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 RECENT DEVELOPMENTS IN THE AREA
OF "ATYPICAL EMPLOYMENT"

BERND WAAS'

Keywords: atypical work; fixed-term work; Germany; temporary agency work

Over the last couple of months two areas of German employment law attracted
particular interest: the law of fixed-tem contracts and the law of temporary agency
work.

1. FIXED-TERM CONTRACTS

Under German law the term of a contract of employment in principle can be fixed
only if such fixing is justified on objective grounds. This is laid down in section
14(1) sentence 1 of the Part-Time and Fixed-Term Employment Act (Teilzeit- und
Befristungsgesetz). According to section 14(1) sentence 2, an objective ground exists
'in particular' if: the need for certain manpower is only temporary (no. 1); the term is
fixed in order to make it easier for an apprentice or post-graduate to get subsequent
employment (no. 2); a worker is employed in order to substitute for another worker
(no. 3); the nature of work justifies the fixing of the term (no. 4); the fixing of the term
serves the purpose of testing the worker (no. 5); grounds which are related to the
person of the worker justify the fixing of the term (no. 6); the worker is remunerated
from budget funds, and these funds are earmarked for fixed-term employment only
under the according budget rules and the worker is employed accordingly (no. 7); and
the fixing of the term is based on amicable settlement before a court (no. 8).
However, section 14(2) contains an exception to the principle enshrined in section
14(1) according to which the fixing of a term requires an objective ground. Under
section 14(2) sentence 1 the fixing of a term according to the calendar is admissible
without objective grounds existing, if the duration of the contract does not exceed
two years. Within a period of two years such contract may be extended three times
at most. Section 14(2) sentence 2 enshrines the so-called 'prohibition of follow-up'

Bernd Waas is professor of Civil and Labour Law at the Faculty of Law of the University of
Frankfurt.

European Labour Law Journal, Volume 1 (2010), No. 4

 Bernd Waas

(Anschlussverbot). According to this provision a fixing of the term of a contract

without objective grounds is not admissible if sometime in the past an employment
contract existed between the parties concerned.
Another exception to the principle laid down in section 14(1) applies to newly
established companies. According to section 14(2a) sentence 1 it is admissible to fix
the term of a contract according to the calendar without objective grounds up to a
period of four years from the date when a company was established. Within the period
of four years such contract may be extended as often as the parties to the contract
think fit. If the term of a contract is fixed according to section 14(2a) sentence 1, the
rules laid down in section 14(2) sentences 2-4 have to be applied accordingly (section
14(2a) sentence 4). In other words, both the so-called 'prohibition of follow-up' and
the rules on disposing of the statutory provisions by way of collective agreements
must be taken into account when fixing the term of an employment contract with a
newly established company.
Finally, a fixed-term contract can be concluded for five years at most without
objective grounds according to section 14(3) if the worker is, first, older than 52, and,
second, has been unemployed for at least four months immediatelybefore conclusion of
the contract (section 14(3) sentence 1). Succeeding fixed-term contracts are admissible
as far as the period of five years is not exceeded (section 14(3) sentence 2).
The parliamentary group of the Social Democrats in the Federal Parliament in
particular (Antragder SPD, BT-Drucks. 17/1769) has been demanding recently to do
away with the limited possibility to conclude fixed-term contracts without objective
grounds on the basis of section 14(2) to (3). The Social Democrats point to the fact that
there has been a steady increase in the number of workers employed under fixed-term
contracts. Among other things, they fear the repercussions of fixed-term employment
on the private life of employees. According to a recent study which was prepared by the
Institute for Employment Research (InstitutfiirArbeitsmarkt- und Berufsforschung),
the research institute of the Federal Employment Agency (BundesagenturfiirArbeit),
the fraction of fixed-term workers increased from 4 per cent in 1996 to more than 6 per
cent in 2006. While in 2001 only 32 per cent of new employment contracts represented
fixed-term contracts, the according number jumped to 43 per cent in 2006. According
to the Federal Statistical Bureau, almost 9 per cent of the workforce at present is
employed under fixed-term contracts. Interestingly, however, a more recent study of
the Institute for Employment Research showed that nowadays workers on the average
enjoy nearly the same continuity of service (10.8 years) than two decades before (10.3
years).
In a public hearing at the Federal Parliament which was held recently the fears
expressed by the Social Democrats were shared by some experts while others
recommended strongly not to touch upon the existing system. Because the Social
Democrats form part of the opposition, their demands will fall on stony ground. It
is more likely, on the opposite, that the ruling coalition (of Christian Democrats and

Intersentia
 Recent Developments in the Area of "Atypical Employment"

Liberals) will restrict the area of application of the 'prohibition of follow-up' some
time in the future.

