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New Regulations for Hiring Temporary Workers in Germany Through a Third Party

On April 1, 2017, the German Act on Temporary Agency Work went into effect, creating changes for temporary workers hired by agencies for their business clients.  In short, the new law limits the length of time that a business in Germany can use a temp worker, and grants the worker employee status if the limits are exceeded.

What You Need to Know About the Act

Here are the key points to know about the new law:

  • The maximum time limit to hire a temporary worker is 18 months
  • After nine months, the worker is entitled to equal pay with permanent employees
  • Striking employees cannot be replaced by temp workers at any time

These rules only apply to workers engaged through a third-party agency, and are designed to prevent businesses in Germany from reliance on ‘temporary employees’, even when they work long term for the company.  This practice allowed the business to avoid the obligations as a formal employer, since the agency is the actual employer and the one that handles the worker on their behalf. 

But now, that has all changed.

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The Temporary Worker Has a Choice to Remain With the Agency

Once the 18month threshold is reached an employment relationship between the temporary worker and business is mandatory, and the agency is no longer involved. Otherwise, the business can no longer use the worker.  However, the temporary employee does have a choice, and can remain as an employee of the agency if that is their preference.  Still, under the new rules the worker must be paid the same as formal employees in a similar role.

A Trend Toward Protecting Worker Rights

This German law does reflect a trend in many countries where labor authorities are limiting the role of temp workers and independent contractors in local businesses. At the center of this movement are the rights of employees and access to the protection of labor laws. 

Basically, if a worker is retained long term, treated as an employee and relied upon by the business, then they are entitled to full employment status.  More and more workers are claiming employment rights, benefits and payments, even if they are initially hired in a temporary and contractual role.  Companies that do business across borders and rely on outsourcing to agencies need to be aware of these changes, and adapt their hiring practices.

Get in touch to find out more about how an Employer of Record Solution can help with your employment needs in Germany

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