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Heiner Dribbusch

Thematic Feature on temporary agency work in an enlarged
Europe – case of Germany

1. Background: definitions and country specific information

1.1 In your country of origin is there a statutory and/or collectively agreed
definition of:
temporary agency work

agency worker

user enterprise
The only legal definition is given in section 1, paragraph 1 of the Temporary Employment Act
(Arbeitnehmerüberlassungsgesetz, AÜG) which reads: Employers (temporary work agencies)
who intend to make the services of workers (temporary workers) available to third parties (user
enterprises) on a commercial basis shall require a licence. A temporary work agency (TWA) is
therefore any licensed business which commercially hires out employees to other companies. The
workers who are employed only to be hired out are temporary workers and those companies who
hire them are user enterprises. Detaching workers to a team established in order to perform a
defined task is not deemed temporary employment provided the employer is a member of this
team, collective agreements of the same branch of economic activity apply and all members are
obliged to independently fulfil contract requirements on account of the contract establishing the
team. Furthermore, workers who are hired out between companies within the same industry in
order to avoid short-term working (Kurzarbeit) or dismissals and workers who are hired out
within a group of companies are not considered as temporary workers (AÜG, section 1, paragraph

1.2 If so, please give details. For TAW, does the definition identify clearly
who the employer of the temporary agency worker is?
A temporary agency worker is by definition an employee of a licensed temporary work agency
but works under the managerial authority of the user company. According to the AÜG they are
deemed to be employees of the temporary work agency even while working for a user enterprise.
Before a temporary worker can work in a user company the works council in the user enterprise
has a co-determination right concerning the hiring based on section 99 of the Works
Constitution Act (Betriebsverfassungsgesetz, BetrVG). Following decisions of the Federal
Labour Court (Bundesarbeitsgericht, BAG) the works council has also a co-determination right
concerning the working time of the temporary worker.
2. Regulatory framework

2.1 Is there any specific legislation (primary/secondary,
national/regional/local), collective agreement,
industry-regulations, market-regulation provisions, jurisprudence?
Temporary agency work is legal only under the provisions of the AÜG. Since 2003 the
bargaining parties in the sector have concluded a number of collective agreements which regulate
pay and working conditions.

2.2 Has the regulation of TAW changed over the past 10 years?
Since its introduction in 1972 the AÜG has undergone several amendments and alterations. Until
2002 these changes to the law affected in particular the maximum time period for which
employees could be hired out to one single employer. This time limit was increased step by step
from 3 months in 1972 to 24 months in 2001. A far reaching revision of the Act, however, was
passed by parliament at the end of 2002 in the course of major changes in labour market
legislation (DE0212203N). Every time limit concerning the hiring out of employees was then
abandoned and various other restrictions were removed. From 2004 onwards, temporary work
agencies were obliged to guarantee their workers the same pay and employment conditions that
permanent staff were entitled to in the user enterprise. The new law allowed a deviation from the
principle of equal treatment and equal pay for temporary agency workers only on the basis of
collective agreements. This finally led in 2003 to the conclusion of various packages of collective
agreements (DE0308203F).
The long standing legal prohibition to hire out workers to the construction industry was
effectively maintained. Although agencies are permitted with effect from 2004 to hire out agency
workers to the construction sector, provided generally binding collective labour agreements are
applicable for both, the agency and the client company there is de facto a restriction because such
generally binding collective labour agreements do not exist at present. However, the German
parliament also adopted an alteration to the AÜG reflecting a decision of the European Court of
Justice (ECJ) made on 25 October 2001 (in Case C-493/99, Commission v Germany). The AÜG
now allows companies that usually do business in construction, ie effectively foreign construction
companies but not temporary work agencies, to hire out workers to German employers. They
must, however, abide by the collectively agreed minimum wages and holiday provisions and
participate in the building industry leave scheme. This was secured via a corresponding alteration
to the Posted Workers Act (Arbeitnehmer Entsendegesetz, AentG), which came into force at the
same time as the alteration to the AÜG on 1 January 2003.
The legislation of December 2002 also established so-called personnel service agencies
(Personal-Service-Agenturen, PSAs) throughout the country. It was planned that these PSAs
would effectively act as temporary work agencies and employ unemployed people and hire them
out on a short-term basis, in accordance with existing collective agreements or agreements which
had to be negotiated between employers and trade unions by the end of 2003. The PSAs were
established on the basis of public tenders, within which private temporary work agencies had to
be given priority. The regional offices of the Federal Employment Service (Bundesanstalt für
Arbeit, BA) concluded free agent agreements with PSAs to cooperate in the placement of
unemployed people.
2.3 What is regulated in these provisions?
Regarding the contract, the AÜG demands that the contract between the temporary work agency
and the user enterprise has to be in writing and has to detail the deployment of labour. This does
not apply to the contract between the TAW and the agency worker but the worker must be given a
document stating the important details of the employment contract just as in regular employment
Concerning social security and social benefits temporary workers are subject to the same legal
regulations as all other employees.
There are no specific tax or fiscal regulations in the AÜG.

