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Germany – Temporary agency must pay €1.4 million in CGZP court ruling

14 May 2012

A temporary employment agency in the Western German town of Worms has to pay €1.4 million in outstanding social contributions for temporary workers who the firm had hired between 2006 and 2009.

The temporary workers were on contracts signed by the staffing firm with the former Christian Unions (CGZP), which have been rendered null and void by Germany's highest labour court (BAG) on 14 December 2010.

A court in Mainz confirmed in a ruling in March, which has only recently been made public but did not reveal the name of the staffing firm due to German law, that the CGZP contracts were not valid and has now ordered the recruitment company to make the payments which exceed €1 million.

CGZP contracts allowed the staffing firm to pay 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 court ruled that the staffing firm could not call on the former validity of the collective bargaining capacity of the CGZP because it had already been nullified by the BAG in 2010.

Therefore the temporary employment agency must, “for the time being” pay the outstanding social security payments, arising from the difference between the pay which was initially made and the pay owed.

Many medium-sized temporary employment agencies in Germany had in the past signed collective bargaining agreements with CGZP, but these have been rendered invalid as they did not sufficiently represent its members and the BAG ruled the GZP was legally not a union.

As a result of the BAG ruling in 2010, temporary employees and the Social Security and Pension Offices can now sue for retroactive payment of the difference between equal pay for equal work and the wages negotiated with CGZP. Outcomes will be decided on a case-by-case basis. 

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