Germany is home to nearly half a million freelancers and self-employed contractors. Understandably, the proposed limit to the AüG (Arbeitnehmerüberlassungsgesetz) licence, which came into force on 1st April 2017, caused quite a stir amongst a number of management companies as well as their recruitment business clients.
However, reactions may have been a bit of a storm in a teacup. Widespread alarm in the media was largely driven by recruitment organisations who failed to read legislative changes closely enough and came to the wrong conclusions. Any company leasing contractors to a German organisation has always been required to hold an AüG licence, and in reality, not a great deal changed outside of assignment limits.
Firstly, most contractors working in Germany are operating as Freiberufler or self-employed people and not under AüG as employed persons, which means they are not impacted by the legislation. Secondly, all that changed was that the maximum period that an employee could work under AüG was reduced from 3 years to 18 months. After 18 months, the position must cease or the employee be offered a permanent position. While this can be a hassle for recruitment agencies and their clients, contractors are not negatively impacted by changes.
In short, Germany continues to be an attractive destination for contractors even if AüG no longer fulfils its earlier purpose for contracts extending beyond 18 months. To ensure compliance, recruiters are likely to ensure that contractors never exceed 18 months in Germany with the same client, and that alternative contractors will take over for those approaching the end of their 18 month term limit. Regardless, the contractor staffing industry is highly resilient, and will continue to find intelligent ways to help clients comply with legislative changes to temporary staffing.