2.4 Which are the requirements for an Agency?
To operate a temporary work agency it is necessary to obtain a permit from the BA. The BA
charges the companies for the licence but fees shall not exceed EUR 2,500 in each instance
(section 2a, AÜG). The licence is valid for one year and must then be renewed. In the case of a
temporary work agency hiring out without a valid licence, any contract already signed is invalid.
If a contract concluded between a temporary work agency and a temporary worker is invalid
under the terms of the AÜG an employment relationship between a client and a temporary worker
is deemed to have been established at the time agreed between the client and the temporary work
agency for the commencement of the assignment.
Compliance to the AÜG is monitored by the BA.

2.5 Are there restrictions on TAW?
It is prohibited to hire out workers to companies in the construction industry for the purpose of
performing work usually performed by blue collar workers, (section 1b, AÜG). Otherwise there
are no restrictions for licensed temporary agency work. There is no limit to the length of
assignment. The temporary work agency has to notify the Federal Employment Agency about
each contract with a user company.
A licence may be refused if the applicant is not a German national or if the application is made by
a company which either has not been established in accordance with German law or does not
have its registered office in Germany.
However, companies stemming from other Member States of the European Economic
Community shall be granted licences under the same conditions as German nationals. Companies
and bodies corporate which have been established in accordance with the statutory provisions of a
Member State and have their registered office, according to their memorandum and articles of
association, their head offices or their main places of business within the Community are deemed
equivalent to nationals of the Member States.
Nationals from third countries who on account of an international convention establish a business
in Germany are not to be treated less favourably than German nationals.
3. Employment conditions

3.1 Which are the employment conditions for TAWorkers which are
different from those of a regular employment contract? (The main objective
here is to identify any indications or patterns of differential treatment or
parity with permanent workers).
From a legal standpoint temporary workers are not treated differently than employees with a
regular employment contract. The fact, however, that they are hired out means that they have to
change their workplace more often than other employees.
In November 2003 the German Institute for Economic Research (Deutsches Institut für
Wirtschaftsforschung, DIW) published a brief report on the working conditions of temporary
workers (http://www.diw.de/deutsch/produkte/publikationen/wochenberichte/docs/03-46-1.html)
based on the German Socio-Economic Panel (SOEP) of 2001. The report showed that temporary
workers are more likely to have a fixed term contract and that they are less likely to receive
benefits such as holiday pay or a Christmas bonus (the first collective agreements which
introduced such bonuses under certain conditions were not concluded until 2003 (DE0308203F)).
In general, temporary workers are about as content with their working conditions as other
employees. However, compared with other employees they enjoy less autonomy at the
workplace, more frequently encounter unhealthy and stressful working conditions and run a
significantly higher risk of accidents at work.
On average, temporary workers earn less than other employees. The wage gap has even increased
in western Germany between 1980 and 2001. According to figures from the Federal Employment
Agency temporary workers in western Germany earned 77.4% of the average wage in 1980
whereas in 2001 they earned only 58.8%. In eastern Germany the respective figure was 68.6% in
2001 (Source: IAB Kurzbericht No. 20, 28 August 2002; calculations of IAB cover the wages of
male full-time employees aged 25 to 35).

4. Social security/social benefits
As stated above, the legal position of temporary workers with regard to protection against
dismissal, social security and social benefits is equivalent to those of other employees.

