Understanding the German AÜG (Temporary Staffing Act) — Duties, Risks, Practice

The Arbeitnehmerüberlassungsgesetz (AÜG) is one of the strictest pieces of German employment law. Companies that don't know it risk significant fines, unwanted permanent hires and even criminal proceedings. This guide explains what counts as temporary staffing, which duties apply to providers and hirers in 2026 — and how to avoid common mistakes.

AÜ exists when a provider hands its employees over to a third party (the hirer) and the hirer exercises the right to direct work.

1. Personnel provision.
2. Integration into the hirer.
3. Right to direct lies with the hirer.

Anyone declaring a work contract while in fact providing personnel runs disguised AÜ — illegal.

Anyone providing workers commercially needs a licence under § 1 AÜG, issued by the Federal Employment Agency.

Licence required: staffing firms, regular HR providers, intra-group leasing.

No licence required: pure recruitment, real work/service contracts.

Consequence of missing licence: The employment contract is deemed to exist with the hirer (§ 10(1) AÜG).

No later than after 9 months at the same hirer, the leased worker is entitled to the same pay as a comparable in-house employee.

What counts: gross wage, bonuses, holiday pay, Christmas pay, benefits in kind, variable pay.

Exceptions: Sector collective agreement can shift equal-pay date up to 15 months.

Risk: Back-payment, fines up to €500,000.

A worker may be leased to the same hirer for a maximum of 18 months in a row (§ 1(1b) AÜG).

• Breaks under 3 months still count.
• Group rotation does not count as interruption.
• Extension via collective agreement up to 24 months.

Breach: Employment contract automatically deemed with the hirer.

1. Hold and renew AÜG licence annually.
2. Written employment contract with each worker.
3. Written assignment contract before deployment.
4. Specific employment relationship documented.
5. Inform worker about equal pay.
6. Pay wages in idle time.
7. Pay social contributions.
8. Run payroll.
9. Annual reporting to Federal Employment Agency.

1. Check provider's AÜG licence in original.
2. Written specification.
3. Time recording.
4. Workplace safety: instruction, PPE.
5. Equal treatment in communal facilities.
6. Information about open posts.
7. Respect employee status.
8. Works council co-determination.

• AÜG licence checked in original
• Written assignment contract before deployment
• Specific person, activity, location, period
• Time recording established
• Safety briefing documented
• Equal treatment in communal areas
• Works council informed
• Assignment duration tracked
• Equal-pay date noted (9 months)
• After 18 months: takeover or end planned

Work contract or disguised AÜ?

Consultant works on-site daily, uses your tools, follows instructions — disguised AÜ. Solution: declare as proper AÜ or define a clear deliverable.

Intra-group provision

Subsidiary A leases to subsidiary B — usually licence required. Check § 1(3) AÜG.

18-month limit reached

Options: permanent hire, 3+ month break, collective agreement extension to 24 months. Permanent hire is usually cleanest.

1. Difference recruitment vs. AÜ?

Recruitment: direct hire, no AÜG. AÜ: worker remains provider's employee, licence needed.

2. Do I as a hirer need my own licence?

No. But you must verify the provider's.

3. What if the provider loses the licence?

Existing contracts continue but cannot be extended.

4. Can I permanently hire a leased worker?

Yes, takeover clauses common. Some allow free takeover after 6–12 months.

5. Does minimum wage apply?

Yes — both general (€13.90 from 2026) and sector-specific.

6. What is the "revolving door" effect?

Brief breaks to bypass the 18-month limit — does not work, sub-3-month breaks still count.

Vardio places directly — no leasing relationship, no AÜG licence, no 18-month limit, no equal-pay risk. You sign a normal employment contract with the worker and keep all compliance benefits of direct hiring.