CWS 3.0: May 4, 2011 - Vol. 3.11


Behind the News: Staffing Agencies Are Being Sued in Germany

Temporary workers are taking staffing agencies to court in Germany, following a December 2010 ruling of Germany's highest labor court (BAG) that rendered null and void the collective bargaining agreements signed by staffing agencies with the Christian Unions (CGZP).

Under normal circumstances, temporary employees in Germany receive equal pay for equal work and are paid the same as their permanent counterparts — unless there is a specific collective bargaining agreement in place allowing for other pay rates.

Many medium-sized temporary employment agencies have in the past signed collective bargaining agreements with CGZP. But BAG rendered those agreements null and void, ruling that CGZP is not sufficiently representative of its members and is therefore legally not a union.

As a result of the court ruling, 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. The outcome will be decided on a case-by-case basis.

The local labor court in the town of Krefeld in April awarded 13,200 euro -- as retroactive payment going back to 2007 -- to a temporary employee who worked for the same staffing agency for 15 years.

Frau Gallner, a BAG spokesperson, told Staffing Industry Analysts, the publisher of this newsletter, that "any retroactive claims against agencies would have to go to labor courts, which will refer to BAG's decision on the so-called 'status' of the CGZP union in the past."

"It is theoretically possible but most unlikely that labor courts will not be guided by BAG's verdict that CGZP's status was the same in the past as it was on 14 December 2010."

However, the newly created Association of Staffing Agencies (BAP), said that the "the Krefeld court ruling is unique so far. In a comparable case in Freiburg, the court ruled in favor of the staffing agency."

It is as yet unclear whether the staffing agency will appeal against the ruling of the Krefeld labor court. Industry experts say the worst case scenario is that staffing firms have to top up the wages and pay benefits for roughly 280,000 workers for four years, which may run into hundreds of millions of euro.

But here’s the real issue for the end users of contingent labor. If staffing agencies do not have the funds to make back payments, or if they go bust, the user of the temporary employment service or client will have to pay. Money notwithstanding, it could also mean the loss of 200,000 to 300,000 jobs as agencies struggle to survive.


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