AÜG License for Employee Leasing

The “Arbeitnehmerüberlassungsgesetz” (Employee Leasing Act) is commonly referred to as “AÜG” in Germany, and it governs the temporary assignment of employees to other companies through staffing agencies or temporary employment agencies.

The AÜG sets out regulations to ensure fair and transparent working conditions for temporary agency workers. Some key provisions of the AÜG include:

• Equal treatment: Temporary agency workers must receive equal treatment compared to permanent employees of the user company in terms of pay, working conditions, and other employment benefits.
• Maximum assignment duration: There are limits on the maximum time of temporary assignments. After a certain period, usually 18 months, the worker must either be permanently employed by the user company or end the assignment.
• Notification requirements: Staffing agencies must notify the works council or the employee representative body of the user company before assigning temporary workers.
• Registration and licensing: Staffing agencies must be registered and licensed to operate per the AÜG.

Obtaining an AÜG license (Arbeitnehmerüberlassungsgesetz license) in Germany involves staffing or temporary employment agencies fulfilling the following requirements. These requirements may vary slightly depending on the specific state (Bundesland) in Germany where the agency intends to operate. However, here are the general conditions:

• Registration: The agency must register its business with the appropriate local authority, usually the Gewerbeamt (trade office) or the Industrie- und Handelskammer (Chamber of Commerce and Industry).
• Business organisation: The agency must have a legally established business entity, such as a GmbH (Gesellschaft mit beschränkter Haftung – Limited Liability Company) or an AG (Aktiengesellschaft – Public Limited Company). The specific legal form may depend on the state and other factors.
• Reliability and professional qualification: The individuals responsible for managing the agency must possess the necessary professional qualification and demonstrate reliability. This typically involves having no criminal record or past offences related to labour law violations.
• Financial stability: The agency needs to demonstrate financial stability and solvency. This may include proof of adequate financial resources, such as a bank or financial statements.
• Insurance coverage: The agency must have sufficient liability insurance coverage to protect against potential damages or claims arising from the temporary assignments.
• Compliance with labour regulations: The agency must comply with all relevant labour laws, including the provisions of the Arbeitnehmerüberlassungsgesetz (AÜG) itself, to ensure fair and lawful employment practices.

At Schlun & Elseven Rechtsanwälte, our employment and labour lawyers are available to assist clients all over Germany with obtaining an AÜG license.

The AÜG license ensures that the company “hiring” the leased employee does not become their official employer. That contractor/leased employee remains tied to the agency or leasing company, even while working on projects for the hiring company.

The agency or company from which your company is hiring must have the required AÜG license, as, without such a license, they may not be seen as valid employee leasers. This can lead to the “hiring” company being legally recognised as the leased employee’s official employer, even in cases where this was not intended. Should your company find itself in such a situation, or are in danger of facing it, contact our legal team to examine your case.

Time limits are another aspect that companies need to be aware of. If the hiring company has the leased employee for more than 18 months at their company, they will be seen as the leased employee’s legal employer. The leased employee can prevent this by stopping work with the hiring company. The leased employee can submit a written declaration to the Federal Employment Agency stating they want to remain with the leasing company or agency. Similarly, should the leased employee continue working with the hiring company after the end of their contract, they will be considered employees of the hiring company.

Keeping a specialist or a hard-working employee within your company can benefit your company. If the dynamic is good within the enterprise and their skills can bring your company forward, it may be worth considering making them a full employee. However, if your company has not intended to make the leased employee an employee of your company, it is vital to keep track of contract deadlines and those 18 months.

In Germany, several documents are typically required when applying for an AÜG license (Arbeitnehmerüberlassungsgesetz license). We provide some of the more common documents below; however, the requirements may vary depending on the state (Bundesland) where the agency intends to operate.

False documents or delays in providing documents can slow the process of obtaining the AÜG license. Therefore, it is essential to ensure that your documents are in the correct order and ready for the authorities to examine.

