Germany: Temporary agency work and collective bargaining in the EU

  • Observatory: EurWORK
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  • Published on: 18 Diciembre 2008



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The significance of temporary agency work is still increasing. Both the number of agencies and the number of temporary agency workers has grown since 2004. The equal treatment clause of the Temporary Employment Act, which provides the relevant regulatory framework, has led to the country-wide coverage of temporary agency work by three competing collective agreements. The agreements have allowed the agencies to deviate from the equal treatment clause.

Section 1. Definitions

1) In your country, is there a statutory definition of:

a) temporary agency work?b) agency worker?c) user enterprise?

If yes, please give definitions.

The legal definition is given in the first paragraph of the Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, AÜG): 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 business which is licensed to hire out employees to other companies on a commercial basis. A TWA must meet the typical obligations of an employer. If it does not, it is deemed to perform only placement services. Workers who are employed only to be hired out are temporary workers and those companies who hire them are user enterprises.

Assigning workers to a team established in order to perform a defined task is not deemed temporary agency work if certain conditions are met:

  • The employer is a member of this team.
  • Collective agreements of the same branch of economic activity apply to all members of the team.
  • All members are independently obliged to fulfil the requirements of the contract establishing the team.

Furthermore, workers who are hired out between companies within the same industry in order to avoid short-time work (Kurzarbeit) or redundancies and workers who are hired out within a group of companies are not considered to be temporary workers.

2) Is there a collectively agreed definition of:

a) temporary agency work?b) agency worker?c) user enterprise?

If yes, please give details (e.g. how and where defined).

The definition of agency workers given in collective agreements either refers directly to the statutory definition given in the AÜG or uses a similar phrase. User enterprises are only specified in firm-specific agreements, such as the agreement between the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) and the temporary work agency adecco with respect to the workers hired out by the latter to Audi (see section 3.5).

3) In your country, would you describe TAW as a sector in its own right?

TAW is a sector in its own right. This is made clear by the statutory regulation of TAW by the AÜG. In addition, several collective agreements apply exclusively to TAW (see section 3).

Nonetheless, IG Metall, for example, is very critical of the fact that companies in other sectors than TAW establish their own temporary work agencies, which are suspected of undermining the prevailing collective standards. However, that the same union acknowledges the generally independent character of the TAW sector is shown by a joint declaration made by the Frankfurt branch of IG Metall and two employers’ associations, the German Association of Private Employment Agencies (Bundesverband Zeitarbeit, BZA) and the Association of German Temporary Employment Agencies (Interessengemeinschaft Deutscher Zeitarbeitsunternehmen, iGZ) published on 11 April 2008.

Section 2. Regulatory framework

1) Have there been any changes in the law concerning TAW since 2004?

a) Yes b) No

No. However, the extension of collectively agreed minimum wages under the Posted Workers Act (Arbeitnehmerentsendegesetz, AEntG) to TAW is currently under discussion. BZA and iGZ together with the bargaining association of all trade unions that are affiliated to the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB) have applied to be covered by the Posted Workers Act. As competing collective agreements exist in the sector (see section 3), the two parties forming the present coalition government disagree about the legality of granting the application. At the moment, the Posted Workers Act applies only to a small number of industries (DE0710019I, DE0703049I).

2) How is TAW regulated in your country?

a) Is there a legal framework specifically for TAW; and/or is it covered by general labour law (including case law/ jurisprudence)?

TAW is legal only under the provisions of the AÜG. Collective agreements regulate specific pay and working conditions. Works agreements may also include establishment-specific rules for the use of temporary agency workers.

b) What is the role, if any, of collective labour agreements and self-regulation?

See, in particular 2.4.

3) What is regulated in these provisions? In particular, does it cover:

a) use of agency work (e.g. length of assignment, sectoral bans, permitted reasons of use, number of agency workers per company, other)

The AÜG prohibits the hiring out of workers to companies in the construction industry for the purpose of performing work usually carried out by blue collar workers. An earlier restriction on the length of assignments no longer holds. The maximum assignment period stipulated by the AÜG was extended several times and finally abolished in 2002 (DE0506203T).

