Pitfalls in staff leasing: what companies have to watch for

When a client company leases temporary workers from a staffing provider, that is Arbeitnehmerüberlassung (staff leasing). It is flexible and popular – but carries risks you should know before the assignment.

Disguised staff leasing

A staffing provider generally needs a license for staff leasing, granted by the employment agency. Only a contract with a licensed staffing company is legally effective. If the license is missing, this is disguised staff leasing – which is unlawful. Hirer and agency are then jointly and severally liable; the client risks an open-ended employment relationship with the worker, back payments of social security contributions and further penalties.

Secondary liability

Social security contributions, accident insurance contributions and payroll tax are actually paid by the staffing provider, since it is the employer. But if it files for insolvency, the obligation to pay passes to the next solvent party – the hirer. You can protect yourself with current clearance certificates from the health insurance fund, the tax office and the professional association. These usually do not cover deferrals, though, so the agency's liquidity can only be read from them to a limited extent.

Occupational safety

Occupational safety covers all employees – including temporary workers, who face a higher risk because their place of work changes constantly. The formal employer, and therefore the responsible party, is the staffing provider; in practice the client company carries responsibility too, since it has the authority to instruct at the workplace. Who provides the personal protective equipment (PPE) should be settled in advance in the leasing agreement.

Maximum assignment period and equal pay

Under § 1 AÜG the maximum assignment period is 18 months and is tied to the person – earlier assignments through other agencies count. A breach, even by one day, makes the employment relationship with the agency void and automatically creates one with the client; on top of that come fines of up to €30,000.^[1] The equal treatment principle (§ 8 AÜG) secures equal treatment and – after nine months at the latest – equal pay. Breaches of equal pay can cost the agency up to €500,000.

Solutions for companies

Companies secure compliance by choosing staffing providers carefully, obtaining clearance certificates and monitoring deadlines consistently. Vendor management platforms such as Pactos check the agency's standing in advance, obtain records continuously and warn 14 days before critical deadlines expire.

Frequently asked questions