In practice, the terms temporary employment and personnel placement are often confused. However, there are clear differences between the two concepts. They primarily address different needs of employers and employees. Let’s take a closer look at what each model entails and examine their respective advantages and disadvantages.

Estimated Reading Time: 8 minutes

What Is the Definition of Temporary Employment?

The term temporary employment is also known as agency work or employee leasing. It refers to an employment model in which a recruitment service provider lends its employees to a third-party company. Legally, there is an employment contract between the employee and the recruitment agency. The third party acts solely as the borrowing company, which is the organization where the employee works temporarily.

It should be emphasised that temporary employment provides companies with maximum flexibility. It allows them to react to seasonal fluctuations or short-term staff shortages. You can also employ highly qualified specialists for temporary projects. The company itself does not enter into any obligations towards the employee. The personnel service provider remains responsible for all legal matters. This means that they take care of salary payments, holiday entitlements and social security contributions.

The legal basis for the Temporary Employment forms the Temporary Employment Act (AÜG). This law regulates, among other things, the maximum permissible duration of temporary employment, the Equal Pay-regulations and the rights of temporary employees. According to these regulations, temporary workers must not be treated worse than permanent employees in the respective company. However, they must not be employed under the company’s instructions or integrated into its operational processes.

What Is the Definition of Personnel Placement?

With the Recruitment The model is different in personnel placement. In this case, the recruitment agency acts as an intermediary between the company and potential candidates. Companies provide information about open positions to the agency, which then handles the entire recruitment process. This means the agency creates job advertisements and selects suitable applicants on behalf of the company. Once the candidates have been identified, the recruitment agency presents the most suitable candidates to the company. Ultimately, the company decides which employees to hire.

Unlike temporary employment, the candidate is then employed directly by the hiring company. The fee for the recruitment agency and the service provided to the company is paid in the form of a commission, which in most cases is based on the annual salary of the placed employee. However, there are also models where fixed fees are agreed upon. Once the recruitment agency has successfully placed an employee with a company, its involvement ends. The employment relationship thereafter exists solely between the employee and the hiring company, meaning the company is responsible for all legal matters concerning the employee.

This model is often used by companies when they want to fill open positions for specialists and executives. Companies prefer personnel placement because it provides access to qualified and vetted candidates. They do not have to handle the entire recruitment process internally and gain access to a larger pool of candidates.

What Are the Differences Between Temporary Employment and Personnel Placement?

There are several characteristics that distinguish temporary employment from personnel placement. These are as follows:

In the case of temporary employment, the employment contract is between the temporary worker and the personnel service provider. In the case of personnel placement, there is a direct employment relationship between the placed employee and the company.

According to the law, temporary employment is limited in time. Of course, there may be cases in which a long-term collaboration occurs. Recruitment agencies often offer permanent positions for an indefinite period.

In the case of temporary employment, the hirer pays the personnel service provider a fee. This includes both the total service margin and the labour costs. In the case of permanent placement, the recruitment agency receives a one-off placement fee once the employee has been successfully hired.

The personnel service provider bears all obligations as an employer in the case of temporary employment. This means that they take care of salary, insurance and social security contributions. In the case of permanent placement, all employee obligations lie with the company hiring the employees.

Integration into the hiring company often varies in the case of temporary employment, as rapid readiness for deployment is required. In the case of personnel placement, the employee is fully integrated into the company's processes. The company then takes over the familiarisation and integration into the internal processes itself.

Temporary employment offers companies a high degree of flexibility if they have short-term deployment options or want to complete projects for a limited period of time. This flexibility is not available with permanent placement. Employment is geared towards the long term and therefore offers less flexibility.

What Are the Advantages and Disadvantages of Temporary Employment?

There are numerous advantages for companies that opt for employee leasing. Of course, there are also disadvantages. Let's start with the advantages.

Advantages of employee leasing

• • One company has a High flexibilitywhen it decides in favour of employee leasing. Companies that know that there are seasonal fluctuations in their industry often decide in favour of employee leasing. However, temporary staffing can also be used to cover short-term staff shortages, for example due to sickness.

• • Another advantage for companies is that, for a certain period of time, they can Access to qualified specialists have. They do not need to enter into any long-term labour law obligations.

• • The personnel service provider takes over the recruitment for the temporary employment agency. This means that the company does not have to use its own resources to carry out the lengthy process itself. All labour law obligations are also eliminated for the company. This means that both Saving resources and time. In the event of staff shortages, the company can make adjustments at short notice if necessary and does not take any risks with this employee.

Disadvantages of temporary work

However, this flexibility also comes at a price.

• • The costs of employee leasing are often higherthan if a company were to hire an employee directly. The company must calculate that it has to pay both the employee's salary and the service for the personnel service provider.

• • Another disadvantage is that employees in the hirer company less integrated as they may not be scheduled for integration. This can negatively on their motivation have an impact.

• • Legal restrictions such as the maximum duration of temporary employment and equal pay regulations can also limit flexibility. 

What Are the Advantages and Disadvantages of Using Recruitment Agencies?

Of course, recruitment also has its advantages and disadvantages. Let's start with the advantages.

Advantages of the recruitment agency

A major advantage for companies here is that they can quickly fill vacancies with qualified and tested candidates. You do not need to handle the recruitment process internally yourself. It can often be very difficult to recruit specialised staff if a company only has access to conventional methods. A recruitment agency usually has a large pool of different candidates.

Another advantage for the company is that the employee is directly employed on a permanent basis. This allows the company to plan better and integrate the employee into the company more easily.

A recruitment agency has a broad network of different potential applicants. There are also special recruitment strategies that increase the chances of companies finding the right specialist or manager more quickly. Recruitment agencies are also worthwhile for employees. Recruitment agencies often have access to jobs that are not advertised publicly. 

This means that the employee can also access jobs that would not normally be available to them. In addition, the employee does not have to bear any risk, as the commission for the recruitment agency is paid by the company.

Disadvantages of the recruitment agency

Now we come to the disadvantages. The placement fee can be high, especially when filling vacancies with qualified specialists. Of course, the company also runs the risk of making the wrong choice. Even the best pre-selection by a recruitment agency cannot eliminate this risk. The disadvantage in this case is that the company has full labour law obligations towards the employee.