Labour leasing in Germany has expanded the horizon for employment and immigration of individual contractors to Germany from other countries. The “Arbeitnehmerüberlassung” or the AÜG is the body of laws that regulate the German Labour Leasing. This License enables agencies to legally engage the services of temporary workers, freelancers/independent contractors, allowing companies to meet their short-term requirement of human resources.
Labour leasing laws describes the scope of the AÜG as “temporary hire of workers for monetary reward by the hirer out (agency) to a third-party hirer (company)”. The leasing agency meets its contractual obligation by engaging a suitable employee to the hirer without supervising or controlling the services or the results of the work performed. The contractor commits himself to complete the work as per the terms stipulated by the hirer. While the employee salary is paid by the hirer through the agency, it is the responsibility of the agency to make deduction of taxes, NIC’s and social security contributions. The leasing agency meets its contractual obligation.
- labour licensing agencies have right to engage the services and direct employees to the hirer
- by such engagement, the contractor becomes a part of hirer organization without formally being his employee
- such labour leasing in Germany can legally be undertaken only if the agency has the requisite AÜG license
- Terms of such engagement are stipulated in the agreement between the hirer and the employee
Advantage Temporary workers
Any Temporary worker’s agency that intends to obtain an AÜG License is required to register and obtain license from the German Federal Government under the prescribed format. The license is granted for a period of one year, thereby enabling the agencies to employ and supply temporary employees to the hirer company. Independent contractors/freelancers enjoy several benefits such as:
- Flexibility of work as per one’s own capability, work hours etc.
- Pay parity of work and better reward for one’s efforts
- Recognition of one’s own talent and ability to take up assignments based on one’s own skill sets
New changes in the Labour leasing law
The growth in the employment market that Germany has witnessed in the recent years, has seen nearly 500,000 temporary workers or 3% of the population employed with German companies. Although there was no restriction on the period that the workers can be engaged through the AÜG license, the new Labour leasing law has brought in several changes to the existing rules post April 2017. This includes several structural and procedural changes and a stringent legal framework providing guidelines to the employment of temporary workers in any organization.