The term temporary employment describes an employer lending an employee to a third party for a limited amount of time.
The Temporary Employment Act (Arbeitnehmerüberlassungsgesetz) defines the term temporary employment as employers (lenders) hiring out employees (temporary workers) to third parties (hirer). The temporary worker stays on as an employee of the lender, i.e. the temporary employment agency. There is no employment contract between the hirer and the temporary worker and therefore no official employment relationship. However, in the context of temporary employment, the temporary worker is integrated into the hirer’s business in the same way as the hirer’s own employees. This means that they must perform their work according to the hirer’s instructions.
The temporary employment contract regulates the hiring out of the temporary worker for a certain period of time in return for remuneration. The lender’s main obligation is to provide the temporary worker to the hirer. Additionally, the lender must ensure that the temporary workers are selected properly, e.g. that they possess the required qualifications. Temporary employment is therefore a three-way employment relationship.
Temporary employment is used as an instrument for the flexible deployment of staff in order to be able to react to fluctuating staffing needs, e.g. in the case of seasonal work, illness, parental leave, etc.
The Temporary Employment Act (Arbeitnehmerüberlassungsgesetz) was amended on 1 July 2017. The aim of the reform was to prevent improper use of temporary workers. A significant change in the law is that a maximum time period has been introduced. Accordingly, a temporary worker can only be assigned to the same hirer for a maximum of 18 months. The period only starts over again after a three-month interruption of the hire. It was also included that temporary workers must be paid the same as permanent employees after nine months of temporary employment with the same hirer at the latest (equal pay principle). Furthermore, the temporary worker must be named in a concretisation prior to deployment. The temporary worker may also not be hired out to other lenders. In addition, temporary workers may not be used as strike breakers and must be taken into account in the thresholds under the Works Constitution Act (Betriebsverfassungsgesetz).