Temporary Employment: AÜG Reform Enters the Home Straight
Cologne, 28.11.2016 - Following three years of parliamentary and extra-parliamentary debate, on 25 November 2016 the Bundesrat has now also formally approved the new regulation of temporary employment and contracts for work. The Act will enter into force on 1 April 2017. An overview of the most important new provisions is given below:
1. Maximum assignment term
- A maximum assignment term of 18 months has been stipulated.
- Periods of assignment prior to 1 April 2017 will not be included in the calculation.
- The assessment of the assignment is oriented on the temporary employee as opposed to the work place.
- In case of repeated assignments by the temporary employee, the previous periods are counted in the calculation; this does not apply if less than three months lie between the assignments; .
- If the maximum assignment term is exceeded an employment relationship with the hirer is simulated, unless the temporary employee declares within a period of one month that he elects to uphold the employment contract with the personnel supplier. The Act stipulates stricter requirements for the validity of this declaration, involving the employment agency.
- A violation of the maximum assignment term also represents a regulatory offence and can be penalised with a fine of up to EUR 30,000.
2. Equal pay
- After nine months the temporary employee receives the same remuneration as a comparable regular employee at the hiring business.
- Should a collective agreement already envisage wage increases after six weeks at most, equal pay must be ensured at the latest after an assignment term of 15 months.
- Breaches hereof can be penalised with a fine of up to EUR 500,000.
3. Chain supply
- Chain supplies are already currently prohibited by the Federal Employment Agency [Bundesagentur für Arbeit]. This has now been stipulated by law, i.e. employees may only be supplied by their contractual employer as the personnel supplier. Any and all chain supplies, interim supplies or further supplies are prohibited. Breaches hereof can be penalised with a fine of up to EUR 30.000.
4. No reserve permit
- Enterprises which deploy their employees at other enterprises will in future no longer be able to prevent the legal consequences of an illegal supply of personnel by reservation of an AÜG permit (reserve permit).
- As of 1 April 2017, temporary employment muss be expressly named as such in the contract and the identity of the temporary employee specified.
- Breaches hereof can be penalised with a fine of up to EUR 30,000. In addition, an employment relationship with the hirer is simulated if the employee does not declare within a period of one month that he wishes to uphold the employment contract with the personnel supplier. Here as well, stricter validity requirements apply to the declaration electing to remain with the personnel supplier.
5. Definition of employee
- With the introduction of a new Sec. 611a German Civil Code [Bürgerliches Gesetzbuch, BGB] under the heading “Employment Contract” the law is defining for the first time who is an employee.
- For so-called solo self-employed persons, but also for enterprises which have their employees work for or at other enterprises, contract structuring and even more so the practice of handling the contracts will cause changes in their implementation and in the business processes.
The Act also comprises a multitude of further provisions, inter alia on codetermination. The new schedule now still gives employers some lead time to analyse any need to make changes to ongoing projects as well as within their compliance organisation, as well as to implement any such changes required.
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