Update on German Labour Leasing Laws – Coalition Agreement

According to Federal Minister Andrea Nahles (SPD), the coalition have now made a breakthrough on proposals to amend the German labour leasing laws. After a meeting of the coalition committee on 10 May 2016, the participants agreed on “clear rules” for employees and employers. They clearly agreed on the principle of “Equal pay for work of equal value” and that no more loopholes will be permitted.

The new draft apparently contains provisions relating to companies which are not party to a collective agreement, and includes the following details:

Assignment of temporary workers:

  • In principle, temporary work shall be limited to a duration of 18 months with the same hirer (after which temporary workers will be regarded as being hired on the basis of long-term contracts of employment, if the temporary work agency does not send the temporary worker to a new user).
  • Possible exceptions:
    • Trade unions and employers agree on an exception and this exception is established in a collective agreement. A works council agreement at company level  between the employer and the works council about the duration of temporary work or about takeover obligations can also be established in the collective agreement.
    • Also companies that are not party to a collective agreement will be able to apply the collective agreement of the respective sector in respect of the limit on the duration of the assignment.

Equal pay:

  • In principle: after 9 months temporary workers should receive equal pay with the core workforce.
  • Possible exceptions:
    • A longer period of divergence is allowed if there are branch surcharge wage agreements (Branchenzuschlagstarifverträge) which intend a gradual rise and “after 15  months at most of personnel leasing” a payment is reached which is comparable with the standard wage of the core workforce.

Prohibition on use of temporary workers as strike breakers:

  • By law it should be prohibited that temporary workers undertake duties to cover for employees on strike.
  • The use of temporary workers in a company which has strike action is not, however, forbidden in general.

According to Nahles, this law should pass the cabinet as early as possible.