The consequences of illegal supply and use of workers
Illicit assignment of workers
The consequences of an employer assigning his employees to a third party without having a licence to supply workers are serious:
In such cases the law sees a (fictional) direct employment relationship as having been established between the user of temporarily assigned labour and the worker.
Description of the picture
A supplier (hirer-out) and a temporary agency worker conclude an employment contract.
The supplier assigns the temporary agency worker to work for a user (hirer).
Since the supplier is not holding a licence to supply labour both the employment contract with the temporary agency worker and the temporary assignment contract with the user are invalid.
An employment relationship between the user and the temporary agency worker is deemed to have been established.
If the supplier pays wages to the temporary agency worker, he is also responsible for paying the worker’s social insurance contributions. He, the same as the worker’s user, is seen as the employer of the temporary agency worker; in this respect both are jointly and severally liable.
When the supply of temporary workers is an administrative offence
Supplying temporary workers without being licensed by the Federal Employment Agency constitutes an administrative offence under the Act on the Provision of Temporary Workers (AÜG), Article 16 (1) No 1, and is punishable with a fine of up to 30 000 euros. As the economic benefit that has been derived from the illicit action can be distrained, the level set for the administrative fine may be exceeded.
All fines imposed in final judgement exceeding 200 euros are entered in the central commercial register.
The Act on the Provision of Temporary Workers rules out any form of chain or indirect supply of manpower, making it an administrative offence (pursuant to Article 16 (1) (1b) AÜG) which can be fined up to 30 000 euros. A situation of chain or indirect supply of labour is given where the user of workers hired from a supplier provides the same workers to other users of the workers’ services. The full economic advantage achieved by the infringer can be recovered or levied, meaning that the statutory level of fines may be exceeded.
Any monetary penalty higher than 200 euros will be entered in the central commercial register.
Along the same lines, any supply of manpower
- without denoting the supply and/or provision as such in the relevant contract for the supply of temporary staff (Article 16 (1) (1c) AÜG),
- without specifying the identity of the temporary employee (Article 16 (1) (1d) AÜG), or
- which exceeds the maximum supply period of 18 months (Article 16 (1) (1e) AÜG)
is an administrative offence punishable with a fine of up to 30 000 euros. The full economic advantage achieved by the infringer can be recovered or levied, meaning that the statutory level of fines may be exceeded.
Any monetary penalty exceeding 200 euros will be entered in the central commercial register.
When the supply of temporary workers is a criminal offence
Under the Act on the Provision of Temporary Workers (AÜG), Article 15, the supply of temporary workers without a licence from the Federal Employment Agency is punishable if the workers supplied are foreign workers who are not permitted to perform such work. Punishments of imprisonment for up to three years, or fines, may be imposed; serious offences may be punished with imprisonment ranging from six months to five years.
When the use of temporary workers is an administrative offence
Under the Act on the Provision of Temporary Workers (AÜG), Article 16(1) No 1a, the use of workers from a supplier who is not licensed by the Federal Employment Agency constitutes an administrative offence, and is punishable with a fine of up to 30 000 euros.
Since workers who are supplied illicitly are seen by the law as being in a direct employment relationship with the user, a fine of up to 500 000 euros can be imposed under Volume III, German Social Code, Section 404 (2) No 3 (SGB III) if foreign workers have been used who are not permitted to perform the work in question.
As the economic benefit that has been derived from the illicit action can be distrained, the level set for the administrative fine may be exceeded.
All fines imposed in final judgement exceeding 200 euros are entered in the central commercial register.
The use of foreign workers from a supplier who is licensed by the Federal Employment Agency is an administrative offence under the Act on the Provision of Temporary Workers (AÜG), Article 16 (1) No 2 if the foreign workers have not been permitted to work as temporary agency workers. The administrative offence is punishable with a fine of up to 500 000 euros.
The Act on the Provision of Temporary Workers rules out any form of chain or indirect supply of manpower, making it an administrative offence (pursuant to Article 16 (1) (1b) AÜG) which can be fined up to 30 000 euros. A situation of chain or indirect supply of labour is given where the user of manpower takes advantage of the services of workers provided by a previous user of hired labour. The full economic advantage achieved through the infringement can be recovered or levied, meaning that the statutory level of fines may be exceeded.
Any monetary penalty higher than 200 euros will be entered in the central commercial register.
When the use of temporary workers is a criminal offence
The supply of temporary workers by a supplier who is licensed by the Federal Employment Agency is punishable under the Act on the Provision of Temporary Workers Article 15a (AÜG) if more than five foreign workers who do not have permits for such work are used, or if the foreign workers are employed under unfavourable conditions of employment.
The use of workers from a supplier who is not licensed by the Federal Employment Agency is punishable under the Act to Combat Undeclared Work and Unlawful Employment (SchwarzArbG), Article 11 if more than five foreign workers who do not have permits for such work are used, or under the Act to Combat Undeclared Work and Unlawful Employment (SchwarzArbG), Article 10, if the foreign workers are employed under unfavourable conditions of employment. In these cases, too, the user is seen as being the employer.
More information about the employment of foreigners
Supplying temporary workers to the building industry
When the supply of temporary workers is an administrative offence
The supply of workers to the building industry is punishable with a fine of up to 30 000 euros under the Act on the Provision of Temporary Workers Article 16 (1) No 1f and (2) (AÜG). As the economic benefit that has been derived from the illicit action can be distrained, the level set for the fine may be exceeded.
All fines imposed in final judgement exceeding 200 euros are entered in the central commercial register.
When the use of temporary workers is an administrative offence
The use of workers in the building industry is punishable with a fine of up to 30 000 euros under the Act on the Provision of Temporary Workers Article 16 (1) No 1f and (2) (AÜG). As the economic benefit that has been derived from the illicit action can be distrained, the level set for the fine may be exceeded.
All fines imposed in final judgement exceeding 200 euros are entered in the central commercial register.
