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A Brief Look at Temporary Work Agencies in Germany

What do Foreigners and Companies Alike Need to Know About Temporary Work Agencies?

Otherwise known as “Zeitarbeitfirmen”, temporary work agencies have enjoyed a growing presence within the German business community during the past few years. Now, there are literally hundreds of these firms. Their sizes range from nationwide organisations such as Manpower and Randstad to smaller enterprises which offer only a small number of locations. All of these agencies intend to “find jobs for people” as well as to “find the right person for the right job”. Most temporary positions within Germany are offered by such companies. However, it has recently been noted that temporary agencies located outside of Germany are beginning to provide workers for the German market. Let us take a closer look.

Greater EU Integration

This move is seen as being representative of a greater level of integration between countries within the European Union. Such labour mobility is likely to gain pace in the coming years. One benefit is that companies can now enjoy a sense of increased flexibility; vital when adapting to changing economic conditions. Combatting rising levels of unemployment as well as providing positions for those who are new to the workforce are two additional benefits which should not be overlooked.

As an example, it is has been shown that approximately three per cent of the entire German labour force represents “temps” that have been found through such firms. Naturally, a wide spectrum of skills and experience can be offered. Some agencies may cater to a specific sector while others could provide a “blanket” approach in terms of the job-seeking marketplace. We should nonetheless note that temporary employees are NOT legally allowed to enter into the construction industry.

German Regulations

It is a well-known fact that Germany has always strictly supervised employment and labour practices. This is intended to protect the job markets as well as the employees themselves. While these guidelines may have somewhat loosened in recent times, they are still very stringent when compared to those adopted by other countries. These laws are all regulated and supervised by what is known as the Arbeitnehmerüberlassungsgesetz (often abbreviated simply as the AUG).

One of the main stipulations put forth by the AUG is that a temporary work agency (TWA) must be licensed under the German government. Please note that this also applies to foreign enterprises. The goal is to prevent unscrupulous firms from entering into the domestic marketplace. Some of the governing rules include the type and length of employment contracts, the payment of taxes and social security, employee compensation and the transparency of relationships between the hiring company in question and the TWA.

Specific Areas of Interest

There can be times when these regulations may appear to be a bit complicated. For instance, a temporary worker is not thought to be an employee of the hiring company, but rather the TWA. Contracts between the worker and the agency are therefore commonplace. However, there can be times when a separate contract is drawn up between the individual and the hiring company. It is nonetheless important to realise the the TWA is responsible for all legal requirements as well as wage deductions (social security, compensation, retirement and insurance are a few examples). Certain deductions will depend upon specific providers and insurers. All wages are also paid by the TWA. It is the responsibility of the hiring company to provide a safe workplace for all employees.

Foreigners in Germany

It is best to obtain professional advice when collaborating with a TWA. This pertains to employees and company owners equally. It is critical to become familiar with all applicable labour laws and contractual requirements before any temporary workers are hired. It is the duty of the employee to appreciate the role of the TWA and if it can satisfy all requirements.

Anyone entering from outside of the European Economic Area (or the EU) should be aware that working with a TWA is not likely to result in the acquisition of a residency permit with permission to work. Anyone who already has such a permit could nonetheless be allowed to enjoy a temporary position. The final decision is generally under the domain of local authorities.

Now that we have perused some of the concepts surrounding work agencies in Germany, it is critical to list a number of questions which should be asked when considering a particular TWA. Some of the most relevant are:

  • Is the agency in question able to provide proof of a valid license within Germany?
  • Are there any limits in regards to the amount of time that a temporary employee is allowed to work?
  • In the case of a company, can a worker be hired outside of the TWA and be placed on a private payroll?
  • Will companies be liable for any additional taxation issues when liaising with a TWA that is found outside of Germany?
  • What type of assistance can foreigners expect from the TWA? Examples include health insurance, local contributions, residency permits and taxation responsibilities.
  • How will the TWA operate when dealing with a citizen from within the European Union as opposed to one from outside of the European Economic Area?
  • Assuming that a worker has obtained employment via a TWA outside of Germany, are there specific tax obligations and will the worker be provided with social security from his or her home country?
  • What types of assurance will be provided by the TWA in reference to compensation and income requirements by law?

As we have seen, some of these issues can be complicated. It is therefore wise to obtain advice from the TWA as well as from industry experts well in advance of entering into any type of formal agreement. This pertains to workers as well as hiring firms.

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