Here are the documents that are generally required:

• Application form: The agency usually needs to complete an application form provided by the relevant authority. This form collects basic information about the agency and its operations.
• Proof of registration and legal status: The agency must provide documentation proving its legal existence and registration. This can include the registration certificate or excerpt from the commercial register (Handelsregister) for the business entity, such as a GmbH or AG.
• Business profile and description: The application may require a detailed description of the agency’s business activities, services provided, and the sectors or industries in which it operates.
• Proof of professional qualification: The individuals responsible for managing the agency should provide evidence of their professional qualifications. This can include diplomas, certificates, or other documents demonstrating their expertise in personnel services and labour law.
• Financial statements: The agency may need to submit financial information, such as balance sheets and profit and loss statements, to demonstrate financial stability and solvency.
• Bank statements: Recent statements can prove the agency’s financial standing and resources.
• Liability insurance documentation: The agency must provide proof of liability insurance coverage, including details of the insurance policy, coverage amounts, and the coverage period.
• Organisational structure: The application may require information about the agency’s organisational structure, including details about the management team, key personnel, and staffing arrangements.
• Employee contracts and terms: The agency may be asked to provide sample employee contracts or terms of employment used for temporary workers.
• Compliance documentation: The agency should demonstrate compliance with labour laws and regulations, including documents outlining policies and procedures related to equal treatment, occupational health and safety, and other relevant areas.

At Schlun & Elseven Rechtsanwälte, our employment and labour lawyers will advise you on your application’s required documents.

The duration of the AÜG licensing process in Germany can vary depending on several factors, including the workload of the responsible authorities, the completeness of the application, and any additional requirements or checks that may be necessary. However, working with our experienced professionals allows them to explore avenues to accelerate your application.

Maintaining an AÜG license involves ongoing obligations, including reporting requirements. These obligations are in place to ensure that the parties involved comply with German labour and employment regulations and that there is transparency around fair working conditions. Some of the obligations can vary based on the Bundesland; however, there are several that companies should generally be aware of when using the AÜG license.

Firstly, the agency must typically report temporary assignments to the responsible authorities. This process may involve providing information about the duration of the assignment, the user company, the tasks performed by temporary workers, and other relevant details. This requirement aims to show there is transparency in leasing employees.

There is also an equal treatment compliance requirement. The agency must ensure equal treatment of temporary agency workers compared to permanent employees of the user company. This includes providing the same pay, working conditions, and other employment benefits as mandated by the AÜG.

There is a general requirement for AÜG license holders to comply with labour laws. It relates to all applicable labour laws and regulations, including working hours, minimum wage, occupational health and safety, and other employment standards.

Agencies also need to provide financial reporting. Regular financial reporting may be required to demonstrate ongoing financial stability and solvency. In this case, financial reporting can involve providing financial statements, balance sheets, or other financial documentation to the responsible authorities.

Agencies should be aware that they should expect inspections from the authorities responsible for labour and employment matters. They need to collaborate in such reviews, including facilitating access to premises, providing requested documents, and assisting with interviews of agency employees and temporary workers. Companies should keep accurate record-keeping for such inspections.

The agency should maintain proper records of temporary assignments, employee contracts, payroll, and other relevant documentation for a specified period. These records may be subject to verification and compliance checks by the authorities if required.

It’s important to note that these ongoing obligations and reporting requirements can vary based on state-specific regulations and any additional requirements set by the responsible authorities.

Should your company require legal advice in matters relating to ongoing requirements or face legal issues relating to them, please get in touch with our lawyers directly.

The AÜG establishes the principle of equal treatment for temporary agency workers compared to permanent employees of the user company. This principle ensures that temporary agency workers receive the same basic working and employment conditions as comparable permanent employees.

The starting point for equality is in pay and benefits. Temporary agency workers must receive equal pay for the same or similar work as permanent employees. This requirement includes the basic wage or salary and any additional payments, allowances, or bonuses that permanent employees in comparable positions receive. Benefits such as holiday pay, overtime pay, and shift differentials should also be provided equally.

