Temporary agency work-an outstanding challenge

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The European Council meeting of 14 December 2007 (16616/1/07 REV 1) endorsed the agreement on the common principles on flexicurity reached in the Council on 5/6 December 2007.

Flexicurity involves the deliberate combination of flexible and reliable contractual arrangements, comprehensive lifelong learning strategies, effective active labour market policies, and modern, adequate and sustainable social protection systems.” (Council of the European Union, 6 December 2007, 16201/07).

Pursuant to Preamble (11), Directive 2008/104, “Temporary agency work meets not only undertakings' needs for flexibility but also the need of employees to reconcile their working and private lives. It thus contributes to job creation and to participation and integration in the labour market.”

How to balance flexibility and security in temporary agency work?

Hereinafter a brief overview of recent cases in which the European Court of Justice (ECJ) is called upon to rule on matters related to temporary agency work:

Raad van bestuur van de Sociale verzekeringbank (C-713/20)

The case is concerned with the social security legislation applicable to temporary agency workers residing in a Member State other than that in which they are working.

The question referred to the ECJ for preliminary ruling, relates to periods between temporary work assignments (when no temporary agency work is performed, and the employment relationship with the temporary work agency is terminated).

The referring court seeks to establish whether the legislation of the Member State in which the worker pursues the activity as an employed person is applicable -Art 11.3(a) Regulation 883/2004, or the legislation of the Member State of residence -Art 11.3(e) the said regulation.

The ECJ is called upon to rule on the concept of “pursuing an activity as an employed person” in the meaning of Art 11 Regulation 883/2004, practically to determine whether that concept encompasses periods during which the employment relationship is not suspended (e.g., unpaid leave), but terminated.

A possible affirmative answer raises the question of the duration of a temporary interruption giving rise to continuity of the subjection in the country of employment.

In discussion the application to the case at hand of the ECJ rulings in Franzen (C-382/13, EU:C:2015:261), and in Van den Berg and Others (Joined Cases C-95/18 and C-96/18, EU:C:2019:76).

AG Pitruzzella will deliver his Opinion on 17 March.

NP v Daimler AG, Mercedes-Benz Werk Berlin (C-232/20)

The case concerns the interpretation of Directive 2008/104/EC on temporary agency work.

The Higher Labour Court, Berlin-Brandenburg, Germany, referred to the ECJ questions related to : i)  the concept of temporality from Art 1(1) Directive 2008/104, and, ii) the compatibility with Directive 2008/104 of the Section 19(2) Act on Temporary Agency Work (AÜG) and, iii) the existence of a right to a permanent contract of employment between a user undertaking and a temporary agency worker, directly derived from the said directive, in the event of successive assignments to the same user undertaking and, iv) the compatibility with the said directive of the discretion given to the parties of a collective agreement to extend the maximum assignment period otherwise provided for by law.

Recalling the ECJ ruling of 14 October 2020 in KG (C-681/18, EU:C:2020:823), and the Opinion delivered by AG Szpunar in AKT (C-533/13, EU:C:2014:2392), AG Tanchev concluded that (Opinion delivered on 9 September 2021 EU:C:2021:727):

  • the word ‘temporarily’ in Article 1(1) Directive 2008/104 it relates only to the period of assignment of the temporary agency worker in question to the user undertaking, rather than the post to which he or she is assigned, and consequently, permanent jobs and jobs that are not performed “to provide cover” are not automatically precluded from the scope of Directive 2008/104
  • when applying the “misuse of temporary agency work” test from KG (i.e., “to determine whether a permanent employment relationship was concealed behind successive temporary agency contracts designed to circumvent the objectives of Directive 2008/104, and in particular the temporary nature of temporary agency work.”), due regard must be given to the nature of the work carried out for the user undertaking (“including whether or not it is a permanent post”)
  • a temporary agency worker has no entitlement under Directive 2008/104 to the establishment of a permanent employment relationship with a user undertaking in the event of a finding of misuse of temporary agency work under Article 5(5) of Directive 2008/104”, however, unless contra legem interpretation of Member State law, the national court may not disregard obligations derived from the said directive
  • the application of Section 19(2) AÜG to the case at hand, is inconsistent with Art5(5) Directive 2008/104 (however, in a horizontal action between two private parties, provisions of Member State law that are in breach of EU law, may be disapplied only if this does not compel contra legem interpretation of Member State law)
  • without prejudice to an eventual misuse of temporary agency work in the meaning of Directive 2008/104 as interpreted by ECJ case-law, the extension of the maximum assignment period may be left to the discretion of the parties to a collective agreement

The ECJ will deliver its judgment on 17 March.

TimePartner Personalmanagement GmbH (C-311/21)

The case concerns the interpretation of the principle of equal treatment enshrined in Art 5 Directive 2008/104 on temporary agency work, notably the Member States’ right to give the social partners “the option of upholding or concluding collective agreements which, while respecting the overall protection of temporary agency workers”, derogate from the principle of equal treatment.

On 18 May 2021, the Bundesarbeitsgericht (Federal Labour Court of Germany) has referred to the ECJ several questions arising from a horizontal action between a temporary work agency and a temporary agency worker.

The latter was granted the pay provided for in the collective agreement concluded between the Association representing the interests of German temporary employment agencies and the United Service Sector Trade Union, which provides for a derogation from the principle of equality of treatment. 

The AÜG allows a derogation from the principle of equality of treatment through a collective agreement, provided that the latter does not fall short of the minimum hourly wage rates laid down in a regulation pursuant to Section 3a (2) of the AÜG. Such minimum rates did not exist during the period in dispute, and the hourly rate paid based on the collective agreement was lower than that received by comparable permanent employees of the user undertaking.

In what it concerns collective agreements that contain provisions which derogate from the principle of equal treatment, the referring court seeks to clarify: i) the interpretation must be given to the concept of “overall protection of temporary agency workers” from Art 5(3) Directive 2008/104 and, ii) what criteria must be considered in ascertaining respect of such overall protection and, iii) the extent of the autonomy given to social partners when derogating from the principle of equal treatment (under German law, collective agreements enjoy in principle a presumption of fairness) and, iv) whether the 2017 amendment of the AÜG restricting derogations through collective agreements, is sufficient to grant the overall protection of temporary agency workers and ,v) the extent to which national courts may review whether such collective agreements respect the overall protection of temporary agency workers.

The principle of equal treatment enshrined in Art 5 Directive 2008/104 is object of another request for a preliminary ruling lodged by the Tribunal Judicial da Comarca de Braga – Juízo do Trabalho de Barcelos, Portugal, on 10 September 2020 (Luso Temp, C-426/20).

ALB FILS KLINIKEN (C-427/21)

The case concerns the interpretation of the scope of Directive 2008/104.

By its first question the Federal Labour Court of Germany (Bundesarbeitsgericht) seeks to clarify whether “supply of staff” (in the meaning of outsourcing), falls under the scope of Directive 2008/104 on temporary agency work.

The referring court observed first that only undertakings that fall under the scope of  Directive 2008/104, should comply with the rules that govern temporary-agency work.

To assess whether the case falls under the scope of Directive 2008/104, the referring court was 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 temporary work agency: “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

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

The Federal Labour Court of Germany observed 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  Directive 2008/104, 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 (AÜG-§1(3)2b).

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

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