Temporary work agencies must only notify the Federal Employment Agency (Bundesagentur für Arbeit, BA) of each contract with a user company. In addition, it must provide the BA with biannual statistics on the number and specific characteristics of hired out workers, the number of user enterprises served, the number of placements per sector, etc.

According to the AÜG and the provisions of § 99 of the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG), the works council of the user enterprise must be informed about the use of temporary agency workers and can object under a very limited number of circumstances, such as the agency’s failure to comply with the AÜG. In such a case, the user enterprise can apply to the local labour courts for an injunction overriding the works council’s objection.

b) the form of the contract (e.g. project, fixed-term, special contract, open ended, etc.)

Agency workers are subject to the same legal regulations as all other employees. The legal provision that prohibited limiting the length of the employment contract between the worker and the agency to the duration of the job in the user enterprise – the so-called synchronisation ban (Synchronisationsverbot) – was abolished in 2002 (DE0212203N).

c) social security and social benefits

No. Agency workers are subject to the same legal regulations as all other employees.

d) conditions to open a TAW agency (e.g. license or authorisation schemes, supervision by public authorities, financial requirements, or others - please specify)

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 the AÜG limits this fee to EUR 2,500 for each instance. The licence is valid for one year and must then be renewed. If a temporary work agency hires out workers 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.

e) business activities/services delivered by TW agencies (e.g. prohibition to provide other services than TAW)?

No.

f) third-national companies or temporary agency workers (e.g. activities of foreign agencies)?

The AÜG provides that companies based in other Member States of the European Economic Community must be granted licences under the same conditions as those based in Germany. Companies which have been established in accordance with the statutory provisions of a Member State and have the registered office specified in 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 establish a business in Germany according to the terms of an international convention are not to be treated less favourably than German nationals.

4) Do any regulations (by law and/or collective bargaining in the TAW sector) specify equal treatment rights for agency workers with permanent workers in the user enterprise concerning:

a) pay

The AÜG stipulates that agencies are obliged to guarantee their workers the same pay and employment conditions that hold for the permanent employees in the user enterprise. A deviation from the principle of equal treatment and equal pay for temporary agency workers is only allowed if the employment contract refers to an existing collective agreement in the TAW sector. Moreover, if the temporary agency workers were previously unemployed and if they have never been employed by the agency before, the latter may also temporarily deviate from the equal treatment principle.

b) training

No.

c) other terms or conditions of employment?

See a)

If yes, please give details.

5) Do TAW workers have the right to information, consultation and representation?

If yes, please specify the nature/basis.

As regular employees of the agency they are entitled to elect, and to stand for election to, a works council at the agency itself.

As temporary agency workers are regular employees of the agency, their information and consultation rights are usually not extended or transferred to the user enterprise. According to the AÜG, posted workers are, however, entitled to attend works meetings and consultation hours of the works councils at the user enterprises. In addition, those provisions of the Works Constitution Act that cover the right to information on the details and tasks of the daily work in the user enterprise and the complaints procedures also apply to the temporary agency workers when they are hired out to a user enterprise.

Furthermore, the Works Constitution Act stipulates that temporary agency workers are entitled to vote in the election for the works council at the user enterprise if they have been working at this establishment for longer than three months. They cannot, however, stand for election.

6) Is there a control/enforcement mechanism regarding any TAW regulation?

If yes,

a) is there a special labour inspectorate or a bi-partite body governing TAW?

Compliance with the AÜG is monitored by the BA.

b) are there any sanctions/penalties for not respecting the regulations (whether stemming from law and/or collective agreements)?

The BA and the customs authorities may fine companies which violate the AÜG. The AÜG defines upper limits for these monetary penalties. Moreover, the BA can revoke a formerly approved licence.

7) Are there any procedures governing use of TAW and strike breaking?

In particular, can workers on strike be replaced by agency workers?

