Germany's Arbeitnehmerüberlassungsgesetz (AÜG), the Temporary Employment Act, sets the conditions under which a staffing agency (Verleiher) may lease workers to a client company (Entleiher). It requires a licence, caps an assignment at 18 months, mandates equal pay, and backs all of that with a tiered system of fines and criminal penalties.
This article covers the law itself: its structure, the sections that actually matter for day-to-day staffing work, and what happens on a breach. For what temporary staffing is as a model — the three parties, how an assignment runs, when it pays off — see What Is Temporary Staffing?. For the legal structure of the three-way arrangement and how it differs from a contract for services, see Employee Leasing in Germany.
How is the AÜG structured?
The AÜG dates back to 1972 and was last amended by a law of 22 December 2025. Anyone who wants the source text can read it at gesetze-im-internet.de, the official register that every figure in this article is drawn from. Its official structure falls into three blocks:
- Sections 1–7: the licence requirement, how it is granted, refused, withdrawn or revoked, and the licensing authority's right to information. This block decides whether an agency may operate at all.
- Sections 8–14: the temp worker's rights — equal pay, which agreements are void, information and co-determination rights. This block applies to every single assignment.
- Sections 15–20: criminal offences, administrative fines, enforcement and cooperation between authorities. This block only bites once one of the first two has already been broken.
Which sections govern agencies and clients day to day?
The table below translates the sections that matter most for staffing firms into one line each: what to do, who it binds, what a breach costs.
| Section | What it requires | Who it binds | Consequence of breach |
|---|---|---|---|
| Section 1(1) | Hold a licence before the first assignment; the contract must expressly name the arrangement as employee leasing and identify the worker before the assignment starts | The agency (Verleiher) | The contract with the temp worker becomes void (Section 9), fine up to €30,000 (Section 16(1) no. 1, 1c, 1d) |
| Section 1(1b) | Keep the assignment of the same worker to the same client under 18 consecutive months (a sector collective agreement can set a different cap, up to 24 months via a works agreement) | Agency and client (Entleiher) | The employment contract with the agency becomes void, a deemed employment relationship arises with the client (Sections 9, 10), fine up to €30,000 (Section 16(1) no. 1e) |
| Section 2(4) | File for renewal of the one-year licence at least three months before it expires | Agency | The licence lapses; existing contracts may only be wound down, for at most twelve months |
| Section 3 | Demonstrate reliability, a business organisation capable of meeting employer duties, and actual equal-pay compliance | Agency, vis-à-vis the licensing authority | The licence or its renewal is refused |
| Section 7(2) | Give the licensing authority truthful, complete information on request; keep business records for three years | Agency | Fine up to €30,000 for failing to retain records, up to €1,000 for refusing information (Section 16(1) no. 5, 6) |
| Section 8(1) and (4) | Grant equal pay: the same essential working conditions, including pay, as a comparable permanent employee of the client; a collective agreement may deviate only for the first nine months, then must step the worker up, reaching equivalence by month 15 at the latest | Agency | Fine up to €500,000 (Section 16(1) no. 7a, (2)) |
| Section 9(1) | Certain clauses are void by law: terms worse than equal pay, bans on the client hiring the temp worker afterwards, placement fees charged to the worker | Agency and client | The clause is void; the statutory rule applies instead |
| Section 11(2) | Hand the worker a licensing-authority information sheet before the contract is signed; tell them the client's name and address before every assignment | Agency | Fine up to €2,000 (Section 16(1) no. 8) |
| Section 12(1) | Put the agency-client contract in text form, stating licence status, the role, required qualifications and the client's applicable working conditions | Agency and client | If the contract and actual practice diverge, actual practice governs the legal classification |
| Section 13a | Tell the temp worker about open positions at the client; after six months on assignment, give a reasoned answer within one month to a request to be hired | Client | Fine up to €3,000 (Section 16(1) no. 9) |
| Sections 15 and 15a | Never lease or accept a foreign worker who lacks the required residence or work permit | Agency and client | Imprisonment up to three years or a fine; six months to five years in particularly serious cases |
Two topics only get a passing mention in the table because they carry their own full article: the licensing procedure itself — application, documents, cost, renewal — is covered in The Employee Leasing Licence. The exact equal-pay calculation, including the collective-agreement exceptions, is covered in Equal Pay in Temporary Staffing.
What happens when the AÜG is breached?
Three legal consequences apply independently of each other, sometimes at the same time.
