Caution: Grace Periods for Equal Treatment Rule Expire and Problems with the Maximum Periods for Temporary Employment under the Reformed Temporary Employment Act

The Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, AÜG), which entered into force on 1 April 2017, contains two important deadlines, which will take full effect in 2018. This is because the legislators introduced grace periods for companies with respect to old cases, i.e. temporary workers, who had already been assigned to the user company before a specified date (see the article by Franziska von Kummer, "New German Law on Temporary Employment of 15 May 2017").

Substance of the rules

On the one hand, a grace period applies for the so-called equal treatment rule. This requires the temporary-work agency to grant the worker the same employment conditions, including pay, of a comparable employee for the period of temporary assignment. This can only be deviated from for up to nine months in accordance with collective agreements. Taking into account the law's entry into force on 1 April 2017, this exemption for old cases doesn't longer exist since the 1 January 2018.

On the other hand, under the new Temporary Employment Act, the temporary-work agency may only assign an employee to the same client for a maximum period of 18 months. For the old cases, the grace period for the maximum assignment will expire on 30 September 2018. An infringement of this rule constitutes an administrative offence (which can result in a significant fine) and will lead to a fiction of an employment relationship between the user company and the temporary worker. In practice, this raises the high-risk question of how the 18-month period is to be calculated. This is particularly problematic in light of the possible periods of interruption.

Treatment of periods of interruption

The wording of the law focuses on a maximum transfer period of 18 consecutive months. The calculation is therefore simple, when the period of assignment is uninterrupted. The uncertainty arises, when there are interruptions to this period. Here the law directs that periods of previous temporary assignment are to be counted completely when the period of interruption between one period of assignment and the next is not longer than three months. Accordingly, where the period of interruption is three month and one day long, the counter on the 18-month period of temporary employment starts anew. Contrariwise, when the period of interruption is 3 months or less, the temporary periods of assignment are to be added together.

It is controversial how short interruptions, such as public holidays or absences for illness or annual leave, are to be taken into account for the calculation of the maximum period of assignment. The same question arises in situations, in which engagement is intended to be by the hour, day or even week.

From a substantive point of view, the actual working times should be applied. If the periods of interruption are less than three months long, these should not be taken into account. Where the period of interruption is three months and one day long, the calculation starts anew. From this perspective, the assignment will be effective where there are multiple short periods of employment within a time frame that is comparatively longer than the maximum period of temporary employment of 18 months.

In contrast, the formal point of view is based on the term of the of the employee assignment contract. It assumes that short interruptions are irrelevant, when there is a close connection in time (e.g. same duties, same workplace), taking into account the circumstances of the case between the one period of assignment and the next following an interruption. Periods of interruption should be irrelevant when the temporary worker is assigned to the same user company at the same place of work at the end of any illness or holidays.

It is difficult to say which of these views the courts will take. The wording of the law supports the substantive view because it is based on the integration of the temporary worker into the business of the user company and therefore on the worker’s actual deployment. However, due to the fact that the aim of the Temporary Employment Act is to protect workers, it would not be surprising if the courts took the formal view, which would be friendlier to temporary workers.

Calendar or commercial calculation method?

Eventually the courts will have to decide whether the calculation of the 18-month period should be based on a month-by-month basis (calendar calculation method) or a 30-day month (commercial calculation method). The commercial calculation method leads to a shorter maximum assignment period. The wording of the law suggests that the calendar calculation method is correct. Admittedly, this is less practical than the commercial calculation method when there are interrupted periods of temporary employment. The Federal Employment Agency (Bundesagentur für Arbeit) suggests that the calendar month should be used for months of full assignment, while interrupted months should be calculated using the 30-day month (“x/30”).

Practical tip: In order to avoid any risks, we recommend using the commercial calculation method, resulting in a maximum assignment period of 540 days (rather than 18 months).

Conclusion: The maximum assignment period of 18 months introduced by the revised Temporary Workers Act makes it essential that assignment and deadline controls are accurate and seamless. Any assignment of a temporary employee with the same user company should have a maximum duration of 540 days. Periods of interruption to the actual assignment should be taken into account when verifying this time period. Decisive in this case is the period of assignment of the temporary worker with the same user company.

If you have any questions related to this topic, please feel free to contact
Dr Thomas Lambrich (Lawyer).