Introduction

Several developments have been made in regard to the coalition government's last employment law project and its agreement concerning the planned re-regulation of temporary employment, particularly in relation to temporary employment contracts (for further details please see "Proposed statutory 're-regulation' of temporary employment"). On November 16 2015 the Federal Ministry of Labour and Social Affairs presented an initial draft bill. Following strong criticism from all sides, the draft bill was amended and a second draft presented on February 17 2016. The government coalition committee considered this draft on April 14 2016, but failed to reach an agreement.

On May 10 2016 a political breakthrough (albeit, an unsatisfactory one) was finally achieved. This update discusses the resulting changes that will be introduced.

Maximum assignment periods

The provision concerning the maximum period for a temporary assignment (generally 18 months) has been modified so that companies not bound by collective bargaining agreements can make use of opening clauses in collective bargaining agreements. Such non-bound companies can deviate from the 24-month 'ceiling' contained in the draft bill if the collective bargaining agreement expressly stipulates a different maximum assignment period. The 24-month maximum period will apply only if the collective bargaining agreement does not provide for its own maximum assignment period.

Equal pay

The draft bill previously provided that the equal pay principle will apply to all assignments that commence before the law's planned entry into force – including nine-month assignments, in which time a temporary employee generally has no equal pay entitlement. This has now been amended so that the principle applies only to assignments that commence after the law's entry into force. Thus, employers have – as is also the case for the maximum assignment period – a transition period, as the earliest that the mandatory equal pay entitlement can apply is October 1 2017.

This date may be pushed back as it has not been conclusively clarified whether the planned legislative changes will enter into force on January 1 2017 or July 1 2017.

Interruption of maximum assignment periods

When calculating an employee's maximum assignment period, the interruption period of six months has been reduced to three months. Consequently, if an assignment is suspended for up to three months, all previous and subsequent assignment periods will be included in the determination of the date on which the maximum assignment period has been reached. However, if the assignment is interrupted for more than three months, the temporary worker can be re-employed by the same company for up to 18 months. Similar periods also apply for equal pay: if the assignment is interrupted for more than three months (previously six months), a temporary employee's assignment must be renewed for at least nine months before the employee can claim mandatory equal pay.

Strikes

A company cannot engage temporary workers if it is the subject of a strike. However, a company's ability to employ temporary workers to perform tasks not previously performed by striking permanent employees (if applicable) has been clarified. It is intended that this provision will not impair the corporate group privilege.

Corporate co-determination thresholds

Temporary employees will count towards the corporate co-determination thresholds (eg, those prescribed by the One-Third Determination Act and the Co-determination Act) if the total duration of the assignment exceeds six months.

No notification duty for customs authorities

The earlier draft bill included an amendment to the Act to Combat Black Market Labour requiring customs authorities to notify employment protection authorities if they discovered employment protection violations. This amendment has been removed.

Evaluation

The new transition period for mandatory equal pay is a significant change; it was unapparent why the earlier draft bill disregarded an employee's time with a company before the law's entry into force in regards to maximum assignment periods, but not mandatory equal pay. In this respect, the two 'hard' time limits of nine and 18 months contained in the draft bill are treated consistently. In addition, the reduction of interruption periods in regards to the determination of time limits is welcomed. The extended leeway for non-bound companies with respect to the extension of maximum assignment periods through employment contracts and the clarification concerning the engagement of temporary workers in companies that are the subject of a strike are also welcomed.

However, the coalition government committee has not eliminated the main problems – namely, that whereas collective bargaining agreements can generally stipulate a maximum assignment period, temporary employment collective bargaining agreements cannot.

In addition, the legislature does not define equal pay. The equal treatment of temporary and permanent employees in regards to remuneration which will be compulsory for contracts of nine months and over will thus lead to significant organisational and administrative challenges for temporary employment agencies. Here, the legislature should clarify the specifications for practical implementation purposes.

The unfortunate combination of maximum assignment periods and mandatory equal pay is also maintained, which can be disadvantageous for temporary employees if they are treated as permanent employees after nine months, but must be withdrawn after 18 months to be employed by a different client of the temporary employment agency – likely for less pay.

The current adjustments do not eliminate the provisions in the draft bill that exceed the stipulations in the coalition government agreement – in particular, the fact that temporary workers count towards a company's corporate co-determination thresholds. Although this will now occur only for assignments longer than six months, the coalition government agreement mentions only the works constitution threshold values.

Comment

Even with the recent changes, implementation of the draft bill is still far off. In comparison to the initial November 2016 proposal, some improvements have been made. However, it remains to be seen whether the adjustments that the temporary employment industry urgently needs can be implemented.

For further information on this topic please contact Alexander Bissels at CMSHasche Sigle by telephone (+49 221 7716 0) or email (alexander.bissels@cms-hs.com). The CMSHasche Sigle website can be accessed at www.cms-hs.com.

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