ECJ - Requirement of Collective Agreement Compensation for Temporary Employees with Lower Wages

The European Court of Justice (ECJ) ruled in a judgment dated December 15, 2022 that temporary workers may only be paid less than permanent employees if this unequal treatment is compensated for in the collective agreement (ECJ judgment dated December 15, 2022 - C-311/21).

Facts

The basis for the ECJ's ruling is a labor dispute from Germany. A temporary worker had received a collectively agreed hourly wage of 9.23 Euros gross for her work at a retail company, while other employees with comparable work received a collectively agreed hourly wage of 13.64 Euros gross under the sector collective agreement for the retail industry. The temporary worker then sued for payment of additional remuneration of 1,296.72 Euros gross, i.e. the difference she would have received if she had been paid in accordance with the collective wage agreement for industrial employees in the retail sector in Bavaria. She claimed that the relevant provisions of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, "AÜG") and the collective agreement for temporary workers were not compatible with Art. 5 of Directive 2008/104. The defendant temporary employment agency, on the other hand, was of the opinion that it was not obligated to pay any remuneration other than that provided for in the collective agreement for temporary workers.

After the action had been dismissed both at first and second instance, the Federal Labor Court made its decision dependent on the question of whether the German legislature had transposed the German Temporary Employment Act (AÜG) in conformity with Art. 5 of Directive 2008/104. Because of this, it referred various questions to the ECJ for a preliminary ruling.

Reasons for the decision

In its ruling, the ECJ now confirmed the exception to the principle of "equal pay" under the AÜG, according to which it is in principle possible for the parties to a collective agreement to agree a lower pay rate for temporary workers. In return, however, the collective agreement must grant temporary workers compensatory benefits with regard to essential terms and conditions of employment, so that the overall level of protection for temporary workers is maintained. According to the ECJ, such compensatory advantages must be suitable to compensate for the unequal treatment of temporary workers. If a collective agreement provides a lower wage for temporary workers, for example, additional time off could be granted in return.

In this respect, the ECJ does not see it as an obligation of the legislator to make corresponding specifications. Rather, it considers the parties to the collective agreement themselves to be under an obligation to determine a corresponding compensation that respects the overall protection of temporary workers. Nevertheless, according to the ECJ, the collective agreements must be subject to effective judicial review.

Note for practice / Outlook

Although the ECJ's ruling recognizes in principle an exception to the principles of "equal pay" set out in Section 8 AÜG, most collective agreements in the temporary employment industry presumably do not - at least not explicitly - provide for these required compensation benefits. Collective agreements must therefore be examined closely in this respect and, if necessary, improved. The parties of the collective agreement themselves are required to implement the ECJ's requirements accordingly.

However, since it is sufficient to promise the temporary employee better benefits elsewhere, such as more vacation days, the implementation of the case law should be solvable for the parties of the collective agreement.

In the end, it is therefore a case-by-case consideration whether the individual temporary worker may have claims for back pay. A wave of lawsuits for payment of differential wages will probably not happen.