afforded their regular employees.

Foreigners in Germany — whether a company owner or a potential worker - should probably get expert advice when considering working with a TWA. A hiring company needs to familiarize itself with the laws and the contract requirements surrounding the hiring of temporary workers. A potential worker needs to be certain of the responsibilities of the TWA and how they will meet them.

For those coming from outside the EU/EEA it is important to know that signing on with a TWA is probably not the path to getting a residence permit with permission to work. However, those that already have a residence permit with permission to work may be permitted to work as “temps”. These issues are left up to the local authorities.

Following are some questions that should be asked and fully answered when considering working with a TWA — whether as a hiring company or as a potential worker:

Is the TWA (whether a German or non-Germany company) fully and properly licensed in Germany?

As a company is there a limit on the length of time a “temp” can work? As a company are there any laws or regulations regarding the hiring of a “temp” away from the TWA and putting him or her on the company’s payroll?

As a company, when working with a TWA from outside of Germany are there any tax issues that have to be addressed?

As a foreigner contracted by a TWA, what level of assistance can be expected from the TWA in regards to information on such issues as taxes, health insurance, salary deductions, contributions to the social programs, assistance in obtaining a residence permit etc.?

What are the differences in working for a TWA for a citizen of the EU/EEA compared to someone coming in from outside the EU?

If assigned to work in Germany as a worker from a TWA outside of Germany what are the tax obligations and is it possible to be covered under the social security system of the home country?

As a worker what assurances are given that the income will meet the requirements of the law regarding compensation from TWAs?

 

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 (). 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.

Working time and working time accounts

The hours a tem­po­rary employ­ee is oblig­ed to work can be freely agreed with the employ­er. How­ev­er, work­ing hours must com­ply with the pro­vi­sions of the Ger­man Work­ing Hours Act (ArbZG, Arbeit­szeit­ge­setz). The Work­ing Hours Act pro­vides, for instance, that the employ­ee may not work more than eight hours a day on aver­age, but the max­i­mum work­ing time can be extend­ed to up to ten hours a day if appro­pri­ate rest peri­ods are granted.

The col­lec­tive agree­ments for tem­po­rary employ­ment (iGZ and BAP) pro­vide that tem­po­rary employ­ees work­ing full time must work 35 hours a week. For the spe­cif­ic assign­ment, the tem­po­rary employee’s work­ing hours usu­al­ly depend on the cir­cum­stances at the hirer’s com­pa­ny and can there­fore also total as much as 40 hours.

The col­lec­tive agree­ments for tem­po­rary employ­ees pro­vide for work­ing time accounts to be kept. How­ev­er, cer­tain addi­tion­al rules for work­ing time accounts may have to be con­sid­ered if tem­po­rary work­ers are employed in a so-called min­i­mum wage indus­try. In such a case, time accounts may only be kept if this is per­mit­ted by the min­i­mum wage agreement.

A tem­po­rary work­er employed, for instance, in the meat pro­cess­ing indus­try may not keep a work­ing time account at all, because the cor­re­spond­ing min­i­mum wage agree­ment does not pro­vide for this.

If the tem­po­rary employ­ee works on the basis of equal treat­ment pro­vi­sions, a work­ing time account may only be kept if and in as far as a work­ing time account is main­tained for com­pa­ra­ble employ­ees of the hir­er. The tem­po­rary employ­ment agency does not have any dis­cre­tionary free­dom what­so­ev­er in this case.

On average, employees in Germany have some of the shortest working hours in Europe. Couple this with high productivity levels, and it seems that Germans strike an ideal work-life balance. The page looks at working hours, overtime and related regulations in Germany.

Full-time work in Germany

The average working week in Germany is between 36 and 40 hours. The majority of full-time jobs in Germany are seven or eight hours a day, five days a week, with an hour or 30 minutes’ break at lunchtime.

Some companies may operate a longer working week, but compensate their employees with a higher salary or additional annual holiday leave. Self-employed workers often work more than 48 hours per week.

