Goodbye to the AÜG’s group privilege?

On 12 November 2024, the Federal Labour Court (Bundesarbeitsgericht - BAG) ruled that the group privilege according to Section 1 (3) No. 2 of the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz - AÜG) already does not apply - and the provisions of the AÜG therefore do apply - if employees are hired or employed for temporary employment purposes. With this, the BAG interprets the provision beyond the confines of the wording and is once again restricting the flexible deployment of employees within a group environment. Isabel Hexel and Annabelle Marceau explain the implications of this.

The parties were in dispute about whether or not an employment relationship had been established on grounds of a case of covert temporary employment. The plaintiff had been employed for over twelve years by the group company S, which conducted its business at the defendant's plant. The plaintiff claimed that he was integrated into the defendant's work organisation and was bound by the defendant’s instructions and therefore sought a declaration to the effect that he had an employment relationship with the defendant.

Both lower courts dismissed the action on grounds of the group privilege according to Section 1 (3) No. 2 AÜG and deemed the AÜG inapplicable, as the plaintiff had not been hired "and" employed by S for temporary employment purposes. In particular, the court of appeal stated that the aforementioned requirements had to be met cumulatively.

The BAG did not share this view and ruled on 12 November 2024 (9 AZR 13/24) that the conjunction "and" should merely be understood as an enumeration of the designated circumstances and that the group privilege does not apply if the employee is hired “or” employed for temporary employment purposes. The defendant could not invoke the group privilege if it, as the group company deploying the temporary worker, was assigned the employee over a period of several years. Such a practice indicates a corresponding employment purpose.

The BAG therefore referred the case back to the Lower Saxony Regional Labour Court for a new hearing and decision, and the latter must now assess whether the plaintiff was indeed integrated into the defendant's work organisation and bound by the defendant's instructions.

The BAG’s decision is currently only available as a press release. However, it is of considerable practical relevance for foreign deployments within a group and cross-border matrix organisations. Employers who intend to deploy employees flexibly within a group environment should consider which group company is to be the contractual employer before advertising positions.

Our clear advice to employers who wish to claim the group privilege in accordance with Section 1 (3) No. 2 AÜG is not to deploy employees at a group-affiliated company from the very start of their employment or to limit the employee’s assignment within the group in terms of both time and content, for example by making the assignment specific to a certain project.

Back to list