Orrick’s 101 – Employment Law in Germany NEW: Agency Work

1. What is Agency Work?

Agency work (Arbeitnehmerüberlassung) is a highly regulated business area in Germany and occurs when an employer (Agency) provides a third party (Client) with an employee employed by him, the Agency Worker (Agency Worker). The Agency Worker is fully integrated into the Client's work organization and is subject to the Client's instructions. The employment relationship, however, exists between the Agency and the Agency Worker, no employment relationship between the Client and the Agency Worker is being established.

2. What Alternatives Exist to Agency Work?

Third-party personnel deployment on the basis of a service contract (Dienstvertrag) or work contract (Werkvertrag) is to be distinguished from agency work. In distinction to agency work, the employees remain included in the service provider's/contractor's organization and are subject to their instructions, although working at a third party. In these cases, the rules on agency work do not apply. However, great caution is indicated here: If it should turn out that, despite the agreement of a service or work contract, the employees were integrated into the third party's organization, this can be a case of unauthorized agency work, which can result in fines for Agency and Client and the creation of an employment relationship between the Client and the Agency Worker.

Please see full Publication below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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