Yes. However, according to the AÜG, the temporary agency worker is entitled to refuse to work at a user company that is directly affected by industrial action. The agency must inform its employees of this right.

Section 3. Social dialogue and collective bargaining

1) Is there any employers’ association(s) for TAW firms in your country?

If yes, please provide any data on membership (e.g. sectoral coverage of firms/workers)

  1. BZA: According to information provided on its website, the BZA consists of 2,200 establishments.
  2. iGZ: According to information provided on its website, the iGZ consists of 1,250 companies with 2,900 branch offices. Member companies are estimated to employ approximately 185,000 temporary agency workers (information supplied on request).
  3. The Employers’ Association of Medium-Sized Personnel Service Companies (Arbeitgeberverband Mittelständischer Personaldienstleister, AMP): In a press release on 23 August 2007, the AMP mentioned that more than 1,000 agencies were members.

2) Is there any union(s) specifically for agency workers?

If no, have any unions or confederations targeted the recruitment of agency workers? launched any campaigns around agency workers’ rights?

A union specifically founded for temporary agency workers to bargain with the employers’ associations mentioned above does not exist. All unions affiliated to the DGB have set up a bargaining association for TAW. The same holds for all unions affiliated to Christian Federation of Trade Unions (Christlicher Gewerkschaftsbund, CGB).

IG Metall has also launched a campaign for the fair handling of TAW (Leiharbeit fair gestalten) with the aim of recruiting agency workers as members and enforcing equal treatment arrangements in collective and works agreements.

3) Collective bargaining levels

Is TAW governed by collective bargaining at:

a) intersectoral/ national level?b) the sectoral level for TAW?c) company (ie. temporary agency firm) level?

If yes, please provide details of the parties concerned.

Currently, three sets of competing collective agreements exist at the sectoral level:

  1. BZA with the DGB bargaining association
  2. iGZ with the DGB bargaining association
  3. AMP with the CGB bargaining association (Christliche Gewerkschaften Zeitarbeit and PSA, CGZP)

BZA, iGZ and the DGB bargaining association also concluded an agreement on minimum wages for both eastern and western Germany that has been set on hold and will only take effect if it is declared generally binding (see section 2.1).

4) Collective bargaining outcomes

Please provide examples and details of any recent/ significant collective agreements governing TAW at the levels referred to in question 3.

The three relevant collective agreements do not contain any regulations that stipulate equal treatment of temporary agency workers and permanent workers in user firms. Framework and wage agreements for temporary agency workers stipulate working conditions in the same terms as agreements in others sectors do (see table 1).

Table 1 – Selected terms of collective agreements in the TAW sector
Collective agreements in the TAW sector deal with the usual aspects of working conditions.
  BZA and DGB bargaining association iGZ and DGB bargaining association AMP and CGZP
Wages 9 wage classes 9 wage classes 9 wage classes
Western Germany € 7.38 - 16.69 € 7.31 -17.04 € 7.00 - 15.76
Eastern Germany € 6.42 - 14.52 € 6.32 - 14.74 € 5.77 - 11.95
Pay supplements 1.5% (3.0%) for assignments lasting 9 (12) months or longer, in some cases allowances for commuting and accommodation, overtime, night shifts, work on Sundays/public holidays € 0.20 - 0.35 after 14 months (tenure) if the assignments last 9 months or longer, overtime, night shifts, work on Sundays/public holidays 6% for difficult work if the user firm agrees, overtime, night shifts, work on Sundays/public holidays
Bonus payments yes yes yes
Holidays 24-30 days 24-30 days 24-26 days
Working time Annual working time account based on a 35-hour week Flexible handling at the user company Annual working time account based on a 35-hour week Flexible handling at the user company Annual working time account based on a 35-hour week Flexible handling at the user company
Pension plans Conversion of wage into contribution to a pension plan possible   Conversion of wage into contribution to a pension plan possible
Opening clause Only by collective agreement Only by collective agreement Approval by social partners

As of 21 April 2008

Source: Collective agreement archive of the Confederation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA)

5) Are there any examples of sector- or company-level collective agreements in other sectors that restrict, permit or otherwise regulate the use of TAW within their domain?

