1. Relevance of the topic – Germany’s potential in the labour leasing sector

Germany is one of Europe’s densest markets, which companies from many countries, including Latvia, want to get in. Pursuant to the information for January 2024 by the Central Statistical Bureau, Germany is the third most important export partner of Latvia. Although these statistical data refer to the export of goods, an equally important role is played by services, for example in the field of IT, as well as the topicality of recent years - the flow of labour.

Germany is experiencing an acute need for specialists and personnel in almost every sector. In accordance with the data by the German Ministry of Economy and Climate Protection (Bundesministerium für Wirtschaft und Klimaschutz), there has been a pronounced shortage of labour in such sectors as crafts, production, construction, and health care in Germany for several years. In the next decade, this trend will only intensify due to the demographic situation, digitalization and the decarbonization process. Accordingly, it emphasizes the need for Germany to attract labour from other European Union and third countries. In this regard, Germany adopted a new law on the immigration of skilled professionals (Fachkräfteinwanderungsgesetz), which comes into effect gradually until June 1, 2024. The new regulation expands the opportunities for skilled workers from countries outside the EU to come to Germany to enter into legal employment relationship and in many cases simplifies the visa procedure.

It also opens new business opportunities for companies by providing employment services to German companies.

2. Regulation of labour leasing in Germany

Labour leasing is a type of commercial activity where a company-lessor rents out its employees for a certain period of time to work for another company-lessee.

In Germany, the provision of employment services is strictly governed by the Employment Act (Arbeitnehmerüberlassungsgesetz). To do so, a relevant license from the German Labour Agency (Bundesagentur für Arbeit) must be obtained. To provide labour leasing services in Germany, it is not necessary to establish a company in Germany - a foreign company can also obtain a license. Before that, however, a license must be obtained in the home country of the foreign company. In Latvia, the license for labour leasing is issued by the Employment State Agency.  

It should be considered that if the lessor company provides labour leasing services without a license, then the contracts concluded by it with the leased employees and the lessee are not valid, and the employment relationship is established between the leased employee and the lessee with all the consequences arising therefrom, for example, instead of a fixed-term employment contract, it is assumed that an open-ended employment contract has been concluded.

Not all areas allow labour leasing in Germany. For example, in the construction industry, this type of commercial activity is prohibited with certain exceptions. There is also a limitation regarding the lease term, that is, the maximum lease period for one employee cannot exceed 18 months. In accordance with the principle of equality stipulated in the Labour Leasing Law, the lessor must provide the leased employee with the same working conditions, rest and pay as applied to hired employees. It is important to note that the lessor may only lease his employees who work on the grounds of an employment contract. Therefore, it is forbidden to lease employees - self-employed persons who work in the lessor’s company on the grounds of the company contract.

3. Offer by Njord

ZAB NJORD SIA is a Nordic and Baltic law firm with offices in Denmark, Estonia, Latvia and Lithuania and more than 200 employees, approximately half of whom are lawyers.   

We offer full range of legal assistance and practical support for obtaining a labour leasing license in Latvia and Germany, and we draw up the necessary documents, including employment contracts and cooperation agreements in Latvian and German languages, in accordance with the requirements of Latvian and German regulatory enactments, and their submission to the competent authorities of Latvia and Germany, as well as representation in communication with the respective institutions.

For more information, please contact our German practice manager, attorney-at-law/Rechtsanwältin Zane Ozola (zo@njordlaw.lv).