In November 2015, the Federal Ministry of Labor presented the long-awaited first draft of the reform of the German Temporary Employment Act. Following harsh criticism, especially from the business community, and Chancellor Merkel’s equally rigorous stance, Andrea Nahles has now ventured a second redraft.

To speak of a milestone would be exaggerated, considering the meager changes, but one can certainly identify three smaller mollifications that could be understood as a concession to employers:

1. Option of deviating from the maximum assignment period also available to non-tariff hirers

The first draft provided for a maximum assignment period of 18 months, from which borrowers of temporary workers may only deviate if they themselves are bound by collective agreements. Companies not bound by collective agreement were denied the option of extending the maximum duration, for instance by means of a works agreements.

According to the revised bill, the deviation possibilities have now been expanded. Under the latest bill, companies using temporary workers that are not bound by collective agreements have two options to extend the maximum assignment period:

  • Companies not bound by collective agreements may adopt provisions governing the maximum assignment period in a works agreement that are identical in content to the collective agreement.
  • If the collective agreement itself does not deviate from the maximum assignment period, but contains a corresponding escape clause permitting works agreements, companies not bound by collective agreements may make use of this. However, in such cases, the deviation as a result of a works agreement is only possible up to a maximum assignment period of no longer than 24 months.

2. Equal pay for industry-wide collective agreements only after the 15th month

The coalition agreement stipulates that temporary employees must be placed on equal footing with comparable permanent employees with respect to pay after nine months at most.

The first bill for amending the German Temporary Employment Act provided for an option to deviate from this. The deadline for equal pay can be deferred until the end of the twelfth month, if the relevant collective agreement provides for a gradual alignment to the equal pay levels by means of industry allowances.

The second bill adds a further three months to this. This enables companies that use collective agreements providing for industry allowances to be exempt from the equal pay principle for a period of 15 months.

3. Catalog of criteria dropped from the revised sec. 611 a German Civil Code (BGB)

The first bill proposed the introduction of a new sec. 611 a German Civil Code. According to the preamble, this serves to put into written law the “criteria for differentiating between proper and improper use of external personnel developed by the judiciary”.

The implementation of this catalog of criteria encountered severe criticism. Rightly so, because instead of the announced “1:1 codification” of (supposedly) binding practice by the Federal Courts, criteria were included in the catalog that had already explicitly been deemed irrelevant for differentiation purposes. In particular, according to Federal Court jurisdiction, it is for instance irrelevant with regard to the determination whether a work agreement or a service agreement is given that the service is mainly provided in the premises of the contracting entity (draft sec. 611 a para. 2 b.) or its tools and equipment are used to provide the services (draft sec. 611 a para. 2 c.).

The second bill no longer includes the catalog of criteria. Instead, the revised sec. 611 a BGB now defines who constitutes an employee (verbatim rendering of the Federal Employment Court jurisdiction). This arrangement will not, of course, have any legal effect. We will evidently just have to come to terms with the fact that another subclause has been crammed onto the once well-considered scheme of the 1900 German Civil Code.

4. The Bundesrat urges parties to reach accord in the reform debate

The Federal Council (Bundesrat) is urging the coalition to resolve its current dispute over the proposed law and promptly submit a quorate bill, thereby supporting the Federal Minister of Labor, who recently faced fierce opposition from the CSU. The CSU had indicated that it would not be able to accept Mrs. Nahles’ amended proposals either and announced that it “required further adjustments”. Therefore, contrary to what had been agreed, the second draft bill has not yet been put to an interministerial vote.

At its meeting on February 26, 2016, the Bundesrat passed a corresponding resolution and urged the federal government to “finally” implement the goals to combat the misuse of temporary employment and contracts for work, which had been anchored in the coalition agreement as early as 2014.