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German Temporary Employment Agencies Can Choose: Full Collective Agreement or Equal Pay

Apr 3, 20 • Employment LawNo Comments

German Temporary Employment Agencies Can Choose: Full Collective Agreement or Equal PayWhen hiring out employees (temporary work), special employment contracts must be concluded between the supplier and the user. Collective agreements can also be used for this purpose.

From now on, however, it is no longer possible to simply apply the provisions of a collective agreement that are favorable to the lender in an employment contract between the lender and the borrower. In future, lenders must either apply a collective agreement in full or adhere to the equal pay principle.

Equal Pay: Temporary employees earn as much as permanent employees

Pursuant to § 8, Subsection 2, of the Act Regulating the Provision of Temporary Employees (AÜG), it is in principle possible to deviate from the equal pay principle applicable in the provision of temporary employees on the basis of a collective agreement.

The Equal Pay Principle provides that temporary workers receive a remuneration in exactly the same amount as the permanent employees in the business of the hirer. The Federal Labor Court (Bundesarbeitsgericht, BAG) has now considerably restricted this possibility provided by the law.

So far, Equal Pay could be circumvented

Under the law, it was previously possible to deviate from the equal pay principle provided that a collective agreement from the field of temporary employment was applied. In practice, therefore, the temporary worker was paid a collectively agreed remuneration by the temporary employment agency in some cases – without applying the collective agreement for the rest.

At the same time, however, the temporary employee and the hirer agreed on vacation days that deviated from the collective bargaining agreement, for example, and only the remuneration from the collective bargaining agreement was included in the individual employment contract.

Court decision prohibits cherry picking

The BAG declared this practice inadmissible in a decision at the end of 2019 (BAG dated October 16, 2019, 4 AZR 66/18). The equal pay principle is an elementary part of the AÜG. A deviation was only permissible within very narrow limits.

According to the BAG, the law assumes – in the case of a deviation from the equal pay principle by a collective bargaining agreement – that this collective bargaining agreement is applied in its entirety and not only individual passages. Thus, a comprehensive reference clause to the collective bargaining agreement in the employment contract is necessary in order to allow a deviation from the equal pay principle.

An individual employment contract can only deviate from the collective agreement in exceptional cases if the deviation is intended to benefit the employee.

What should lenders do now?

In order to prevent temporary agency workers from claiming damages for invalid employment contracts, lenders should have the employment contracts they use reviewed and, if necessary, revised.

How can we be of help?

In order to ensure that the employment contracts with the temporary employee are legally compliant, our experts in employment law and the provision of temporary workers will be happy to help you review your employment contracts and make any necessary adjustments. Please feel free to contact us should you have any questions.

Continue reading:
No combination of employment periods as temporary worker and actual employee in Germany
Staff leasing in the German high-wage sector

Ellen Pusch

Ellen Pusch specializes in employment law and inheritance law at our Munich office. She drafts and optimizes employment agreements as well as specific types of termination agreements and assists with restructuring projects and M&A transactions (transfers of undertakings).

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