This diagram shows the basic structure of temporary work and the legal relationship between the employer, the employee and the third-party employer:

The transferor is the organisation that contractually obliges workers to perform work for third parties. That means the transferor is the employer of the employees, which is established with a valid notice of employment. The transferor is subject to all labour and social law obligations as an employer, even though their employees are working for a third-party company. So the transferor is responsible for paying each employee’s salary and is required to register for social security and pay social security contributions and income tax.

The transferor must issue a written basic agreement (notice of employment) and a notice of assignment with the essential circumstances of the third-party employment (e.g. name of the third-party employer, type of employment, expected duration of the assignment, collective agreement of the third-party employer, basic wage, allowances, etc.) to its employees each time they are given a temporary assignment. The number of agreed working hours must correspond to the actual expected working hours.

In order to protect temporarily assigned employees, express consent to the temporary assignment is required from the employee.

A third-party employer is an organisation that uses the labour of a transferor to perform its own work. The temporary workers are integrated into the third-party employer’s company in the same way as the permanent staff. The third-party employer has the authority to issue instructions and – unless otherwise agreed – will provide the necessary tools or working materials.

The third-party employer must also comply with all statutory provisions for the protection of workers. While the temporary workers are working for the third-party employer, the same equal treatment and welfare obligations apply as for permanent employees.

In temporary assignment, there is a triangular relationship between the employee, the third-party employer/client and the transferor/employer. The employee is employed by the transferor/employer, but is assigned to work for the third-party employer/client. The third-party employer/client uses the labour of the employees, while the transferor is responsible for the organisation and administration relating to the temporary assignment.

The third-party employer uses the labour of the transferor’s employees without this giving rise to any labour law claims on its part, as there are no direct contractual ties to the employees.

Unless otherwise agreed, the transferor will supply workers who have average professional qualifications and willingness to work.

A labour leasing contract is concluded between the transferor of workers and the third-party employer before employees start work. This labour leasing contract specifies the job descriptions and qualification requirements of the temporary workers and regulates the conditions under which the employees who are willing to work on a temporary assignment are made available.

In principle, the transferor is not liable for damage (property damage, theft, personal injury) caused by the temporary worker in the course of his/her work for the third-party employer, unless the transferor can be proven to have been at fault in the selection process. Nor is the transferor liable for performance below expected levels from employees who are professionally and personally suitable.