Temporary work - the silent end of the group privilege: enlightening clarifications by the verdict’s full version?

Facts of the case

The employee was employed by S-GmbH from 2008 to 2020, but worked on the premises of V-AG, an affiliated company. He sued to establish an employment relationship with V-AG, as he had received instructions from V-AG and there would not have been a clear separation of activities. V-AG referred to a services contract with S-GmbH. The Labour Court and the Regional Labour Court dismissed the claim: They did not find that the employee had been hired for the purpose of temporary employment.

The decision

According to the BAG, the group privilege does not only cease to apply if there was already an intention to transfer employees to a group company at the time of recruitment (“hired and employed”). Even if employees only become employed for the purpose of temporary employment afterwards during the course of the employment relationship, a temporary employment requiring an AÜG permit may also exist between group companies. Contrary to the at first sight clear wording of the law, the BAG interprets the conjunction "and" as "and / or". In its view, this is the only way to effectively prevent circumvention of the protective provisions of the AÜG. Otherwise, the employer* could change the employment contract after hiring and permanently transfer employees to group companies without authorization. However, the decision still lacks clear criteria as to when employees are "employed for the purpose of temporary employment". Rather, as is so often the case, the relevant legal test is based on an overall consideration of all circumstances. Indications of permit requiring labour leasing falling under the AÜG include (1) immediate assignment to another group company after hiring, (2) regular or exceptionally long periods of work at group companies or (3) the permanent lack of employment opportunities in the contractual employer's business. Nevertheless, not every intra-group assignment is immediately inadmissible. Decisive factors are – first of all – the reason of the assignment, but also its frequency and duration as well as any interruptions. Short-term, ad hoc assignments – for example as part of trainee programs, substitutions or to train other employees – may still be covered by the group privilege and thus not fall under AÜG. Also specific projects continue to be eligible for the group labour leasing privilege. BAG does not specify fixed time limits – the decisive factor is always a consideration of the overall circumstances.

Consequences for practice

In future, an employment relationship including equal pay by the group company to which the employee has been leased can be deemed, even in the case of group labour leasing which were considered permissible before the BAG’s verdict. Even fines may be imposed. Conversely, the BAG has expressly calmed initial concerns that the use of group transfer clauses could be generally impermissible. Rather, it depends above all on whether the reason for the group labour leasing is temporary or maybe even in the interest of the assigned employee. If, on the other hand, the assignment serves to carry out regular tasks at the receiving group company and there is no special reason for the employing group company to lease over the employees, this speaks against the applicability of the group privilege.

Practical tip

Companies should document and clearly justify both the reason and the planned duration of intra-group assignments of their employees. Recurring tasks at other group companies should be carried out by their employees wherever possible. In case of doubt, it may make sense to apply for an employee leasing permit. In matrix organizations, it should be documented that matrix managers exercise the right to issue instructions under the employment contract at least also in the interest of fulfilling business purposes of the contractual employer.