Nowadays it is impossible to picture the working world without temporary employment. However, when publicly discussed, it is a highly controversial subject. Temporary employment is criticized for displacing permanent employment and giving a free pass to low salaries. Now the BAG (The Federal Labor Court) has stepped in and for the first time made some additional necessary specifications in the legal framework.
In its decision on July 10th, 2013, it ruled that temporary staffing that is in fact not temporary is not permitted according to Sec. 1 (1) sentence 2 AÜG (Temporary Employment Act) (Az. 7 ABR 91/11).
What is the background? Following the changes to the Temporary Employment Act (AÜG) that took effect at the end of 2011, temporary staffing may only be “temporary“. Due to a lack of specificity, this indefinite legal term has so far been largely ignored in practice. Accordingly, in most cases employers have been continuing to use temporary employment just as before the legislative change. The decision of the BAG has now put an end to this.
On December 10, 2013, the BAG ruled on another matter relating to the use of temporary staff (Az. 9 AZR 51/13). At issue this time was whether an employment relationship is established between the temporary worker and the client if the use of the temporary worker is not actually temporary. On that, the BAG has now made clear that no employment relationship is established between a temporary worker and a client unless the staffing agency does not have a license (Sec. 10 (1) sentence 1 AÜG). In the Temporary Employment Act (AÜG), lawmakers purposely refrained from mandating the creation of an employment relationship with the client as the legal consequence for using a temporary worker on a long-term basis. EU law is no different in this respect. It is up to lawmakers, not the labor courts, to choose from among the many possible sanctions and determine a penalty.
In the case decided, an IT professional that was hired out to a hospital operator from 2008 to 2011 demanded a permanent position and payment of wage differences. His reasoning: the assignment was not actually temporary. Therefore, an employment relationship had been established with the hospital provider. The BAG did not agree, however, holding that no employment relationship had been established.
Since a ruling about whether the temporary IT worker was used on a more than temporary basis was not necessary in this case, what the term “temporary” really means - at least in terms of duration - is still an open question. There will continue to be uncertainty concerning the legality of “temporary” staffing going forward. Until the BAG further specifies the limits of temporary staffing arrangements, we will have to accept the present legal uncertainty. In any case, it is advisable for the employer to limit the duration of any temporary employment.