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AUG License for Employee Leasing

The AUG license (Arbeitnemeruberlassung License) allows companies and agencies to send contractors to provide their services for end-users in Germany. Employee leasing has become a popular means for companies to resolve short-term employment issues. It is not uncommon for companies to require a specialist in a certain area for a short-term project, and hiring that specialist as a full-time employee would be impractical for them. Employee leasing without the AUG license is a risky business and can lead to fines and other serious penalties.

At Schlun & Elseven Rechtsanwälte, our certified employment lawyers will provide you with clear guidance on all matters relating to employee leasing and gaining the AUG license. Our legal team can be relied upon for full support and leading advice in German employment law, regardless of whether you are the company leasing the employees or the agency responsible for the leasing of the employees.

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Why Work with Schlun & Elseven Rechtsanwälte: Specialisation Makes the Difference

At Schlun & Elseven Rechtsanwälte, we are a full-service law firm based in Cologne, Aachen and Düsseldorf. Our employment law team advises German and global clients on all matters of German employment law. We will oversee your application for the AUG license and ensure that the legal necessities are met. If your company is looking for leased employees, our lawyers will carry out the due diligence to ensure that the agency or company you are dealing with is obliging with its AUG license requirements.

Our employment law team consists of certified employment law specialists (Fachanwälte für Arbeitsrecht) who are widely experienced with court cases and advising companies on best practice measures. Tailored solutions and regularly support from certified experts will ensure that your firm prevents costly disputes from arising. Furthermore, as a full-service law firm, our experts can coordinate with our teams in other fields and ensure that you are provided with a comprehensive legal overview of the decisions made.

At Schlun & Elseven Rechtsanwälte, our firm is built on trust, reliability and availability. We place great emphasis on customer satisfaction, as shown by our consistently high ratings from clients. High-speed and reliable communication methods such as our 24-hr hour hotline and video conferencing facilities ensure that should you have a dispute concerning the AUG license, you can reach us from anywhere in the world when you need us.


The AUG License and Contractors: Self-Employment in Germany

Contractors in particular fields often prefer the route of self-employment as it provides more flexibility and opportunities. However, self-employment in Germany can be more complex than in the contractor’s home country. The status of a self-employed contractor does not automatically carry over upon arrival in Germany. Our corporate lawyers on all matters relating to company formation in Germany – including registering as self-employed sole traders. Non-compliance with the registration requirements may lead to non-recognition of that individuals “independent contractor” status. This, in turn, may lead to the company hiring that “contractor” becoming responsible for various statutory obligations. Legal disputes and conflicts arise in such circumstances, as do further complications. For this reason, working with a leasing agency or company may be in that contractor’s best interests.

Another option available for independent contractors is establishing their own limited company, whereby they would hire themselves out. Once again, our corporate law team will advise you on all the necessary considerations which need to be made when creating a limited company in Germany. Should the contractor decide to go down this route, they may need to possess an AUG license and fulfil all the legal requirements in the establishment of that company.

Please see our page “Temporary Agency Workers in Germany” if you have further questions concerning temporary employment.


The AUG License: Time Frames, Contracts and Concerns

The AUG 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 AUG 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 such a situation, make sure to 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 from happening by stopping work with the hiring company. The leased employee can submit a written declaration to the Federal Employment Agency stating that 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 be beneficial to your company. If the dynamic is good within the enterprise, and if their skills can bring your company forward, it may be worth considering making them a full employee. However, if your company has not intended on making the leased employee an employee of your company, it is vital to keep track of contract deadlines and that 18-month period.


The Benefits of Leasing Employees

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 perfectly suited to a short-term project. For short-term projects, starting in a confident manner is often key to success, and leasing employees with the required attributes often saves time and money that would be spent on training internal employees, or in 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 integrated 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 in comparison to 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 in place for leased employees but leasing an employee means that they are part of your company for a shorter period of time, and the agency or leasing company is responsible for the required tax deductions and payment of health insurance.

Overall, leasing employees greatly reduces the risk involved for companies, and 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 make sure that the leasing agency or company is fully compliant with its AUG license requirements.

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Practice Group: German Employment Law

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German Employment Law

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Martin Halfmann, LL.M.

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