In many industries, companies use temporary workers to react flexibly to order peaks. However, this is not always legal. Hidden employee leasing occurs when companies appear to work with contracts for work and labour or subcontractors, but actually use regular temporary workers. This can have serious legal consequences - from high fines to retroactive permanent employment of the employees concerned.

But how do you recognise the signs of a hidden temporary employment agency? What risks are involved and how can companies protect themselves? Here you can find out what you need to look out for in order to recognise illegal employee leasing at an early stage and avoid legal consequences.

Estimated reading time: 7 minutes

What is concealed temporary employment?

In Germany, temporary employment is regulated by the Temporary Employment Act (AÜG). Companies that hire out employees require a corresponding licence. However, not everything is always done correctly.

A hidden employee leasing exists when a company uses a supposed contract for work or service contract to actually lend employees. The management power remains with the hirer, which blurs the line between a legal employee leasing and a genuine contract for work and labour.

• Hidden employee leasing is often used to avoid costs and social security obligations.
• Employees appear as external service providers or subcontractors, but work within the structures of the hirer's company.
• This problem is particularly common in sectors such as construction, logistics and IT.

The question is: How do you recognise such a practice in reality?

What are the signs of a concealed supply of labour?

The boundary between legal temporary employment and unauthorised covert temporary employment is not always clear. Nevertheless, there are some clear signs that may indicate a covert supply of labour.

• The supposed contractor works like an internal employee
  • No separate organisation, but direct integration into the work processes.
  • Use of the hirer's equipment and work clothing.
• The hirer gives direct instructions
  • Supervisors of the hirer determine working hours and locations.
  • The alleged subcontractor has no decision-making authority of its own.
• Working hours and activities correspond to permanent employees
  • The employee has a regular shift schedule like internal employees.
  • No difference in tasks and responsibilities to permanent colleagues.
• Contractually, a contract for work is faked
  • Work is not invoiced according to project progress, but by the hour or day.
  • There is no concrete "work" or measurable result.

If several of these signs apply, there is a high risk that this is an illegal supply of labour.

What are the legal consequences of unauthorised employee leasing?

Hidden employee leasing is not a trivial offence. Companies that do not comply with the German Temporary Employment Act (AÜG) risk severe penalties and sanctions.

• Retroactive permanent employment of the temporary worker
  • If an illegal hiring-out of employees is detected, the employee and the hirer must a regular employment relationship.
  • The employee is then entitled to all the rights of a permanent employee - including Social security, continued payment of wages and protection against dismissal.
• Fines of up to 500,000 euros
  • Companies that hire out workers without authorisation must reckon with heavy fines.
• Claims for damages and additional payments
  • Become Social security contributions the state can retroactively impose high Back payments demand.
• Reputational damage and loss of orders
  • Companies that engage in illegal Temporary employment risk losing the trust of customers and partners.

The consequences can therefore be life-threatening. Companies should therefore ensure that they comply with the legal requirements.

How can you protect yourself against covert employee leasing?

Companies should take a number of preventive measures to avoid unwittingly becoming involved in illegal employee leasing.

• Clear contractual demarcation
  • A genuine contract for work or service must contain specifically defined services.
  • Billing is based on the project and not on working hours.
• Contractor's own organisation
  • The service provider should bring its own work equipment, personnel and structures.
  • Employees of the service provider may not be directly controlled by the hirer.
• Regular review by specialised lawyers
  • Contracts should be checked by experts in order to avoid unauthorised temporary employment.
• Cooperation with certified recruitment agencies
  • Anyone who Legal temporary employment should only work with providers who offer a AÜG licence have.

These measures help to avoid legal problems and minimise the risk of hidden employee leasing.

Zeitarbeit International - Your partner for legally compliant solutions

The concealed Temporary employment is a serious problem that can cause companies considerable legal and financial difficulties. Those who recognise the signs early on and draw up legally compliant contracts can protect themselves from sanctions.

It must be clearly defined whether you are using a contract for work and labour or a temporary employment agency. Uncertainties should be clarified with legal advice or by working with certified service providers.

Temporary Work Internationall is your experienced partner for legally compliant temporary employment and recruitment. With many years of experience and certified processes, we ensure that our customers act in compliance with the law.

• AÜG-compliant placement of specialised personnel
• Legally compliant contracts for hirers and temporary workers
• Comprehensive advice on avoiding risks
• International specialists from Eastern Europe with experience

Avoid legal risks - rely on a secure recruitment agency with Zeitarbeit International.

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