A deemed employment relationship with the client. If the contract between agency and temp worker is void under Section 9 — say, because the agency had no licence, the arrangement was never labelled as employee leasing, or the 18-month cap was exceeded — Section 10(1) deems an employment relationship to exist between the client and the worker, retroactive to the date the assignment was meant to start. The worker can object in writing within one month (a "Festhaltenserklärung") and choose to stay with the agency instead (Section 9(2) and (3)). How this kind of disguised leasing arises in practice, and how to spot it, is covered in Disguised Employee Leasing.
A criminal offence for foreign workers without a permit. If an agency leases a foreign national who lacks the required residence title, permit or toleration, Section 15 provides for imprisonment up to three years or a fine, rising to six months to five years in particularly serious cases. Section 15a imposes the same penalty on the client if the working conditions offered are strikingly worse than those of comparable German temp workers, or, under paragraph 2, once more than five such workers are deployed at once without a permit.
Loss of the licence. The licensing authority can withdraw an unlawfully granted licence under Section 4, or revoke it under Section 5 — for instance if the agency fails to meet an attached condition in time, or a refusal ground under Section 3 arises later. Either step is only allowed within one year of the authority learning the relevant facts.
How high are the fines under Section 16 AÜG?
Section 16(2) tiers the maximum fines by how serious the breach is:
| Maximum fine | Applies to, for example |
|---|---|
| up to €500,000 | Denying an equal-pay working condition, not paying the statutory minimum hourly rate, deploying a foreign worker without a permit, using a temp worker in breach of the strike-related rule in Section 11(5) (Section 16(1) no. 2, 7a, 7b, 8a) |
| up to €50,000 | Not keeping working-time records under Section 17c(1), or not for the required two years |
| up to €30,000 | Leasing without a licence, failing to label the arrangement as employee leasing, exceeding the 18-month cap, not retaining business records for three years, obstructing customs checks or reporting duties |
| up to €3,000 | Skipping the notification under Section 1a, ignoring a condition attached under Section 2, failing the duty to inform about open positions or access to shared facilities |
| up to €2,000 | Not handing over the information sheet or written statement required under Section 11(1) or (2) |
| up to €1,000 | Other notification and information duties toward the licensing authority, e.g. under Section 7(1) and (2) |
Depending on the offence, either the Federal Employment Agency or the customs authorities (Zollverwaltung) enforce it (Section 16(3)). Both cooperate on these cases with health insurers acting as collection agencies, tax authorities and pension insurers (Section 18(1)) — so a breach rarely stays with a single office.
This article summarises the AÜG's legal framework and does not replace individual legal advice.
Frequently asked questions about the AÜG
What does the AÜG regulate?
Germany's Temporary Employment Act governs the commercial leasing of employees from an agency to a client company: the agency's licensing requirement, the maximum assignment length, the equal-treatment principle (equal pay), and the sanctions for breaches — from administrative fines to criminal offences.
How long can a temp worker be assigned to the same client?
Generally no longer than 18 consecutive months at the same client (Section 1(1b)). A sector-level collective agreement can set a different cap, and a works or service agreement built on such a collective agreement can extend it up to 24 months.
What does equal pay mean under the AÜG?
For the duration of an assignment, the temp worker is generally entitled to the same essential working conditions, including pay, as a comparable permanent employee of the client (Section 8(1)). A collective agreement can deviate for the first nine months, with a staged step-up that must reach equivalence by month 15 at the latest.
What happens if an agency leases workers without a licence?
The contract between agency and worker becomes void under Section 9, and an employment relationship is instead deemed to exist with the client (Section 10). On top of that, a fine under Section 16 applies, and leasing a foreign worker without a residence permit can trigger criminal liability under Section 15.
How high can fines under the AÜG get?
Depending on the offence, from as little as €1,000 for minor notification and information duties up to €500,000 — for example when an agency denies an equal-pay condition or fails to pay the statutory minimum hourly rate (Section 16(2)).
Does the agency-client contract have to explicitly say "employee leasing"?
Yes. Section 1(1) sentences 5 and 6 require the arrangement to be expressly labelled as employee leasing and the worker to be identified before the assignment begins. If either is missing, the employment contract with the agency becomes void under Section 9(1) no. 1a, unless the worker objects.
Jürgen Ulbrich
Jürgen Ulbrich has more than a decade of experience in developing and leading high-performing teams and companies. As an expert in employee referral programs as well as feedback and performance processes, Jürgen has helped over 100 organizations optimize their talent acquisition and development strategies.