Part-time work in Germany

Anyone working in Germany for less than 30 hours per week is considered a part-time employee. Once you have been at your company for six months, you have the right to request a reduction to your weekly working hours (as long as the company employs more than 15 people).

Part-time work is becoming more popular, as freelancing and job-sharing become more prevalent. The generous provision in Germany for parental allowance also combines well with part-time work. In 2018, Germany’s biggest metalwork union won a legal battle to be granted the right to a 28-hour week.

Legal limits to working hours in Germany

In Germany there are strict legal limits on working hours: you are not permitted to work more than eight hours per day. The working week runs from Monday to Saturday, and employees must not work more than 48 hours per week. This can be extended to 10 hours per day, if within six months (or 24 weeks) the overall average working time does not exceed eight hours per day.

Work on Sundays and public holidays is largely prohibited, except for workers in the service industry. Work on Sundays must be compensated by corresponding time off within the following two weeks.

If you work between six and nine hours you are entitled to a 30-minute break, which you can also split into two breaks of 15 minutes. If you work more than nine hours, you are entitled to a 45-minute break after six hours of work. You must receive a break of more than 11 hours between work shifts.

Working overtime in Germany

Overtime work must also conform to the maximum working hours specified above (i.e. no more than 60 hours a week, averaging out to 48 hours over a 6-month period). Overtime will usually be compensated with time off in lieu, although some companies will pay for any overtime hours worked.

Your right to compensation for hours worked overtime will be specified in your employment contract. Some companies maintain that a small amount of overtime is a normal part of the job and will not provide additional remuneration.

If you have any concerns with the amount of (unpaid) overtime you are working, it is best to speak with your employer. You might also consider consulting with a lawyer.      

Flexible hours in Germany

Many companies in Germany will allow you to work flexibly rather than sticking rigidly to the standard working day. This might include:

  • Working from home
  • Working longer days in exchange for days off
  • Time off in lieu

Distinction between service contracts and contracts to produce a work as well as risk sharing

This dis­tinc­tion is impor­tant because dif­fer­ent rights and con­se­quences can be derived from them in law and in fact. Con­tract and invoic­ing prac­tice should there­fore be as accu­rate as possible.

Service contract

Under a ser­vice con­tract, one par­ty pro­vides a ser­vice for the oth­er party.

The ser­vice provider pro­vides his ser­vices inde­pen­dent­ly and is usu­al­ly not bound by the customer’s instruc­tions, but in con­trast to a con­tract to pro­duce a work, the ser­vice provider does not owe a con­crete work result. The ser­vice provider is only oblig­ed to work for the cus­tomer who bears the entre­pre­neur­ial risk. Even if the desired suc­cess is ulti­mate­ly not achieved, the cus­tomer is oblig­ed to pay for the pro­vi­sion of the ser­vices. The clas­sic ser­vice con­tract, for exam­ple, is a con­tract for med­ical treat­ment. The physi­cian does not owe the patien­t’s recov­ery, but is only oblig­ed to pro­vide cor­rect treat­ment. In the busi­ness world, ser­vice con­tracts come in many dif­fer­ent forms, for exam­ple, as main­te­nance con­tracts for IT sys­tems, as con­sul­tan­cy or as agency contracts.

Contract to produce a work

The pro­duc­er of a work owes his cus­tomer a ‘suc­cess’ or a ‘work’. The pro­duc­er of the work is there­fore liable to the cus­tomer. The pro­duc­er of the work is also liable for his work and he is oblig­ed to rem­e­dy defects. The cus­tomer is oblig­ed to accept the ‘work’. The pro­duc­er of the work is not enti­tled to claim remu­ner­a­tion until the work has been accept­ed. This means that the pro­duc­er of the work bears the entre­pre­neur­ial risk.

