License

Features of the license

The license to operate a temporary employment agency is granted to a specific person or legal entity and is not transferable. The license is then valid for all branch establishments or branches of the license holder. Various events affecting the holder of the license can therefore also have an effect on the license.

 

Death of the license holder

The license does not pass to the heirs of a deceased holder. The heirs may therefore no longer conclude new contracts for the assignment of temporary employees after the death of the licence holder. However, most authors agree that they can still wind up existing contracts within one year (sec. 2 (4) sentence 4 of the German Law on Temporary Employment (AÜG, Arbeitnehmerüberlassungsgesetz)).

 

Transformation

The license expires when the temporary employment agency is divided (sec. 123 (1) of the Transformation Act (UmwG, Umwandlungsgesetz) or merged (sec. 2 UmwG) or when a full transfer of assets takes place (sec. 174 (1) UmwG). The reason for this is that the transferring legal entity also ceases to exist. However, if the legal entity continues to exist, for instance, in the case of a division (sec. 123 (1) UmwG), the license does not expire, but remains with the previous legal entity.

The license also remains in effect in the case of transformations that change the legal form, because the transferring legal entity merely changes its legal form (sec. 190 et seqq. UmwG) and because the trade name of the company, i.e. the company name, is retained (sec. 200 UmwG). However, if sole proprietorships or companies under civil law are transformed to corporations, the previous legal entity and with it the license will expire.

 

Transfer of operations

When operations are transferred, the key criterion is whether or not the holder of the license continues to be a legal entity after the transfer of operations.

If the licence holder becomes part of another company, i.e. is included in this company, a new temporary employment agency license must be applied for by the receiving company.

If the licence holder is merged with another business and a new company is established, a new legal entity is also created, so that a new temporary employment agency license must be applied for.

Only if the licence holder ‘swallows’ another business will the licence holder continue to exist and does not require a new license, but must of course inform the Federal Employment Agency (Bundesagentur für Arbeit) of any changes (new address, new CEOs, etc.).

 

Change in corporate bodies or shareholders

The licence remains in effect if corporate bodies or shareholders of a corporation change. The license only expires if the legal entity of a corporation is dissolved or if a partner of a partnership changes.

 

Insolvency

Insolvency of the temporary employment agency does not automatically mean that its license expires. However, the Federal Employment Agency may revoke the license due to a lack of economic performance.

 

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