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Germany – Work council’s right to refuse temporary employee assignment upheld

17 October 2013

Numerous temporary agency work decisions rendered by the Federal Labour Court have created a furore in the past two years because they have brought about a legal approximation of temporary employees with the core workforce, reports the International Law Office.  

A recent Federal Labour Court decision (July 10 2013, 7 ABR 91/11) on the works council's right to refuse consent when moving temporary employees into permanent positions now further restricts replacing core staff with temporary employees.

The works council has extensive participation rights when it comes to assigning temporary employees. Before every planned temporary hiring, the employer must first provide detailed information to the works council; including, for example, the personal particulars of the temporary employee and the duration and scope of the planned assignment. This applies without restriction for every hire of a temporary employee, no matter how brief. Under certain circumstances, the works council may reject taking on the temporary employee if, among other things, such a hire breaches a statute.

In this respect, it has previously been disputed whether Section 1(1)(2) of the Temporary Employment Act – which implements EU Temporary Agency Worker Directive (2008/104/EC) (applicable since December 1 2011) – falls within this meaning. According to the act, the provision of employees to the client establishment is to be effected on a temporary basis, whereby the act leaves it open whether legal consequences will be incurred in the case of a non-temporary assignment. Moreover, there is a lack of a legal definition of the word 'temporary'.

After an undertaking's works council had refused its consent to hire a temporary employee permanently, the employer filed a petition with the labour court for substitution of such consent by the court.

Unlike in the lower courts – which substituted the works council's refused consent for the court decision – the employer's petition before the seventh senate of the Federal Labour Court was unsuccessful.

The Federal Labour Court held the view that Section 1(1)(2) of the Temporary Employment Act not only contains a non-binding guideline, but also prohibits any temporary provision of temporary workers. According to the court, on one hand its aim is to protect temporary employees, while on the other, it is designed to prevent the permanent segregation of the hiring undertaking's workforce into a core workforce and a temporary workforce. Therefore, the works council of the client enterprise may refuse to give its consent to hiring temporary employees if the latter are not intended to be employed only temporarily.

The issue of whether legal consequences arise under a breach of Section 1(1)(2) in terms of the legal relationship of the individual temporary employee to the client undertaking plays no role in terms of the works council's right to refuse consent.

According to the International Law Office, the decision leaves open the question of the time period that an agency worker's temporary assignment is supposed to capture. In this case, the employer intended to assign the temporary employee, instead of a permanent employee, without temporal limitation. According to the court, this is no longer temporary.

The decision shows that employers must adjust to new rules when it comes to temporary agency work. The assignment of an employee will no longer be possible if an assignment to a permanent position without temporal limitation is involved. The decision clarified that Section 1 of the act is a prohibitive law. It underpins the court's inclination to allow temporary work as an exception (eg, to bridge order peaks, but not – as is the practice in many cases – as a permanent condition).

The equally disputed issue of when an assignment of a temporary employee is still temporary has not been answered. Legal uncertainty regarding the assignment of temporary employees remains, particularly because when interpreting the term 'temporary' the lower instance courts arrive at different outcomes. In some cases, a hire that is limited in time from the outset is deemed sufficient, without a maximum time limit required. In other cases, fixed time periods between 12 and 24 months (only) are still classified as temporary. The question as to whether permanent positions can be filled (temporarily) with agency workers is raised. In this regard, there are several actions pending at the Federal Labour Court.

Employers are advised to limit temporally the assignment of temporary employees in each case. Nevertheless, by doing so it cannot be ruled out that a works council will refuse its consent to the hiring of temporary employees. Should this arise, the employer's only option is to initiate proceedings to obtain substitute consent by the labour court. Without or against the consent of the works council, the employment of a temporary employee will be provisionally possible, subject only to it being required urgently for objective reasons. Temporary employment of this kind would therefore come into consideration in exceptional cases only, if – without the immediate implementation of such employment – noticeable detriment to the establishment were to arise.

Ultimately, a close eye must be kept on existing legal developments. It is hoped that clarity will be provided by the European Court of Justice since the basis of the requirement in terms of 'provisional' assignment of temporary employees is the Temporary Agency Work Directive.

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