4.1 Which are the rules and procedures which apply to TAWorkers in
contrast to other workers? (The main objective here is to identify any
indications or patterns of differential treatment or parity with permanent
There are no specific rules and procedures as far as social security and social benefits are

5. Quantitative data

5. 1 What is the overall incidence of TAW in:
a) number of employees involved (e.g. at a given point in time, in full-time equivalents over a 12-
month period)
b) the percentage of the total national workforce involved
c) the number of temporary work agencies in operation at
        ca) national level
        cb) sectoral level
According to figures provided by the BA there were about 400,000 temporary agency workers
employed in 2004 (June)
(http://www.pub.arbeitsamt.de/hst/services/statistik/200406/iiia6/aueg/auegd.pdf). These
represent about 1.2% of all employees subject to national insurance contributions. This is the
same share as in the year 2000.
In June 2004 305,000 temporary workers were men and 95,000 were women.
In the first half of 2004 there were 15,070 licences to hire-out employees issued by the BA. 7,153
temporary work agencies including branches of major companies dealt exclusively or
predominantly with the hiring out of workers. There is no sectoral disaggregation of those figures

5.2 What are the main sectors where TAW is used ?
The data of the BA is not differentiated by economic sector. There are, however, figures available
about the occupations temporary workers perform in the user enterprises.
In June 2004, 32% of all temporary workers worked in low skilled jobs without any further
description. 18% worked as mechanics or as metalworkers, 9.5% in administrative or clerical jobs
and about 7% worked as electricians. Only 0.5% were employed as chemical workers.

5.3 What is the development of TAW (in percentage of the total national
workforce involved) in your country since 2000
        a) at national level
        b) at the dominant sectoral levels
There was a steep increase in temporary agency work in the second half of the 1990s which,
however, has slowed down since 2000 – see table 1 below.
                    Table 1: Temporary agency workers 1994-2004 (June)
Year                All                  Men                 Women                Share of
1994                           138,451             113,148               25,303              18.3%
1995                           176,185             143,614               32,571              18.5%
1996                           177,935             145,124               32,811              18.4%
1997                           212,664             171,997               40,667              19.1%
1998                           252,895             202,572               50,323              19.9%
1999                           286,394             227,513               58,881              20.6%
2000                           339,022             262,762               76,260              22.5%
2001                           357,264             277,938               79,326              22.2%
2002                           336,295             257,326               78,969              23.5%
2003                           327,331               253,728               73,603             22.5%
2004                           399,789               305,183               94,606             23.7%
Source: Federal Employment Agency (BA), Arbeitsmarkt in Zahlen – Arbeitnehmerüberlassung
1. Hj. 2004

5.4 What is the turnover of TAW in your country?
There is no data available on the turnover of temporary agency staff.

5.5 What is the average length of assignment (in days) of a TAWorker?
The average length of assignments is not known. Of about 250,000 temporary employment
contracts, however, which according to data of the BA ended in the first half of 2004, 15% lasted
less then a week, 46% lasted between a week and short of 3 months and 39% lasted 3 months and

5.6 What is its relative importance among:
a) women and men
b) different age groups
c) different occupations and levels of skill/qualification,
Most temporary agency workers are men. The share of women has increased with time and
reached about 24% of overall temporary employment in 2004 – see table 1 above.
There is no data available on the age differentials amongst temporary agency workers. According
to the survey based report of the DIW of 2003 (see 3.1.), however, the average age of temporary
agency workers is 37.5 years compared to 41.4 in the whole economy. According to the same
source temporary agency workers are less likely to have a higher formal education and have more
often no formal occupational training compared to the average employee in the economy.
Temporary workers are found in the whole economy and in a wide range of occupations, but
many of them perform low-skilled jobs – see 5.2. above.

6. Quality criteria

6.1 Are there codes of conduct for agencies/ agency workers?
There are no particular codes of conducts for temporary work agencies.