2. TEMPORARY AGENCY WORK

A couple of months ago the Federal Ministry of Labour and Social Affairs made
public a first discussion draft - Diskussionsentwurf zur Anderung des AUG
und des AEntG of 4 June 2010 - of an Act amending both the Act on Temporary
Agency Work (Arbeitnehmeriiberlassungsgesetz)and the Act on Posting of Workers
(Arbeitnehmerentsendegesetz). Later the Ministry produced a more elaborated draft
(Referentenentwurfzur Verhinderung von Missbrauch der Arbeitnehmeriiberlassung
of 2 September 2010). The draft was approved by the government on 15 December
2010. The amendment aims at implementing Directive 2008/104/EC on Temporary
Agency Work. Another element of the proposed legislation is to fight abuse of
temporary agency work in the sense that employers will be prevented from dismissing
employees and later reengaging them as temporary agency workers either in the same
enterprise or another enterprise forming part of the same group of companies under
less beneficial working conditions. Insofar the draft legislation is prompted by a recent
attempt of the German retailer Schlecker to dismiss regular staff and to take them on
later as temps working either at the same employer or within the group of companies
but in any event under worse conditions than before (so-called "Drehtiir-Effekt").
As far as the implementation of Directive 2008/104/EC on Temporary Agency
Work is concerned it is foreseen that the Temporary Agency Act will apply to
agencies engaged in economic activities whether or not they are operating for gain
(Article 1(2) of the Directive). Currently it is required that the agency performs a
commercial activity (with the aim of a realisation of profits). In light of Article 1(1)
of the Directive (according to which the Directive applies to workers with a contract
of employment or employment relationship with a temporary work agency who are
assigned to user undertakings to work temporarily (sic) under their supervision and
direction), a provision will be established under which, in case that the assignment is
not temporary in nature, it will be presumed that the agency is engaged in the activity
of placing workers (Arbeitsvermittlung).Maximum periods for assigning workers will
not be fixed, however.
Under existing legislation the parties can dispose of the equal pay principle
for a maximum period of six weeks if the agency worker was unemployed before
(section 3(1) no. 3 of the Act on Temporary Agency Work). This provision has not
been made much use of in practice. In addition to that it is doubtful whether it is
in line with what is required by the Directive. The draft aims at doing away with it
altogether. In addition provision will be made to ensure that there are no abusive
assignments of workers within an enterprise or within a group of companies. For this
purpose it is foreseen that collective agreements cannot dispose of the statutory equal

European Labour Law Journal, Volume 1 (2010), No. 4

 Bernd Waas

pay principle if it aims at the assignment of workers who in the preceding six months
were employed under better working conditions as regular staff (as regards the power
of the social partners to dispose of the equal pay principle see also the decision of the
Federal Labour Court of 14 December 2010 - 1ABR19/10 - denying the capacity to
conclude collective agreements of an umbrella organization of Christian trade unions).
Provision will also be made to ensure that any clauses prohibiting or having the effect of
preventing the conclusion of a contract of employment or an employment relationship
between the user undertaking and the temporary agency worker after his assignment
are null and void or may be declared null and void (Article 6(2) of the Directive).
Further provision will be made to guarantee that agencies shall not charge workers
any fees in exchange for arranging for them to be recruited by a user undertaking,
or for concluding a contract of employment or an employment relationship with a
user undertaking after carrying out an assignment in that undertaking (Article 6(3)
of the Directive). Other provisions aim at ensuring that temporary agency workers
shall be informed of any vacant posts in the user undertaking to give them the same
opportunity as other workers in that undertaking to find permanent employment
(Article 6(1) of the Directive) and at ensuring temporary agency workers shall be given
access to the amenities or collective facilities in the user undertaking, in particular
any canteen, child-care facilities and transport services, under the same conditions as
workers employed directly by the undertaking, unless the difference in treatment is
justified by objective reasons (Article 6(4) of the Directive). Finally, rules will be fixed
on penalties applicable in the event of infringements of the provisions implementing
the Directive (Article 10(2) of the Directive).
In contrast to the earlier DiskussionsentwurftheReferentenentwurfdoesnot contain
the possibility of fixing minimum pay for temporary agency workers on the basis of a
declaration of generally binding of an according collective agreement anymore. The
introduction of such minimum pay is hotly debated in the ruling coalition though it
is demanded even by most employers in the area of temporary agency work (in light
of the fact that the German labour market will be open as from next year for workers
originating from the "new" member states of the EU). In the meantime collective
bargaining provides examples for innovative solutions: Most recently a collective
agreement was concluded in the steel industry between the employers and IG Metall
which enshrines equal pay in this sector. Under the agreement the hiring companies
will be obliged to ensure that the temporary agency provides equal pay (so-called
Einwirkungspflicht). If the hiring company fails to appeal successfully to the temporary
agency it owes the according temporary agency workers compensation.

Intersentia