[Correspondent:] If yes, please give details. Particularly highlight any agreements that have any terms concerning parity with permanent workers at the user enterprise.

Only a few collective agreements at the company level or works agreements stipulate parity with respect to wages or restrict the use of TAW. The works agreement archive of the Hans-Boeckler-Foundation (Hans-Böckler-Stiftung, HBS) lists a small number of agreements that regulate various aspects of the use of TAW in user companies, such as quotas, principles, conditions. A survey among 80 works councils in 2007 commissioned by HBS (Wassermann/Rudolph, 2007) suggests that only a minority of works councils (25%) strives to embed or has successfully embedded the use of TAW into works agreements.

On 29 August 2007, IG Metall and adecco concluded an agreement that only applies to adecco workers assigned to Audi. It stipulates that the affected agency workers receive a wage at the level that corresponds to the wage level fixed by the collective agreement in the Bavarian metal and electrical industry. On 21 April 2008, IG Metall and 16 temporary work agencies concluded a similar agreement that applies to agency workers at BMW.

Moreover, the fairness covenant agreed by BZA, iGZ and IG Metall on 11 April 2008 is to pave the way for settlements between the user company, the agency and IG Metall or the works councils. These agreements will make the temporary agency workers better off than if the collective agreements between BZA, iGZ and IG Metall were applied.

6) Please provide any data concerning:

a) trade union density for agency workers

No data available.

b) the coverage of collective bargaining within the sector.

The exact coverage rate is not known but it is assumed that in the case of the three agreements mentioned above the coverage rate is close to 100%. Employment contracts in agencies that do not belong to one of the three employers’ associations usually refer to one of the three collective agreements mentioned above to circumvent the equal treatment obligation.

The iGZ, for example, claims that one third of temporary agency workers are covered by the collective agreement between iGZ and the bargaining association of the DGB unions (base: number of workers at agencies that predominantly or exclusively assign workers to user companies). The AMP claims that agencies which are members of neither the AMP, iGZ nor BZA mainly refer to the collective agreement between the AMP and the bargaining association of the unions affiliated to the CGB.

Section 4. Employment and working conditions of TA workers

1) Please provide the most recent data (averages) on TAW employment

a) longevity of TAW employment, i.e. how long workers remain employed

- in the sector?

- with a particular agency?

TAW tends to be relatively short-term. According to the latest semi-annual report on posted workers issued by the BA, 45.1% of the temporary workers whose employment by an agency ended in the first half of 2007 had worked for that agency for three months or longer (see table 2). The contracts of a further 12.2% ended within in the first week. The employment duration of the remaining 42.6% was between one week and three months. With respect to the longevity of TAW employment, male and female temporary workers did not significantly differ.

Table 2 – Length of temporary agency work employment – share of workers whose contract was annulled in the reference period (in %)
Employment duration is relatively short.
  All Male Female
First half of 2004      
Up to one week 12.0 11.7 12.7
One week to three months 48.9 49.0 48.9
Three months or longer 39.0 39.3 38.4
First half of 2007      
Up to one week 12.2 11.5 14.0
One week to three months 42.6 42.3 43.4
Three months or longer 45.1 46.1 42.6

Rounding differences

Source: BA, own calculations

According to a specific analysis by the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB), the average length of employment of temporary agency workers in 2003 was 4.7 months. The median was 2.1 months.

According to BA data, almost 10.3% of the temporary agency workers had previously been employed by another temporary work agency. (Reference date: 30 June 2007)

b) duration of TAW placements, i.e. the length of assignment to a user company.

The average length of TAW assignments is unknown. According to a survey conducted by the employers’ associations in the metal and electrical industries (Arbeitgeberverbände in der Metall- und Elektro-Industrie, Gesamtmetall) in February 2008, in 16% of the responding firms the duration of TAW placements was no longer than three months. In around 32% of the companies the assignments lasted between three and six months. Only 19% of the enterprises reported placements that were longer than one year. 487 firms responded to this question.