The cus­tomer is not enti­tled to issue instruc­tions regard­ing indi­vid­ual work steps. He can only issue gen­er­al, work-relat­ed instruc­tions to the pro­duc­er of the work (orders, spec­i­fi­ca­tions, etc.).

The clas­sic con­tract to pro­duce a work, for exam­ple, is a con­tract for repair work with a mechan­ic. Con­tracts to pro­duce a work exist in many dif­fer­ent forms in the busi­ness world, for exam­ple, as instal­la­tion ser­vices in the IT sec­tor, in project work or in the man­u­fac­ture of prod­ucts. 

Practical tip

The risk when choos­ing the form of con­tract is that the Fed­er­al Employ­ment Agency (Bun­de­sagen­tur für Arbeit) checks pre­cise­ly which form of work is stip­u­lat­ed in the writ­ten con­tract and which one is then actu­al­ly car­ried out. It is, for instance, not per­mis­si­ble to des­ig­nate a con­tract as a ‘con­tract to pro­duce a work or ser­vice con­tract’ , although employ­ees are in fact hired out with­in the frame­work of tem­po­rary employ­ment (ANÜ). Oth­er­wise a fine of up to EUR 30,000 may be imposed .

In order to avoid any risk, it is bet­ter to con­clude a tem­po­rary employ­ment con­tract rather than a con­tract to pro­duce a work or a ser­vice con­tract. Espe­cial­ly the lat­ter form is often very sim­i­lar to the tem­po­rary employ­ment con­tract. The tem­po­rary employ­ment con­tract should express­ly state that it is a tem­po­rary employ­ment contract.

 

 

Sick, holiday & maternity leave in Germany

Anyone working in Germany is legally entitled to time off for holidays, sickness and care, as well as following the birth of a child.

Holiday leave in Germany

Full-time employees in Germany are entitled to a statutory minimum of 20 days of paid holiday per year, based on a five-day working week, or 25, based on a six-day working week. Part-time employees have their holiday leave calculated pro rata, based on their weekly working hours.

In practice, most employers give more holiday, with between 27 and 30 days annual leave (excluding public holidays) being very common. Some employers will also let you take additional holiday in exchange for a reduction of your salary. The amount of holiday you will receive is detailed in your work contract.

Generally, you have to use up your holiday leave during the annual year, but some employers will let you carry it forward. Legally, you can carry your holiday forward until March 31 if you were unable to take it due to sickness or operational reasons (i.e. you had to cover someone else’s holiday leave).

Leftover holiday entitlement & Leaving your job

If you have unused accumulated holidays when you leave your job (e.g. if you find a new job), you can claim remuneration from your employer for holidays not taken. Your employer may also require you to take your unused holiday leave during your notice period.

Sick leave

If you are ill on a working day, you must report it to your employer. Most companies will have a designated process for calling in sick, which usually involves contacting your manager and, sometimes, someone from the HR (Personal) department.

In contrast to many countries, taking time off when you are sick is not frowned upon in Germany but accepted; you are not expected to struggle on through, but to take time to recover. (Although, this attitude towards sickness may be different if you work for an international company rather than a German one). If you are sick during your holiday, some companies will let you count this as sick leave rather than holiday leave.

If you have worked in your company for longer than four weeks, you are entitled to six weeks of statutory sick pay. After the six-week period, you are entitled to sickness benefit.

If your child, rather than you, has taken ill, in Germany you are legally entitled to take time off work to take care of them. The child sickness benefit covers up to 90 percent of lost earnings for parents insured under the statutory health insurance scheme, if their employers don't continue to pay their salaries. 

Maternity leave in Germany

If you become pregnant while working in Germany, you are legally entitled to fourteen weeks' maternity leave (at least six weeks before and eight weeks after childbirth). You are entitled to eighteen weeks’ leave in the event of a premature birth, multiple births, or if your child is found to have a disability.

During your statutory maternity leave, you can claim maternity benefit.

German parental leave

New parents can also take parental leave (Elternzeit). Parental leave is a legal entitlement to time off work, given to both mother and father. While taking parental leave, you can also claim the parental allowance (Elterngeld), to mitigate your loss of earnings.

