ECJ to rule on limitations of the scope of the Temporary Work Agency Directive

Like Comment

A request for preliminary ruling made by the Federal Labour Court of Germany (Bundesarbeitsgericht), might give rise to a landmark ECJ ruling (C-427/21- ALB FILS KLINIKEN).

By its first question the referring court is asking in essence whether “supply of staff” (outsourcing) falls under the scope of the Directive 2008/104/EC on temporary agency work.

Where in certain Member States that matter is addressed by national law and/or jurisprudence, there is still a great deal of legal uncertainty as to:

  • the scope of the Directive 2008/104/EC
  • the concept of “hiring out of workers” beyond the scope of the Directive 2008/104/EC

A positive example (of legal certainty) is the Belgian Act of 24 July 1987 on temporary work, temporary agency work and hiring out of workers for the benefit of users that clarifies: i) the scope of temporary agency work, and ii) the rules of hiring out by undertakings that are not temporary work agencies.

In the case at hand the referring court observes first that only undertakings that fall under the scope of the Directive 2008/104/EC, should comply with the rules that govern temporary-agency work.

The reasoning suggested by the Federal Labour Court of Germany is of utmost relevance beyond the case at hand.

To assess whether the case falls under the scope of the Directive 2008/104/EC, the court is looking into:

  • the concept of temporality that represents an intrinsic part of the definition of a Temporary Work Agency (see inter alia Judgment of 14 October 2020, JH vs VG, C-681/18, EU:C:2020:823 paragraph 61)
  • the recruitment of the employee by the alleged TWA: “The employment relationship was thus definitely not entered into, as provided for by Article 3(1)(c) of Directive 2008/104, for the purpose of assigning the employee to a user undertaking.

Pursuant to Article 3.1(b) of the Directive 2008/104/EC, “temporary work agency means any natural or legal person who, in compliance with national law, concludes contracts of employment or employment relationships with temporary agency workers in order to assign them to user undertakings to work there temporarily under their supervision and direction.”

In my view, it is fair to assume that if the legislature’s intention was to cover other forms of triangular employment relationship, reference to such forms would have been included.

As regards “the applicability of the Directive to companies which are not temporary work agencies but occasionally second staff by placing it under the supervision and direction of another undertaking:

Article 1(2) states that the Directive applies to undertakings ‘which are temporary work agencies and Article 3(1)(b) contains an autonomous definition of the notion of ‘temporary work agency’. Consequently, the Directive may in certain situations be applicable to employers in spite of their not being qualified as temporary work agencies under national law. However, this may only be the case when the entity under consideration fulfils the conditions laid down in Articles 1 and 3 and, thus, must be considered as a temporary work agency in the meaning of the Directive.” (European Commission- Employment, Social Affairs & Inclusion-Unit B2-Labour law -Report -Expert Group-Transposition of Directive 2008/104/EC on temporary agency work-August 2011-pages 8 and 9 -emphasis added).

By its second question the referring court is essentially asking whether the exclusion of “supply of staff” from the scope of the Directive 2008/104/EC (in the case at hand), is compatible with the protective purpose of the directive.

In accordance with Article 2, the purpose of Directive 2008/104 “is to ensure the protection of temporary agency workers and to improve the quality of temporary agency work by ensuring that the principle of equal treatment, as set out in Article 5, is applied to temporary agency workers, and by recognizing temporary-work agencies as employers, while taking into account the need to establish a suitable framework for the use of temporary agency work with a view to contributing effectively to the creation of jobs and to the development of flexible forms of working.”

The Federal Labour Court of Germany observes inter alia that the “existing conditions of employment continue to apply and the typical risks of personnel leasing, in particular a high degree of job insecurity and constantly being assigned to different sites, are not present.”

Provided that the ECJ will rule that “supply of staff” does not fall under the scope of the Directive 2008/104/EC, the case at hand would be deemed to represent a situation of hiring out of workers permitted under national law, practically, the legislative intention and adopted text (Employee Leasing Act – AÜG-§1(3)2b).

On the contrary, the question will be answered is whether the exclusion under national law is compatible with Article 2 of the said directive.

The reasoning suggested by the Federal Labour Court of Germany applies mutatis mutandis to Professional Employer Organizations (Employers of Record).

Such triangular employment relationships do not fall under the scope of the Directive 2004/108/EC (remark: that statement does not apply to “quadruple” relationships such as using EOR services to work at customer site-in my view, in such cases, the EOR’ registration in the capacity of TWA might not add to the case, merely because an EOR is not deemed to be “the employer”).

It must be then assessed whether the specific scenario entails hiring out of workers, and if the answer is in the affirmative, whether the situation is lawful (considering the factual performance, and the national law in the Member State concerned).

The ECJ ruling is eagerly awaited.

Tanel Feldman

Senior Partner , Immigration Law Associates

Immigration Law Associates provides in-depth advice on rights and obligations triggered by the cross-border element of a given legal situation. Our know-how is built on an extensive experience in EU law and is supported by a network of partners across the EU. Social security coordination : • Autonomous application of the social security coordination regulations and ECJ case-law, to any situation involves a cross-border element EU Company law : • Establishment -permanent activities • Establishment -self-employment activities International Private Law : • Law applicable to the employment relationship Labour and employment law : • Freedom of movement of workers-equal treatment, access to social benefits • Employment contracts and termination of employment • Working conditions • Employee benefits • Transfer of undertakings • Authorisations of work for third-country nationals Special regimes : • Posted workers • Frontier workers • Highly mobile workers • Employment of record • Intra-EU mobility of third-country nationals