Definition and classification
The agency and the hirer are the two companies in the triangular relationship of Staff Leasing – the third corner is the temporary worker. The agency (Staffing provider) supplies the employee and is their employer; this is where the contractual, collectively agreed and statutory employee rights apply. The hirer (the client company) deploys the worker, receives the authority to instruct and has to make the normal operational working conditions available (the equal treatment principle), but is not the employer.
Between agency and hirer there is a leasing agreement (AÜV)setting out the framework and the hourly rate. Within the hirer, several parties are often involved in sourcing – HR, procurement, management or decentralized branch and production managers – who have to agree who is responsible for sourcing and coordination (possibly through a masteror a Neutral Vendor).
The role of the Federal Employment Agency
Fundamentally the agency needs a Temporary staffing license from the responsible employment agency. It is limited to one year at first; a renewal has to be applied for at the latest three months before it expires, and after three consecutive years an open-ended license is possible. The conditions include a properly run business, professional expertise, granting the working conditions due and sufficient financial means for wage and salary payments. The agency verifies this in audits. For the hirer the rule is: only work with staffing companies that hold a license – otherwise it is concealed staff leasing .
What role does the works council play?
The hirer's works council has to be involved before the assignment; the agency has to show it the license. The works council can refuse the assignment if it breaches a law, a collective agreement or a works agreement, if there is a concern that permanent staff will suffer disadvantages, or if industrial peace is endangered. The veto has to be given in writing with reasons within one week – otherwise consent is deemed given. After a veto the hirer can ask the labor court to substitute consent.
Legal basis
The legal basis is the AÜG, which implements the European Temporary Agency Work Directive 2008/104/EC and governs, among other things, Equal Treatment, Equal Pay and the maximum assignment period regulates. On top of that the hirer has to observe further requirements, for example the German Supply Chain Act and the PPE regulation. Through Secondary liability the hirer is also liable on a secondary basis for contributions that go unpaid.