Similarly, temporary agency workers should be subject to the same working time regulations as permanent employees. This necessity includes limits on daily and weekly working hours, rest periods, and break times.

Temporary agency workers are also entitled to the same leave entitlements as permanent employees. Such leave includes annual (vacation), parental, sick, and other types of statutory leave.

Temporary agency workers should not be a means for employers to escape their occupational health and safety requirements. Temporary agency workers should receive the same level of protection and safeguards regarding occupational health and safety as permanent employees. Therefore, they should have access to appropriate training, protective equipment, and safe working conditions. Similarly, they should have access to communal facilities and services provided by the user company, such as canteens, transportation services, childcare facilities, and other amenities available to permanent employees.

It’s important to note that equal treatment does not mean identical treatment in every aspect. Temporary agency workers may still have different employment contracts and terms than permanent employees. However, the principle of equal treatment ensures that they receive the same basic working and employment conditions.

The interpretation and application of equal treatment can vary based on collective agreements, industry-specific regulations, and individual circumstances. At Schlun & Elseven Rechtsanwälte, our employment and labour law specialists will guide you through all these matters and provide you with the tailored service required for your business.

There are risks involved with non-compliance with the AÜG, as it can lead to various legal risks and liabilities for staffing agencies or temporary employment agencies. The AÜG is in place to regulate the temporary assignment of employees and ensure fair working conditions.

Firstly, non-compliance can lead to administrative fines and penalties the responsible authorities impose. The amount of the fine can vary depending on the severity of the violation and other factors. Workers or employee representatives may also consider filing civil lawsuits or legal claims against the agency for non-compliance with the AÜG. This can lead to potential legal expenses, damages, and reputational harm for the agency.

Agencies that violate the AÜG may have their contracts or assignments deemed invalid. This can lead to legal disputes and potential financial liabilities.

In more severe cases of non-compliance or repeated violations, the responsible authorities may issue injunctions to prevent further illegal operations or order the closure of the agency’s business. In deliberate or repeated breaches of the AÜG, criminal charges can be filed against the individuals responsible for managing the agency. In such cases, criminal prosecution, fines, and potential imprisonment can follow depending on the case’s severity.

Non-compliance with labour laws and regulations can result in significant reputational damage for the agency. This impact is more difficult to assess as how it will hit a business varies significantly by case. However, reputational damage can impact relationships with clients, business partners, and the overall perception of the agency in the market.

At Schlun & Elseven Rechtsanwälte, our lawyers can guide you through the potential risks and liabilities associated with non-compliance with the AÜG and ensure compliance with applicable regulations. Should you face a legal case regarding compliance with the AÜG, our team will provide full-service legal solutions to achieve the best result for you in that particular matter.

There are many benefits for companies seeking to bring in leased employees on a short-term basis. Firstly, the leased employee market consists of highly qualified workers whose skills may be ideally suited to a short-term project.

For short-term projects, starting confidently is often vital to success, and leasing employees with the required attributes often saves time and money that would be spent on training internal employees or looking to bring in an employee for the role. Should that project be viable, the company’s plans in that area may change, and this may lead to needing a person full-time for that position. If the leased employee successfully integrates with the company and fits your business culture and ethos, then it is possible to hire them directly.

Secondly, leasing employees from an agency or company can be cost-saving and more efficient than hiring a full-time employee. With full-time employees, there are more protections relating to unfair dismissal, notice periods, annual leave and other employment law aspects. There are protections for leased employees, but leasing an employee means that they are part of your company for a shorter period, and the agency or leasing company is responsible for the required tax deductions and payment of health insurance.

Overall, leasing employees dramatically reduces the risk involved for companies, especially in projects which may be short-term in nature or where the company is unsure of its success. When going down this route, it is vital to ensure that the leasing agency or company fully complies with its AUG license requirements.