Parental leave requirements:

You and / or your partner can claim parental leave if:

  • You are employed (including part-time and temporary contracts, but not anyone who is self-employed).
  • You live together with your child in one house.
  • You (jointly) care for the child yourself.
  • You work no more than 30 hours per week while taking parental leave.

How much parental leave do I get?

Parents are free to decide themselves how much parental leave they wish to take. It can be taken anytime between your child’s birth and their third birthday (i.e. up to three years). You can also save up to 24 months of parental leave to use at any point between your child’s second and seventh birthdays, as long as your employer gives permission.

You and your partner can take parental leave simultaneously or separately, if you wish. Note that if you are taking parental leave jointly, you are barred from claiming social assistance such as unemployment benefit. You therefore need to make sure that you can provide for your family for the duration of your parental leave.

How to apply for parental leave

You need to give your employer seven weeks’ notice if you wish to apply for regular parental leave, or thirteen weeks’ notice if you wish to take unclaimed parental leave after your child’s second birthday. Your application for parental leave should be submitted in writing to your employer, specifying the dates of the leave you wish to take.

Care leave

In Germany, you are also entitled to take up to ten days off work to care for close relatives who are in need of care. This leave is usually unpaid, unless otherwise stated by your employer.

You can also take nursing care leave of up to six months for a close relative. If you take long-term care leave you need to give your employer at least 10 days’ notice. You may also need to provide proof, such as a letter from a doctor. During this time you are protected from dismissal.

Note that only employers with more than 15 employees are subject to nursing care leave obligations.

Sickness benefit in Germany (Krankengeld)

As an employee in Germany, if you are unable to continue working due to sickness, through no fault of your own, your employer will usually continue to pay your regular wage for six weeks. After that, if you are still unable to work, your health insurance will pay your sickness benefit (Krankengeld) for up to 78 weeks, while you recover.

Sickness benefit is funded by your health insurance premiums, meaning that you are automatically covered if you contribute to the German statutory insurance system. If you have private health insurance, the amount and duration of sickness benefit you receive beyond the initial six weeks depends on the type of cover you chose when taking out your policy.

Requirements for sickness benefit

In order to qualify for sickness benefit, you need to meet the following criteria:

  • You are employed and contributing to a statutory health insurance scheme.
  • You hold a valid residence permit (if applicable) that permits you to work in Germany.
  • You have been unable to work due to sickness for more than six weeks and / or your employer is no longer paying you a salary.
  • You have a certificate from your doctor attesting to your incapacity for work.
  • You attend a medical examination if requested.

If you hold private health insurance, whether or not you are entitled to sickness benefit depends on your individual policy. Check with your health insurance provider if you are unsure. 

How much sickness benefit will I get?

Your health insurance provider will cover 70% of your gross salary, up to a maximum of 112,87 euros per day (in 2021). The payments cannot exceed 90% of your net salary.

You will be covered up to the end of your certified period of inability to work (usually attested to by a certificate from a doctor), although you cannot draw sickness benefit for more than 78 weeks in a three-year period. Under certain conditions, it may be possible to extend this.

How to apply for sickness benefit

To apply for sickness benefit, you need to send an incapacity certificate (Arbeitsunfähigkeitsbescheinigung - AU) to your health insurance provider as soon as possible. You can obtain this certificate from your doctor after submitting to a medical examination. You also need to submit a copy to your employer.

You will receive a response from your insurance provider in the post, outlining whether you are eligible for sickness benefit and if so, detailing the next steps you need to take. If you are not eligible for sickness benefit, you may be able to apply for unemployment benefit or long-term care benefit.

Child sickness benefit

Germany also compensates parents for lost earnings if they cannot work due to their child's sickness. If you need to take time off work to care for a sick child, you employer may continue to pay your salary; if not, the child sickness benefit steps in to fill the financial gap.