License

Who needs a temporary employment agency license in Germany?

All domestic or foreign companies require a temporary employment agency license in Germany as soon as they perform an activity as contemplated in sec. 1 (1) sentences 1, 2 of the Law on Temporary Employment (AÜG, Arbeitnehmerüberlassungsgesetz).

Sec. 1 (1) sentences 1, 2 AÜG
Employers intending to hire out employees (temporary workers) to third parties (hirers) for work within the framework of their economic activity (temporary employment) require a license. Employees are assigned to perform work if they are integrated into the hirer’s work organisation and bound by the hirer’s instructions.

German law covers not only the traditional hiring out of employees as temporary employees, but also all other constellations in which an employee is employed by one company and receives a salary, but works at another company and is bound by the latter’s instructions. Even in the case of a short-term assignment, or if the company which pays the employee’s salary merely performs the payroll accounting  function (so-called ‘payrolling’) for any other reason, German law treats this constellation as temporary employment for which a license issued by the Federal Employment Agency (Bundesagentur für Arbeit) is required.

 

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