stefan daub arbeitsrecht webp.jpg

Temporary employment - restriction of the group privilege

According to a decision by the Federal Labor Court (Bundesarbeitsgericht, “BAG”), an impermissible temporary assignment of employees may also exist if an employee has been assigned to another group company for several years since the beginning of the employment relationship.

Facts of the case

The ruling of the BAG of November 12, 2024 (9 AZR 13/24) is based on the following facts: The plaintiff employee was employed by S-GmbH as a seat finisher from July 14, 2008 to April 30, 2020. He performed his contractually owed work on the premises of the defendant, a company in the automotive industry. The defendant and S-GmbH were affiliated companies during the plaintiff's period of employment.

The exact circumstances under which the plaintiff performed his work are disputed between the parties.

The plaintiff claims that an employment relationship was established between the parties pursuant to Section 10 para. 1 in conjunction with Section 9 para. 1 of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, “AÜG”), because he had been deployed as a temporary worker since the beginning of his employment with the defendant in violation of the provisions of the AÜG. The contractual cooperation between the defendant and S-GmbH was not of a service or work contract nature, but was to be qualified as temporary employment.

The lower courts dismissed the claim. The Regional Labor Court had affirmed the requirements of the exception in Section 1 para. 3 no. 2 AÜG for the application of the group privilege because the plaintiff had not been “hired and employed for the purpose of assignment” as formulated in the law.

Reasons for the decision

According to the decision of the BAG, the Regional Labor Court was not permitted to dismiss the claim on these grounds.

The statutory group privilege is not only inapplicable if recruitment “and” employment is for the purpose of hiring out. According to the BAG's interpretation, the word “and” in Section 1 (3) no. 2 AÜG is to be understood as an enumeration of the specified circumstances. According to the intention of the legislator, the group privilege does not apply even if the employee is hired “or” employed for the purpose of the assignment. This is regularly the case if the employee has been continuously employed as a temporary worker for several years since the start of employment. Such a practice indicates a corresponding employment purpose.

The Ninth Senate referred the dispute back to the Regional Labor Court for a new hearing and decision. This court must now assess whether the plaintiff was actually employed in the form of temporary employment as alleged - in which case the AÜG would be applicable. This depends on whether the plaintiff was actually integrated into the defendant's work organization and was subject to its instructions or whether S-GmbH alone was authorized to issue instructions towards the plaintiff.

Practical information

The decision is important for group companies that previously felt privileged due to the statutory group privilege.

The Regional Labor Court had argued that the statutory group privilege in Section 1 (3) no. 2 AÜG should not be reversed for reasons of European conformity. The statutory wording could not be interpreted to the effect that, irrespective of the conditions of employment, any employment of the employee hired by a group company as a temporary worker in another group company would exclude the use of the group privilege, as there would then be no room for the group privilege and the will of the national legislator would be completely ignored.

The BAG decided otherwise. The scope of application of the group privilege following the BAG's decision can only be assessed once the reasons for the ruling are available - currently only a press release is available.

For the time being, employers should also strictly observe the provisions of the AÜG when assigning an employee within a group.

1:1. This is how we work together. You decide upon a competent partner; he/she will then remain your point of contact. > more