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Germany – New labour court ruling eases procedure for claims against staffing firms

28 May 2012

The status of staffing firms liable to pay outstanding social security contributions has been further clarified after the Federal Labour Court (BAG) has ruled that the “pending proceedings in labour and social courts, in which the bargaining capacity of the CGZP represents a pivotal preliminary issue, can now continue without an introduction of a decision procedure.”

In December 2010, the BAG had first ruled that the former Christian trade unions (CGZP) had lacked bargaining capacity.  

The BAG has now confirmed the decision of the Regional Labour Court of Berlin-Brandenburg and, in definitively rejecting complaints from employers regarding the status of the CGZP, temporary agency workers will be able to continue to pursue equal pay lawsuits against staffing firms.

The BAG clarified that the CGZP lacked bargaining capacity from its foundation on 11 December 2002 and should never have been allowed to negotiate collective agreements.

Staffing firms which had used CGZP contracts in the past have been accused of wage dumping as they paid far lower wages to temporary workers than to permanent employees, which is why the social contributions for the temporary staff were also considerably lower.

The German trade union ver.di welcomed the ruling. Dina Boesch, board member at the union, said that “Employers can now no longer escape their responsibility with this ruling.” She added that this decision strengthened the social security institutions in pursuing their claims against staffing firms for outstanding payments of social security pay.

The Confederation of German Trade Unions (DGB) estimates that the costs faced by staffing firms for unpaid social contributions amount to €2 billion alone.

This comes after a temporary employment agency in Germany recently had to pay €1.4 million in outstanding social contributions for temporary workers which the firm had hired between 2006 and 2009.

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