Employee Leasing: Deviation from Equal Pay

According to a judgement of the Federal Labour Court employers (agency) who lease employees (agency workers) to a third party (client) can deviate from the principle of equal treatment (“Equal Pay”) by virtue of a reference clause in the contract of employment only if, for the period of the lease, the relevant collective bargaining agreement for employee leasing fully, and not just partially, applies (judgement dated 16 October 2019, docket number 4 AZR 66/18).

The plaintiff was employed by the defendant and leased out to a client as a driver for the period from April 2014 to April 2015. The contract of employment contained a dynamic reference clause on the collective bargaining agreements concluded between the DGB and the IGZ. In addition, the contract of employment contained provisions that partially deviated from these collective bargaining agreements. Comparable employees (drivers) at the client received a significantly higher hourly wage.

In his claim, the plaintiff therefore requested the difference between the wage actually paid and the wage paid to comparable employees at the client. The Labour Court and Higher Labour Court dismissed the claim. However, the plaintiff’s appeal was successful.

According to the press release a deviation from Equal Pay (in the version of law in force until 31 March 2017), is not effective if a collective bargaining agreement relevant to the provision of employee leasing does not apply in full for the leasing period. This is required by the purpose and system of the German employee leasing laws. The plaintiff therefore had a claim to Equal Pay on the basis that his contract of employment contained deviations from the collective bargaining agreements which did not exclusively benefit the employee.

The judgement is not only important for the old, but also for the current legal situation. Employers who lease out employees to clients must therefore carefully review whether the judgement may impact their current business.