Definition and classification
A Master Vendor is a staffing provider that takes care of planning and coordinating the temporary workers and acts as the main supplier. It fills the client company's open positions largely from its own pool of people. Where it cannot cover the whole requirement itself, it sources the rest from co-suppliers (second tiers) – other staffing providers with their own employees. All workers, whether from its own pool or from co-suppliers, are coordinated by the master vendor.
What characterizes it is the active role in planning and delivery: if the master vendor carries out its work directly at the client, that is called on-site management. The cooperation between master vendor and hirer is set out in a framework agreement .
A plant with high, fluctuating staffing needs engages a master vendor. It fills 70% from its own pool and brings in two co-suppliers for the peak – each covered contractually by an AÜV, to avoid onward leasing. The client has only one contact but loses the free choice of the best individual workers.
Legal framework: beware of onward leasing
Where co-suppliers are brought in, the hirer and the co-supplier have to conclude a leasing agreement (AÜV) – usually the master vendor concludes it on the hirer's behalf. Without sufficient contractual cover this is onward leasing : leasing an employee on to a third company. Without an AÜV that is unlawful under the AÜG and carries heavy fines for both the client operation and the third company.
What are the pros and cons of the master vendor model?
Advantages. Greater certainty: the requirement is covered even when market conditions fluctuate, and lasting availability and flexibility are secured. Targeted planning: the master vendor remains the central contact and interface for all parties, across several sites too. Less effort: the client saves its own recruiting process and is relieved of contract, billing and hours checking as well as health and safety checks.
Disadvantages. A lack of neutrality: because the master vendor acts in its own company's interest and draws on its own pool, the client has little room to pick the best-qualified workers. Being tied to a region: the provider's own pool is usually regional – models that span regions offer more matching qualifications.
What alternatives are there?
The best-known alternative is the Neutral Vendor: it is not an employee of any particular provider but supplies a large, decentralized, digital network of staffing companies from which the client chooses itself. Other models are single sourcing (deliberately only one supplier), a preferred supplier pool (a limited number of competing suppliers) and recruitment process outsourcing (complete, long-term outsourcing of recruitment).