6.2 Do other quality requirements for members of TAW associations exist?
The German Association of Private Employment Agencies (Bundesverband Zeitarbeit Personal-
Dienstleistungen, BZA) has established own quality requirements. These so called “BZA-
Principles for the Exercise of Profession” are reliable for all members. They particularly rule the
behaviour of affiliates towards employees, applicants, client businesses, the general public,
authorities and the association itself. The association ensures that the statutes and quality
standards adopted by the general assembly of members are obeyed.
The BZA established an appeal body to which employees of its member companies can address
complaints if the employee is of the opinion that the employer does not comply with the BZA
working conditions and social benefits. A similar body has been established by the Association of
German Temporary Employment Agencies (Interessengemeinschaft Deutscher
Zeitarbeitsunternehmen, iGZ).

7. Role of the social partners

7.1 Have temporary work agencies structured themselves into a separate
sector of activity, and do they have a trade and/or employers' association?
At the end of 2004 there existed four competing employers’ associations in the industry. The two
major employers’ associations are the BZA, whose members include some of the major
companies like Adecco, Manpower and Randstad and which is an official member of the
Confederation of German Employers' Associations (BDA) and the iGZ representing a number of
small and medium-sized temporary agencies. In spring 2005 the BZA had about 440 member
companies with 1,850 branches/subsidiaries and the iGZ had 881 member companies with about
2,000 branches/subsidiaries. Both associations cover about 100,000 employees each ie together
50% of all temporary workers. The two smaller employers’ associations are the Association of
Northern Bavarian Temporary Employment Agencies (Interessengemeinschaft Nordbayerischer
Zeitarbeitunternehmen, INZ) and an association of medium-sized businesses called
Mittelstandsvereinigung Zeitarbeit (MZV). The latter associations merged with effect from 1 July
2005 under the umbrella of a new employers’ association of medium sized personnel service
companies (Arbeitgeberverband Mittelständischer Personaldienstleister, AMP) which claims to
have about 850 member companies after the merger, covering about 100,000 employees.

7.2 Have there been collective bargaining/agreements between temporary
work agencies or their employers' associations and trade unions (at
sectoral/company level) ?
In 2003 the bargaining association of all trade unions affiliated to the Confederation of German
Trade Unions (Deutscher Gewerkschaftsbund, DGB) concluded two separate packages of
national cross-sector collective agreements on pay, working hours and a range of benefits such as
holiday and Christmas pay with both the BZA and the iGZ (DE0308203F). These agreements
followed the legislation of December 2002 and they were the first national collective agreements
concluded between the DGB and an employers’ association in the industry. New pay agreements
between the bargaining parties were concluded at the end of 2004 and in February 2005
(DE0503202N). The lowest collectively agreed pay level stands at EUR 7 according to the DGB-
iGZ-agreement and at EUR 7.02 according to the DGB-BZA-agreement.
INZ and MZV signed in 2003 separate collective agreements with a collective bargaining
association of trade unions affiliated to the small Christian Federation of Trade Unions
(Christlicher Gewerkschaftsbund, CGB), which had previously not succeeded in concluding
collective agreements of major relevance in the main economic sectors and which has a
reputation to undercut collective agreements concluded by the DGB. The provisions in these
package of collective agreements fell below the collective agreements concluded by the DGB in
particular with regard to benefits. Besides these collective agreements there exist a number of
collective agreements at company level concluded either with affiliates of the DGB or the CGB.
The exact coverage of the different packages of collective agreements is not known. It can be
assumed, however, that about 50% of employees are covered by either the BZA-DGB or the iGZ-
DGB collective agreements. About 25% of employees are either covered by the national
collective agreements concluded by the CGB with the smaller employers’ associations and in
future those concluded with the AMP. The other employees are either covered by company level
agreements or by no agreement at all. As insiders estimate that perhaps 5% of employees enjoy
equal treatment according to the AÜG there remains an estimated number of unknown cases
where neither a collective agreement is in place nor is the law implemented.

7.3 Which are the information/consultation/participation rights of temporary
agency workers?
Temporary workers enjoy consultation and co-determination rights with their employer ie the
temporary work agency, as laid down in the BetrVG. When working in the user company longer
than 3 months they are, however, entitled to vote if there are elections of works or staff councils
in the user enterprise - but they cannot stand as candidates. They are entitled to consult the works
or staff council of the user company during the consultation hours and to attend works meetings.
In the case of an assignment the temporary worker may also ask the user enterprise for
information about the essential working conditions including remuneration applicable to a
comparable worker in that enterprise. However, in case an agency worker is covered by a
collective agreement, this right does not apply.
According to section 11, paragraph 5 of the AÜG a temporary worker is not required to work for
a user enterprise which is directly affected by an industrial dispute. In the event of an industrial
dispute at the user enterprise the temporary work agency shall inform the temporary worker of the
right to refuse to perform the work.

