← Blog1 February 20226 min readEditorial teamDEUAENRU
For businesses
Contract for work or temporary agency work? How the two models differ in Germany
In Germany there are two common ways to bring extra workers into your business: a contract for work (Werkvertrag) or temporary agency work (Arbeitnehmerüberlassung, also called Leiharbeit or Zeitarbeit). With the first you buy a result; with the second you hire working hours. Choosing the wrong model, or living the right one the wrong way, can lead to fines and back payments.
Contract for work: you buy a result
Under a contract for work (section 631 of the German Civil Code, BGB), the contractor promises a defined result: cleaned hotel rooms, a harvested field, an installed solar plant. You pay for that result, not for the hours worked.
The contractor decides how to deliver it. He plans the work, puts the team together and leads it through his own foreman. You say what needs to be done – not who does it, how or when.
At the end you accept the work (Abnahme, section 640 BGB). If it has defects, the contractor must fix them (section 634 BGB). The business risk stays with him.
Temporary agency work (Leiharbeit): you hire working hours
Under the Temporary Agency Work Act (AÜG), an agency provides you with workers who join your organisation and follow your instructions, just like your own staff. You are responsible for the result. Strict rules apply:
- the agency needs a licence from the Federal Employment Agency;
- the contract must be expressly called temporary agency work, and each worker must be named in advance;
- a worker may generally be placed with the same client for no more than 18 months;
- as a rule, agency workers get the same pay as comparable permanent staff (equal pay); a collective agreement may usually deviate only for the first nine months.
The difference at a glance
| Contract for work | Temporary agency work | |
|---|---|---|
| What you get | a result | working hours |
| Who instructs the workers | the contractor | your business |
| Billing | per result, e.g. per room or module | per hour |
| Who fixes defects | the contractor | your business |
| Government licence | not required | required |
Sham contracts for work: what inspectors look for
What counts is how the contract is lived, not what it is called. A contract for work becomes a sham contract (Scheinwerkvertrag) when the workers are in fact used like agency staff. Typical warning signs:
- your shift supervisor assigns the contractor’s workers and gives them direct instructions;
- they work mixed in with your own staff, without their own foreman;
- billing is per hour instead of per result;
- there is no clearly defined piece of work that can be accepted.
The consequences are serious. If the arrangement is really undeclared agency work, the contract is void and the workers are deemed to be employed by your business (sections 9 and 10 AÜG). On top of that come fines of up to 30,000 euros and possible back payments of social security contributions.
Which model fits your business?
A contract for work fits when a task can be clearly defined: room cleaning, dishwashing, harvesting, installation – typical services under a contract for work. You receive a finished result and do not have to manage the team yourself.
Temporary agency work fits when you need extra people inside your own processes and want to lead them yourself.
In some sectors the law makes the choice for you:
- Construction: temporary agency work for tasks usually done by manual workers is generally prohibited (section 1b AÜG), so contracts for work are used.
- Meat industry: in slaughtering, cutting and meat processing, contracts for work have been banned since 1 January 2021 and agency work largely since 1 April 2021.
FAQ
Can we give the contractor’s workers any instructions at all?
Yes – you may define what is to be done, for example which rooms need cleaning today. Who does which task and when is decided by the contractor’s foreman.
Who is liable for poor work?
Under a contract for work, the contractor: he must fix it. With agency work, the risk for the result is yours.
Do we need a permit for a contract for work?
No. Only an agency placing workers needs a licence.
What kind of work suits a contract for work?
Tasks with a measurable result: housekeeping, dishwashing, harvesting, installation. In construction it is usually the only permitted model for manual work.