2) Please provide any evidence from official, academic and social partner sources concerning:

a) the reasons for user companies’ usage of TAW, including any differences by sector, occupation, firm size etc.

According to a study commissioned by HBS, larger firms use temporary agency work more frequently. The proportion of temporary agency workers to all employees in the user company, however, decreases as the firm size increases. This suggests that in larger firms TAW is supplementary rather than substitutive. Moreover, where it is substitutive TAW seems to replace other ‘atypical’ employment forms, such as part-time work, rather than regular jobs. Finally, establishments which make use of TAW are also those which more frequently report difficulties in recruiting appropriately skilled workers and complain that the prevailing wages impose a heavy burden on the company’s competitiveness. The study is based on the establishment panel of the IAB.

A survey among medium-sized companies shows that TAW is mainly used for coping with temporarily high volumes of incoming orders.

According to the Gesamtnetall survey, ‘increasing flexibility’ was the most important reason for the usage of TAW (see table 3).

Table 3 – Reasons for TAW usage in companies in the metal and electrical industry
Increasing flexibility is the most important reason for user companies.
Reason Proportion of companies giving this reason in %
Better cost calculation 24
Increasing flexibility 88
Stand-ins for absent workers 60
Avoiding outsourcing 9
Other reasons 17

Note: Multiple responses, total number of respondents: 487 companies

Source: Gesamtmetall

b) reasons for workers participation in the sector and levels of satisfaction, including any differences by age, sex, education etc.

No information available. According to BA data for June 2007, two thirds of the employees who perform TAW for the first time were previously unemployed or have never been employed anywhere. This suggests that the most important reason for the bulk of workers is to enter or reenter the labour market.

3) In practice, which rules and procedures may apply to temporary agency workers in contrast to other workers in the user company?

Firstly, temporary agency workers and permanent workers at the user enterprise are covered by different collective agreements. Secondly, if a collective agreement does not cover the permanent workers in the user company, working conditions are stipulated on the base of individual working contracts. Therefore, temporary agency workers do not benefit from additional benefits that are offered by the user company.

Section 5. The extent and composition of TAW.

1) For 2004 and 2007, please state

a) the number of agency workers b) total reventues of the TAW sector

Table 4 – Number of temporary agency workers
Number of temporary agency workers has increased
  All Male Female
June 2004 399,789 305,183 94,606
June 2007 731,152 542,151 189,001

Source: BA

Table 5 – Total revenues in the TAW sector (in € 1,000)
Total revenues increased from 2004 to 2005.
Year Revenues in NACE 74.5
2004 8,939,486
2005 10,186,305

Notes: 2005 most recent year

Source: Federal Statistical Office ( Statistisches Bundesamt, Destatis)

2) What proportion of the TAW workforce is currently

a) male/ female?

In June 2007, just under 26% of temporary agency workers were female (see table above).

b) full/part time?

According to destatis data based on the microcensus, the proportion of part-time workers among temporary agency workers in 2006 was 17%.

c) young (<c. 25) or older (>c. 50) workers?

Also according to destatis, in 2006 the share of young workers was 31% and that of older workers (here: 45 to 60) was 24%.

3) Has there been any changes to the TAW sector in terms of

a) concentration, i.e. proportion of employees or turnover accounted for by the largest firms?

No information is available on the development of the turnover accounted for by the largest firms. The official statistics only show data on the revenues of the largest companies for 2005 (most recent reference period).

With respect to the number of work agency employees or agency size, the market reveals no signs of a concentration process because the whole market, and the demand for TAW, have been growing in recent years. Nonetheless, the proportion of larger agencies increased between 2004 and 2007 (see table 6). The total number of agencies rose from 15,416 establishments in June 2004 (including those only temporarily assigning workers) to 20,784 in June 2007.

