Recruiting temps in Germany brings new problems post-Brexit with licences being revoked

Some British recruiters providing temporary workers to employers in Germany have had their licences to do so revoked by the German Federal Employment Agency, following the UK’s exit from the European Union, a German lawyer says.

According to Dr Sebastian Buder, partner at law firm Taylor Wessing’s Berlin office, under the spotlight are British limited companies with registered offices in the UK – even those with branch offices in Germany – that held so-called employee leasing, or AUG, licences. 

The AUG model involves a recruiter or umbrella company providing temporary workers to an employer, or hirer. 

“Before Brexit, there was no problem if the recruiter was located in the UK and the third party in Germany, as both the UK and Germany were part of the EU,” Buder told Recruiter

However, “since the final exit of the UK”, Buder said, “the Federal Employment Agency has taken the position that it cannot effectively monitor and audit UK companies to ensure compliance with the Employee Leasing Act and thus cannot guarantee for the social protection of temporary workers anymore”. 

The Employee Leasing Act mandates specific lengths of tenure and working conditions for temporary workers. 

UK recruitment companies that established subsidiaries in the form of German legal entities and the German equivalent of limited liability companies (GmbH) in Germany in the period leading up to Brexit are not affected because they can be monitored and audited by German authorities, Buder said. But recruitment companies that opted to establish the less expensive and therefore, seemingly less reputable small start-up business (UG) framework face some uncertainty. 

Of UG companies, Buder said the option to pay €1 to establish a business instead of €25,000 for the GmbH is “designed for start-ups, everybody would say you don’t have money here so it’s not really recognised on the market, and that’s not the reputation you would like to have”.

Another piece of red tape threatening both temporary workers and permanent new hires with UK/non-EU country citizenship who are deployed to Germany is a requirement for work permits, Buder said.

“Since the final exit of the UK,” Buder said, “a considerable degree of legal uncertainty has arisen. The final trade and co-operation agreement between the EU and the UK has not contributed complete clarification.”

Buder and associates at Taylor Wessing are exploring legal options for their UK clients.

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