This post was also contributed by Bastian Semmel, International Trainee, Norton Rose Fulbright LLP (Frankfurt).

With effect from 1 January 2017, the German legislation on temporary employment will be reformed, as the Federal Cabinet recently passed a draft law regarding this matter on 1 June 2016. These changes are designed to address the misuse of temporary employment and to strengthen the position of temporary employees. The following article provides a short overview of the main modifications that will be made to the German Law on Temporary Employment (Arbeitnehmerüberlassungsgesetz – AÜG).

In future, a temporary employee will only be allowed to work for the same hirer for a maximum term of 18 consecutive months. After that time, either the hirer will have to engage the temporary employee as his regular employee or the temporary employment agency will have to withdraw the employee from this workplace. Any interruption in the temporary employee’s working period of 3 months or less will be ignored for the purposes of calculating the 18 month maximum term. If the interruption is longer than 3 months, the past period of employment will not be taken into account.

This maximum hire term can be extended by collective bargaining agreements (concluded between a trade union and an employers’ association or an employer) or by works agreements (concluded between a works council elected by the employees and the employer) based on a collective bargaining agreement. Hirers, who are not bound by a collective bargaining agreement (i.e. who are neither member of an employers’ association nor have concluded a collective bargaining agreement with a trade union themselves), can adapt a representative collective bargaining agreement from their respective branch via a works agreement. But if the related collective bargaining agreement provides for the possibility of an extension without specifying a maximum hire term, it can only be increased to up to 24 months by the hirer (who is not bound by a collective bargaining agreement). Where the adapted collective bargaining agreement stipulates a higher limit, for example, 48 months, then the hirer (who is not bound by a collective bargaining agreement) can conclude a works agreement up to the same maximum length.

The temporary employees will be entitled to receive pay equal to that of comparable regular employees of the hirer after a period of 9 months in the same company. A difference in pay for a longer period of up to 15 months is possible, if an existing collective bargaining agreement on branch surcharges within the temporary employment industry enables the hirer to do so. The rates of pay must start being equalised after a period of no more than 6 weeks.

In addition, it will be prohibited to use temporary employees as strike-breakers. No temporary employee hired by a strikebound business will be able to take over the work of a striking employee.

To counter bogus contracts for work and service, the employer will have to declare the engagement of a temporary employee from the outset. This prevents the subsequent declaration by the employer of a contract as temporary employment.

Additionally, the employer will have to inform the works council about the length of the assignment, location of assignment and tasks when hiring external staff.

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