Germany's AÜG licence and what it means for the hirer

What is the AÜG licence and what triggers it?

The Arbeitnehmerüberlassungsgesetz is Germany's employee leasing act. Section 1(1) requires an employer that wants to supply its employees to a third party, in the course of its economic activity, to hold a permit issued by the Bundesagentur für Arbeit. The permit is commonly called an AÜG licence. Narrow exemptions exist and are set out further down this page.

What decides whether an arrangement needs one is not what the parties call it. Section 1(1) sentence 2 states the test in terms of what actually happens: workers are supplied for the performance of work when they are integrated into the hirer's work organisation and subject to that hirer's instructions. An arrangement in which a company directs someone's day-to-day work, sets their priorities and manages them alongside its own staff answers that description, whether the contract is headed employee leasing, employer of record, consultancy or services.

That is the first thing worth understanding about the German market. The classification follows the facts on the ground, so a label chosen for commercial reasons does not decide the legal position and a company cannot contract out of the regime by describing it differently.

What happens if the provider does not hold one?

This is the consequence chain and it is the reason the licence question belongs in a procurement conversation rather than a legal appendix. Each of the first four steps follows automatically from the one before it.

The step that surprises people is the third. The company that engaged the provider does not merely lose a supplier or gain a dispute. It becomes the employer, in law, of a person it did not intend to employ, with the notice periods, dismissal protection and contribution history that follow from that. The failure of a provider's compliance lands on the client's balance sheet.

The fifth step is worth reading twice as well and it works differently from the others. The hirer's exposure to a fine is its own offence under section 16 number 1a rather than a share of the provider's, but unlike the steps above it requires fault, intentional or negligent and the penalty is discretionary. Letting a worker supplied without a permit work is itself the hirer's breach.

Can the worker change that outcome?

Yes and the mechanism has a short clock and formalities that are easy to miss.

The worker may declare in writing, to either the provider or the hirer, that they wish to keep their contract with the provider. Before submitting it they must present the declaration in person at an Agentur für Arbeit, which stamps it with the date and confirms their identity, and it must reach the provider or the hirer by the third day after that. A declaration made before the period starts is ineffective and it cannot be made twice.

The period is one month from the date the provider and hirer had set for the assignment to begin, not one month from the day the missing permit comes to light. The clock can therefore expire before the defect is discovered.

Two points follow and they cut in opposite directions for the hirer. The declaration saves the employment contract with the provider only: the commercial contract between the provider and the hirer is void whatever the worker does. And the decision belongs entirely to the worker. A company facing a deemed employment relationship cannot resolve it by agreement with its supplier.

How long can one placement run?

Section 1(1b) sets a default of 18 consecutive months for the same worker with the same hirer and it binds both of them: the provider may not supply beyond it and the hirer may not let the worker continue beyond it.

Two qualifications matter more than the headline number.

The limit is a default rather than a ceiling. A collective agreement made by the parties for the hirer's own sector can set a different maximum period and where such an agreement allows the point to be settled by a works agreement, a hirer that is not itself bound by the agreement can use that route up to 24 months. So the applicable limit is a question about the hirer's sector, not a fixed statutory figure.

Time also aggregates. Earlier assignments of the same worker to the same hirer count in full, whether they were made by the same provider or a different one, wherever the gaps between them are three months or less. A short break does not reset the clock and changing supplier does not reset it either.

Exceeding the applicable limit is a ground under section 9(1) number 1b on which the employment contract becomes void, with the same deemed employment consequence under section 10(1), subject to the same declaration by the worker within one month of the limit being passed.

What must the worker be paid?

Two instruments apply in sequence and the second is the one that repays reading closely.

The section 3a floor is not the general statutory minimum wage and is higher than it. Over the same period the general minimum wage is EUR 13.90 an hour, rising to EUR 14.60 in January 2027. A model built on the general figure understates the floor for a supplied worker.

The equal-treatment rule is a default, not a guarantee, and it is easy to over-read in the client's favour. An employer that has not signed a temporary-work collective agreement can still adopt one by reference and rely on the derogation. The derogation is also not capped at nine or fifteen months: a longer one is permitted provided two conditions are both met, namely that the agreement steps the worker up to a rate it defines as equivalent to the collectively agreed rate for comparable workers in the user's sector and that the step-up begins after an induction period of no more than six weeks and reaches that rate by month fifteen at the latest. That benchmark is the sector rate the agreement names, not the hirer's actual pay for a comparable employee, so section 8(1) does not simply switch on at a fixed month.

The useful question for a client is therefore not when equal treatment begins but which collective agreement the provider is applying and what that agreement actually pays.

Which arrangements fall outside the permit requirement?

A small number and they are narrower than they first appear.

Section 1(3) takes certain supply outside most of the Act. One limb is supply between group companies within the meaning of section 18 of the Stock Corporation Act and it carries a condition: the worker must have been neither engaged nor employed for the purpose of being supplied. Occasional supply between employers is exempt on that same condition. Supply within a single industry to avoid short-time working or redundancies is exempt where a collective agreement applying to both businesses provides for it. Separately, section 1a lets an employer with fewer than 50 staff supply a worker for up to twelve months to avoid short-time working or redundancies without a permit, provided the worker was not engaged and employed for that purpose and the employer notifies the Bundesagentur für Arbeit in writing beforehand.

Everything else runs the other way. Section 1b prohibits supply into construction businesses for work usually done by manual workers, subject to narrow collective-agreement exceptions, which is a bar rather than a relief. Sections 1(1) sentences 5 and 6 require the contract to designate the arrangement expressly as employee leasing before the worker starts and to identify the worker by reference to that contract and section 9(1) number 1a voids the employment contract where that is not done. That last duty is easy to overlook because it falls on a document the client itself signs.

What should a client establish before an arrangement starts?

Four things and they are settled in writing before an engagement is structured rather than discovered during it. Whether a permit under section 1(1) is held. Whether the contract designates the arrangement expressly as employee leasing and identifies the worker, as sections 1(1) sentences 5 and 6 require, since that is a term of the client's own agreement. Which maximum assignment period applies, given that 18 months is a default a sector collective agreement can move and that earlier placements aggregate across providers. And which collective agreement governs pay and what it actually pays.