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No employment relationship with labour lease employee

No employment relationship with labour lease employee

In a recently decided case, theGerman Federal Labour Court has clarified the conditions under which the commercial lease of workers will not give rise to a direct employment relationship with the client’s enterprise. In the case at hand, the plaintiff applied for a decision that an employment relationship exists between him and the client’s enterprise by virtue of his exclusive and permanent assignment to the client’s facilities.

The Court rejected the argument that an employment relationship had been constituted between the plaintiff and the client’s enterprise for lack of legal basis. The Court clarified that an employment relationship is deemed only where the lessor does not have a permit (labour lease licence) for the commercial lease of workers. This holds true also in case of a more than just temporary lease of workers. The result is compatible with the Temporary Agency Work Directive, which calls for effective, proportionate, and dissuasive penalties to be imposed on EU Member States in the event of violations of the provisions of the Act on the Assignment of Workers (Article 10(2), second sentence, of Directive 2008/104/EC). In view of the great number of conceivable penalties, the determination of the legal consequences of a more than mere temporary assignment of workers is not the responsibility of the courts, but rather the legislature.

Practical recommendations
The judgement shows that enterprises employing workers from other enterprises on the basis of a labour lease contract should strictly monitor whether their assigning provider has the required permit for labour lease. The lessor should always be asked to provide a copy of the current labour lease licence and – in case that it is only a temporary one – a copy of the annual extension of the licence before leased workers start to work.

By Dr Alexander Krol

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