Temporary work – Rules on the maximum duration of temporary assignments can be altered by collective agreements

Time and again, the courts have had to deal with the maximum duration of temporary employment. Numerous judgments by the Federal Labour Court (Bundesarbeitsgericht – BAG) from last year alone show that many detailed questions still have to be clarified. It was only in October 2024 that the Federal Labour Court turned to the ECJ in several preliminary ruling proceedings to clarify how a transfer of undertakings on the side of the user undertaking affects the calculation of the maximum duration of an assignment. We reported on this in our Insight of 18 October 2024.

At the same time, the Federal Labour Court had to rule in parallel proceedings (Federal Labour Court, judgment of 01/10/2024 - 9 AZR 270/23), in which the transfer of undertakings issue was not relevant. The grounds for the judgment are now available.

Facts

A temporary agency worker had been working continuously at a company in the metal and electrical industry since 2010. In the meantime, the user undertaking had been transferred to another owner as a result of a transfer of undertakings.

The temporary agency worker sought a declaration by the court that an employment relationship had existed with the user undertaking since 1 April 2021 because the maximum permitted duration of the assignment had been exceeded. The Federal Labour Court confirmed the decision of the lower labour court and, contrary to the court of appeal, ruled in favour of the employee.

At the centre of the Federal Labour Court’s findings were collective agreement provisions which, within the scope of application of the collective agreements for the metal and electrical industry in North Rhine-Westphalia, allowed the maximum assignment period to be extended from the statutory 18 months to 48 months using the scope opened up by section 1(1b) of the German Temporary Agency Work Act (Arbeitnehmerüberlassungsgesetz – AÜG); also by means of a company agreement to the extent permitted by the collective agreement.

The user undertaking had entered into such a company agreement, which stipulated a maximum assignment period of 48 months for the production plant and associated “auxiliary and ancillary operations”. The employer and the Regional Labour Court as the court of appeal had still assumed that this maximum assignment period also applied to the claimant. A mistake, as the Federal Labour Court has now clarified.

Federal Labour Court’s decision

This is because the employee was not employed in production, but in downstream logistics. According to the Federal Labour Court, he was therefore employed outside the scope of the collective agreement.

The departmental scope of application not only covered companies in the iron, metal, electrical and central heating industries and the plastics processing industry, but also auxiliary and ancillary companies and assembly sites, provided the employer belonged to a member association of the industry association, Verband der Metall- und Elektro-Industrie Nordrhein-Westfalen e.V., also known as Verband Metall NRW. The extension of the scope of application of a collective agreement to “auxiliary and ancillary companies” – even those not bound by a collective agreement – is also generally recognised by the courts (see Federal Labour Court of 01/04/1987 - 4 AZR 77/86). However, as the Federal Labour Court has now clarified, this does not apply to the downstream operations

• logistics,
• packaging and
• distribution

in

• industrial and
• manufacturing companies.

Whether these activities take place in the immediate vicinity of production – in this case on the same company premises – is irrelevant. Although logistics, packaging and distribution are part of the value chain, they have nothing to do with production. The decisive factor is that the product, even if unpackaged and not ready for distribution, is already fully constructed. Downstream work steps can therefore not be affected by an exemption from extending the scope of the collective agreement. Here, other collective bargaining partners are responsible for making their own rules. The collective agreement therefore already has no effect on the work carried out by the temporary agency worker. For lack of application of the collective agreement, the company agreement does not apply either.

In any case, the maximum assignment duration had been exceeded since January 2020. The legal presumption of an employment relationship pursuant to section 9(1)(1b) in conjunction with the first sentence of section 10(1) of the Temporary Agency Work Act therefore applies.

When is an extension possible?

In its previous case law, the Federal Labour Court had classified operating units and subsidiaries in logistics, packaging and distribution in the retail sector as “auxiliary and ancillary operations” to which the corresponding collective bargaining rules may be extended. The decisive factor here was whether an auxiliary service was provided for the distribution of goods. This is more obvious in distribution-focused retail than in industrial production.

Practical significance

The judgment shows once again that temporary work in Germany is a difficult situation. The judgment is likely to cause an uproar in industry in particular. Temporary agency work is used disproportionately often there. Similar rules can be found in almost all regional collective labour agreements. As a result, many companies have agreed with employee representatives to extend the maximum duration of temporary work assignments. According to the Federal Labour Court ruling discussed here, these rules may be ineffective for large sections of the value chain, unless other collective agreements legitimise such an exception. User undertakings should therefore check immediately whether they are also affected by this ruling and whether the situation can be remedied, possibly with the cooperation of the collective bargaining representatives/company partners.

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Further resources on the topic of deploying external staff

The latest information on the topic of deploying external staff is available

• in our quarterly webinar series, Quarterly Update on Contractor Deployment (available in German only)
• and our podcast on this topic (Noerr_podcast: Employee status, employee data protection and algorithm transparency in the platform economy) (available in German only)

 Authors: Daniel Happ und Pasquale Bender