Update Employment November 2019
No deviation from the equal pay principle with only partial reference to a collective agreement on temporary employment
Press release: Federal Labor Court, October 16, 2019 – 4 AZR 66/18
Employers leasing out temporary agency workers to a third party may only deviate from the principle of equality (equal pay) by virtue of an agreement in the employment contract if the relevant collective agreement for the hire of temporary workers is fully and not only partially applicable for the hiring period on basis of this reference.
Facts of the case
The complaint was brought by a temporary worker against his employer, a temporary employment agency, which had hired him as a driver and leased him out to third parties. The employment contract contained a dynamic reference clause to the collective agreements on temporary work concluded between the German Trade Union Federation’s Collective Bargaining Department and the German Association of Temporary Employment Agencies. In addition, the employment contract contains deviations from the collective bargaining provisions which do not exclusively benefit the employee. From April 2016 to August 2018, the defendant employer leased the temporary worker to a customer (lessee) for an agreed gross hourly wage of EUR 11.25. The regular employees working as drivers in the lessee company received significantly higher pay. In his complaint, the temporary worker claimed the difference in pay between the remuneration paid during the period of hiring out and the remuneration which the regular workers received from the lessee. The courts of instance dismissed the complaint.
The Federal Labor Court ruled that the temporary worker was entitled to the same pay for the duration of the assignment as the comparable permanent employees working in the lessee’s company. There would be no permissible deviation from the requirement of equal payment. Any permissible derogation would require the full application of a collective agreement relevant to the provision of temporary workers. In the case to be decided, this was denied because the deviations from the collective bargaining provisions in the employment contract were not exclusively in favor of the temporary employee.
If employers as lessors want to assign a temporary employee to a third party and if they want to deviate from the requirement of equality (Section 8(2) Act on Temporary Employment) by applying a collective bargaining agreement on temporary employment and thus from the generally owed equal wage in the lessee company, the relevant collective bargaining agreement on temporary employment must be referred to in its entirety in the employment contract. Individual contractual deviations from the collective bargaining provisions are only possible to the extent that they are in favor of the employee. Temporary employment agencies should take this decision as an opportunity to review individual contractual deviations from collective agreements referred to. As a result, only partial reference to the collective bargaining agreements on temporary employment does not lead to permissible derogation from the principle of equal pay.