What is Staff Leasing?
Staff leasing is the process of one company (Company A) “leasing” an employee temporarily to another company (Company B) in order to perform a task or job. The employee remains employed by Company A (including all HR aspects such as payroll, medical insurance, pension, etc.) but will be reporting to Company B to perform tasks on a daily basis. This gives Company B another employee to do their business while the burden of payroll and other HR-related items are handled by someone else (Company A), freeing up Company B’s resources for something more important. Doing this could be crucial for start-ups and small businesses where resources and personnel are at a premium.
By its nature, staff leasing is temporary. Countries that allow staff leasing often have set limits and restrictions on how long an employee can stay at one company and if they can return after that time is up. Once the time limit has passed Company B can choose to hire the leased employee (at which it would also incur his employment costs) or can seek out a new leased employee from Company A.
Staff Leasing in Germany
The laws pertaining to staff leasing in Germany are the Arbeitnehmerüberlassungsgesetz or AÜG for short. These laws lay out the foundation for staff leasing in Germany such as term limits, remuneration, and working conditions. These laws were updated in April of 2017 in order to bring more clarity to some provisions contained within. These laws provided set definite assignment limits as opposed to the ambiguous assignment limits that were the standard prior to the new regulations being adopted.
Assignment limits before the new regulations were written as such that an employee should be temporary. With the new regulation, strict assignment limits were imposed instead of the ambiguous temporary title. Now a temporary employee hired under the AÜG laws can only be assigned to a company (to use the example above, Company B) for a maximum of eighteen (18) months. After this, an employee cannot work for Company B for at least three (3) months, at which time he can work at Company B again. At this time Company B can request another employee from Company A (the staff leasing company), can offer the employee a job (in which he would become a full-fledged employee of Company B), or they can choose to not refill the position.
The failure to follow these strict leasing terms could mean fines for both Company A and Company B, along with the leased employee becoming a full employee of Company B and them now incurring the employment costs that come with that status. As these rules went into effect on April 1st, 2017, the earliest that a company can be fined for exceeding the assignment limits will be October 1st, 2018 as it only applies to agreements signed after April 1st, 2017.
Equal Pay and Working Conditions
The old regulations of the AÜG stated that employees must receive the same working conditions as other employees in their same position and this doesn’t change in the new regulations. One change for the new regulations is the amount of time before employees must be paid equally to their peers. After nine (9) uninterrupted months at an assignment, Company B has an obligation to offer the leased employee equal remuneration as employees working at a comparable level. This includes benefits-in-kind such as meal tickets and transit passes. As is the case above, this regulation is only for agreements signed after April 1st, 2017.
These are just a few of the changes to the AÜG code. For more information about all of the changes or to get more information about how we can help you with you staffing needs in Germany (or around the world), contact us at email@example.com