The Federal Labour Court (Bundesarbeitsgericht, BAG) ruled on 12 July 2016 (docket number 9 AZR 352/15): If the employer as agency (Verleiher) has the appropriate commercial agency work permit according to the Regulating Commercial Agency Work Act (Arbeitnehmerüberlassungsgesetz, AÜG) to contract out agency workers (Leiharbeitnehmer) to clients (Entleiher) in the context of its economic activity, no employment relationship is established between the agency worker and the client, even if the services of the agency worker are not designated as agency work, but as a specific works contract (Werkvertrag).

The decision of the Federal Labour Court, which is currently only available as a press release, was based on the following case: The plaintiff is an engineering draftswoman. She was assigned to the defendant, an automotive company, from 2004 until the end of 2013. The services between the defendant and the contractual employer were expressly based on specific works contracts. The contractual employer has an appropriate commercial agency work permit.

The Federal Labour Court ruled that there is no employment relationship between the defendant and the plaintiff, even if the plaintiff is contracted out on the basis of a fictitious specific works contract. Of major importance is the fact that the contractual employer has the appropriate commercial agency work permit. The Regulating Commercial Agency Work Act postulates the existence of an employment relationship only in case of the absence of an appropriate commercial agency work permit. An analogous application of the term to concealed agency work is not possible due to an unintended oversight by the legislator. The legislator stated that there is no employment relationship established between the agency worker and the client.

The decision is to be welcomed, since it enables employers to truly rely on the effectiveness of their commercial agency work permit, regardless of the contractual configuration of the employee leasing.