Table 6 – Distribution of agencies with respect to the number of their employees (in %)
The proportion of larger agencies has increased.
  Below 10 10-29 30-49 50-99 100-149 150 and more
June 2004 58.5 17.1 9.5 9.6 2.9 2.4
June 2007 30.8 24.8 17.3 14.1 7.0 6.0

Source: BA, own calculations

b) internationalisation, i.e. number/significance of multinational TAW firms?

No data available.

4) What is your evaluation of the availability and quality of statistical data concerning TAW in your country?

All in all the availability and the quality of data on TAW are satisfactory. Specific questions, such as workers’ level of satisfaction or union membership, should and could be dealt with in specific surveys among temporary agency workers.

Commentary by the NC

With respect to general sectoral developments, according to the HBS study based on the IAB establishment panel 61.2% of temporary agency workers were assigned to manufacturing. The proportion of temporary agency workers to the total number of all workers in manufacturing rose from 2.1% in 2004 to 3.8% in 2006. Moreover, the number of temporary agency workers who work in technical, service and elementary occupations increased particularly strongly between 2004 and 2007 (see table 7). According to a study by the Cologne Institute for Economic Research (Institut der deutschen Wirtschaft Köln, IW Köln), approximately half the workers in elementary occupations are temporary agency workers (Schaefer, 2007).

Table 7 – Classification of TAW occupations – total number, change and distribution
More than one third of temporary agency workers work in elementary occupations.
Occupations June 2004 June 2007 Change in % Share in % (2004) Share in % (2007)
Technicians 15,477 33,238 115 3.9 4.5
Clerks 37,907 64,984 71 9.5 8.9
Service workers 64,886 129,499 100 16.2 17.7
Building trades workers 5,039 6,327 26 1.3 0.9
Metal moulders 10,802 18,702 73 2.7 2.6
Machinery mechanics and fitters 57,445 89,902 57 14.4 12.3
Electrical mechanics and fitters 27,271 41,461 52 6.8 5.7
Assemblers 14,493 24,475 69 3.6 3.3
Elementary occupations 128,664 250,653 95 32.2 34.3
Others 37,805 71,394 89 9.5 9.8
All 399,789 730,635 83    

For statistical reasons the total numbers of temporary agency workers differ from those in table 4.

Source: BA, own calculations

The presented data suggest that TAW provides a bridge to the labour market for many persons who would otherwise have remained unemployed. A strict application of the equal treatment clause would therefore not only change the character of TAW, turning it into an ordinary placement service, but would also undermine the employment prospects of those who are currently benefiting from the expansion of the TAW market. Moreover, a strict application of the equal treatment clause would not be feasible, particularly for smaller agencies and for assignments in user companies not covered by a collective agreement. Red tape and information costs could rise to a prohibitive level.

The substitution of permanent workers by temporary agency workers may be occurring in a few cases. However, the results of empirical research do not confirm fears that there is extensive nation-wide replacement of the former by the latter.

Selected comments of social partners

In an article published in June 2007, DGB official Inge Kaufmann argued that the proposal for a TAW directive which would include equal treatment clauses could result in a convergence of working conditions across Europe. According to Ms Kaufmann, the proposal also promoted the inclusion of an equal treatment clause in German legislation at that time.

In its comment on the same proposal, the iGZ stated that a strict application of any equal treatment clause would increase red tape to an unacceptable level. iGZ, however, welcomed the clause suggesting that an appropriate level of social protection might also be guaranteed by collective agreements. Moreover, iGZ objected from the beginning to any inclusion of TAW in the directive on services in the internal market.

Oliver Stettes, IW Köln

Additional references:

Schaefer, Holger, 2007, Warum die Zeitarbeit boomt, Thema Wirtschaft Nr. 108, IW Köln, Cologne

Wassermann, Wolfram /Rudolph, Wolfgang, 2007, Leiharbeit als Gegenstand betrieblicher Mitbestimmung, Arbeitspapier No 148 der Hans-Böckler-Stiftung, Düsseldorf

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