The regional government of the federal state of Saxony-Anhalt has decided that companies, which exceed an agency temporary employment quota of 20% of all staff, will be excluded from all public investment subsidies. On top of this, newly created jobs for agency temporary employees will not be considered at all by the subsidies committee.

The move follows last year's decision by the regional government of the federal state of Thuringia to penalise companies, which employ 'too many' agency temporary employees by reducing their investment subsidies and by cutting the subsidies altogether if employers have more than a 30% level of agency temporary employees in their companies.

Thomas Hertz, Managing Director of the Association of Temporary Employment Agencies (BAP, previously BZA and AMP), commented "this move discriminates against companies which employ completely legal [agency temporary] employees. Almost 100% of agency staff in Germany are covered by a collective bargaining agreement."

"In our view, the regional government's decision is legally untenable. It also contravenes the European Union directive on agency employment, which demands that governments abolish all unjustified restrictions to agency temporary employment. They certainly must not introduce new restrictions."

"Companies, which have their subsidy applications rejected because of exceeding the agency staff quota, should consider legal steps."

With a combined population of 4.5 million, Thuringia and Saxony-Anhalt are two of the smaller 16 federal states of Germany (total population of 82 million). However, if the latest move were to be adopted by other larger federal states, the consequences for staffing agencies could be quite serious.

To read the regional government's statement, in German language, please click here.