Temporary Employment: Flexibility for Companies and Employees

Temporary employment, also known as agency work or employee leasing, refers to an employment arrangement in which workers are hired by a temporary employment agency (lessor) and temporarily assigned to another company (hirer). The employment contract exists between the worker and the agency, while the actual work is carried out at the hiring company.

How Temporary Employment Works

Temporary employment creates a triangular relationship:

• Temporary Employment Agency (Lessor):
  The employer of the temporary workers, responsible for salary payments, social security contributions, and compliance with labor law.

• Hiring Company (Hirer):
  Utilizes the services of temporary workers for a limited period—without forming a direct employment contract.

• Temporary Worker:
  Performs the job at the hiring company while remaining employed by the agency.

This model allows companies to respond flexibly to staffing demands—e.g. during seasonal peaks or temporary staff shortages.

Legal Basis and Regulations in Germany

The German Employee Leasing Act (AÜG) forms the legal framework for temporary employment. Key provisions include:

• Licensing Requirement:
  Agencies must obtain an official license to lease employees.

• Equal Treatment Principle (Equal Pay):
  Temporary workers are entitled to the same essential working conditions and wages as comparable permanent employees at the hiring company.

• Maximum Assignment Duration:
  A temporary worker may be assigned to the same company for a maximum of 18 months.

Pros and Cons of Temporary Employment

Advantages

For Companies:

• High flexibility in workforce planning

• Quick reaction to market changes

• Short-term solution for staffing gaps

For Employees:

• Insight into different industries and companies

• Broad work experience

• Easier entry into the labor market

Disadvantages

For Companies:

• Onboarding effort for short-term staff

• Weaker employee loyalty

For Employees:

• Often less job security

• Potential unequal treatment compared to permanent staff

• Challenges in team integration

Conclusion

Temporary employment offers flexibility and the chance to gain diverse experience—for both employers and employees. However, it requires clear legal guidelines and mutual awareness of the challenges to ensure fair working conditions and successful cooperation.