8. Overview of national discussions and policy debates

8.1 Please identify and describe policies and / or regulatory developments,
negotiations and debates taking place in your Member State regarding
TAW. What general analysis do employers and trade unions have of TAW?
Has this analysis changed over time?
Since the legal changes introduced in December 2002 (which ended most of the restrictions on
temporary agency work) the political debate on the issue has declined.
Whereas the Federal Minister of Economics and Labour, Wolfgang Clement, said at a conference
of the of the Confederation of German Employers’ Associations (Bundesvereingigung der
deutschen Arbeitgeberverbände, BDA) in May 2005 that he was very happy with the
implementation of the AÜG, there has been some public concern about the future of the new
PSAs established in co-operation with temporary work agencies by the Federal Employment
Agencies. The temporary work agency Maatwerk Gesellschaft für Arbeitsvermittlung which
operated 201 of about a total of 1,000 PSAs declared bankruptcy in February 2004. The BZA,
which is critical about the construction of the PSAs, commented that Maatwerk had probably
underestimated the costs involved in placing unemployed people.
The employers’ associations in the sector have arranged themselves with the AÜG while still
opposing the provision in the AÜG on equal treatment which they consider as a means to force
them under a collective agreement. BZA, MZV and a number of temporary work agencies went
to the Federal Constitutional Court (Bundesverfassungsgericht) to topple this provision but failed
on 29 December 2004 when the Court decided unanimously in a pre-procedure to dismiss the suit
because it considered the provision to be in line with the constitution.
The employers’ associations in the industry also oppose any attempt to introduce some kind of
statutory minimum wage by way of collectively agreed rates of pay being made binding within
their respective industries by way of the statutory procedure of extension of collective
agreements (Allgemeinverbindlichkeitserklärung, AVE) (TN0212102S) as in the construction
industry – as intended by the red-Green government in spring 2005.
The employers’ associations in general have long been in favour of temporary employment and
the president of the BDA, Dieter Hundt, demanded in May 2005 that the Federal Employment
Agency should make much more use of employ temporary work agencies to place unemployed
people. The BZA believes that the new collective agreements will give the temporary agency
market a high degree of certainty, reliability and trust. According to the BZA this will enhance
future job creation by the sector, create a new relationship between the industry and the trade
unions and finally increase the acceptance and the image of agency work in Germany.
The DGB affiliated trade unions have been traditionally very hostile towards temporary
employment. For many years they demanded that temporary work be outlawed and compared it
to some kind of modern slave labour. This attitude has changed over the years and the DGB has
accepted temporary work as a fact. Still demanding, however, that temporary work should not be
used to substitute regular permanent employment and that temporary workers should be treated
equally and especially paid the same rates as other employees in the companies they were
assigned to (DE9711138F). For the DGB, the national cross-sector agreements concluded in 2003
marked the end of a development which had started years previously with a handful of collective
agreements at individual agency level (DE0105222N and DE9907211N) accompanied by much
scepticism in a number of trade unions about whether the temporary agency work sector should
be accepted as a normal sector. Commenting on the conclusion of the collective agreements in
2003 the DGB's chief negotiator, Reinhard Dombre, said that the industry could now develop into
a normal economic sector like any other. Some scepticism about the extension temporary agency
work and its potentially negative effect on permanent, however, remains amongst trade unions.
Some regional DGB bodies, however, remain very critical towards temporary agency work and
for example criticise the fact that the new labour market laws introduced in 2003 (DE0401205F)
effectively promote temporary work by forcing unemployed people to accept every legal job
The official for the temporary work industry on behalf of the United Service Union (Vereinte
Dienstleistungsgewerkschaft, ver.di), Hartig was quoted in the press in April 2005 saying that he
would recommend every unemployed person to try to find a new job by way of temporary
employment. He admitted, however, that the chances to get into permanent employment in this
way were small.
Heiner Dribbusch, Institute for Economic and Social Research, WSI

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