Proposed draft legislation in Germany that aims to regulate the apparent misuse of contract staff could mean recruiters placing temporary workers in the country will have to rethink their business models.

The draft legislation, tabled by German labour minister Andrea Nahles last month, includes proposals to: 

• limit assignments of temporary workers to 18 months. This assignment limit can be overturned by collective bargaining agreements but only for hirers which are bound by such agreements 

• give temporary workers equal pay rights, as a general rule, after nine months in a role. Where a collective bargaining agreement is applicable and covers equal pay, equal pay rights will take effect after 12 months 

• ensure temporary workers are not used as strike-breakers

• make it unlawful for there to be more than one supplier between worker and end-hirer

• make sure hirers inform workers councils on scope, place and time of the placement of temporary workers. 

According to Lutz Hoheisel, labour & employment partner at Squire Patton Boggs in Frankfurt, how agencies are affected by the legislation will vary based on their business models. 

Hoheisel told Recruiter in a statement: “If the agency is a recruiter for permanent employees only, little will change. If the agency provides temporary staff, and particularly those placing self-employed freelancers, they will need to be mindful of these provisions and to comply not only with the timelines but also the duties and functions of that individual in the company.

“Agencies that provide freelance self-employed workers will need to consider their business models carefully if they are placing individuals in roles normally performed by permanent staff members.”

And according to an update on employment lawyer Osborne Clarke’s website, whether someone is a temporary worker as opposed to a genuine freelancer governed by relevant German labour law, tax law and social security requirements is largely determined by whether they are deemed to be dependent. 

The update said: “What dependent work is will be set out in the German Civil Code. Some fear that there will be changes in the relevant rules such that statement of work-type consultancy could henceforward be interpreted as dependent work.”

The Association of Professional Staffing Companies (APSCo) recently set up operations in Germany. 

Commenting on the draft legislation, the recruitment trade body’s managing director for Germany Tremayne Elson said any restriction that reduces the ability of a freelancer to perform their independent function is likely to be fiercely challenged by end clients, agencies and the freelancers themselves.

“We believe that this restriction will be totally counter-productive,” he said.

“There is, as you would expect, considerable discussion in Germany concerning these proposals and Chancellor Merkel has already indicated her opposition to certain elements.  

“APSCo Germany will be watching the progression of these proposals carefully and we will be encouraging the Federal Minister of Labour & Social Affairs and the government to promote clarity and flexibility in the labour market.”

The legislation would be effective from January 2017.

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