GER: No Equal Pay – Temporary Workers May Get Paid Less

Jul 14, 2023 Benn-Ibler Rechtsanwälte

In principle, it is possible to pay temporary workers less than permanent employees. However, such a measure must be compensated for, according to the German Federal Labour Court (Bundesarbeitsgericht, hereinafter BAG).

Collective agreements may depart from the principle of equal pay. This decision was made by the BAG after a referral to the European Court of Justice. With this decision, the struggle of a temporary worker for more pay is now over.

According to the German Temporary Employment Act (Arbeitnehmerüberlassungsgesetz, hereinafter AÜG), temporary workers are entitled to the same wage as the permanent employees of a company. A departure from the equal pay principle is only possible through a collective agreement under Section 8 (2) of the AÜG. In the case at hand, the BAG had referred this question to the ECJ for a preliminary ruling because a temporary worker had previously brought an action before a German court. The permanent workers of the company where she was employed were being paid a higher hourly wage than she was.

The lower courts subsequently dismissed the action and so the ECJ had to deal with the issue in a preliminary ruling. According to the ECJ, temporary workers can only be paid less than permanent employees if such unequal treatment is compensated for in the collective agreement, i.e. if other benefits are granted.

In the case at hand, the BAG had considered such compensation to have been granted and saw no justifiable claim to equal pay. The court held that a benefit was being provided as the temporary worker was being paid even during the time she was not on loan.

German labour law ensures that the collectively agreed pay of temporary agency workers may not fall below the local state wage limits as well as the statutory minimum wage. In addition, the principle of equal pay may only be deviated from during the first nine months of a temporary employment relationship, according to Section 8 (4) of the AÜG.

Press Release No. 25/2023 on BAG 5 AZR 143/19 (31.05.2023)