Direct Placement vs. Temp Staffing and Try-and-Hire

Direct placement means a candidate signs their employment contract straight with the client company – the staffing provider never becomes the employer and, under German law, needs no temporary-staffing licence for it. That sets it apart from temp staffing, where the provider stays the employer and does need a licence, and from try-and-hire, which combines a fixed-term assignment with a separately priced conversion later on.

This article stays inside that boundary: how direct placement differs from temp staffing and from try-and-hire, legally and financially, and which route fits which situation. The general direct-placement process – steps, fee models, contract terms – belongs to the companion article on recruitment placement (Personalvermittlung) and isn't repeated here.

What legally separates direct placement from temp staffing?

The difference sits in the employment contract. In direct placement, the candidate signs directly with the client company; the staffing provider only introduces them and is never the employer. In temp staffing, the provider (Verleiher) stays the employer while the work is performed at the client's site (Entleiher) – defined in German law by the worker being "integrated into the client's work organisation" and subject to its instructions (Section 1(1) AÜG, accessed September 10, 2026). How that model runs in practice is covered in the companion article on temp staffing (Zeitarbeit).

Two consequences follow. First, licensing: a provider that only places candidates, without ever leasing them out, needs no licence under Section 1 AÜG – the licence requirement attaches only to leasing workers out "as part of an economic activity." Section 1(2) AÜG spells this out for the borderline case: if the provider doesn't take on the usual employer duties and employer risk, the law presumes it is running placement (Arbeitsvermittlung) instead – exactly what direct placement is. Second, the cost structure: no ongoing markup applies, only a one-time fee due on successful placement. Its size, timing, and any repayment clauses are covered in the companion article on placement fees.

Direct placement, temp staffing, try-and-hire: the three routes compared

All three routes end in a filled role, but they run on different legal relationships, cost logics, and timelines:

What is try-and-hire, and is a conversion fee legal?

Try-and-hire is temp staffing with a declared intent to convert: the candidate is first leased out through the staffing provider under the same AÜG rules as any other temp assignment, and after an agreed trial period – if both sides agree – moves into a direct employment contract with the client. Unlike direct placement, the client sees the person actually work before committing.

The practical question is whether the staffing provider may charge a conversion fee for that move. Section 9(1) No. 3 AÜG (accessed September 10, 2026) voids any agreement that simply bans the client from hiring the temp worker after the assignment ends – an outright conversion ban is unenforceable. But the same sentence carves out the exception: "this does not exclude agreeing a reasonable fee between the lessor and the hirer for the placement." A conversion fee is therefore legal, as long as it is agreed between provider and client and reasonable in amount – in practice usually staggered down with the length of the prior assignment, since the provider already earned through the markup during that time.

Two further, narrower rules in the same section protect the candidate, not the client: Section 9(1) No. 4 AÜG voids any clause that bars the worker themselves from taking a job with the client once their employment with the provider ends – a candidate can't be contractually blocked from a conversion. And Section 9(1) No. 5 AÜG voids any agreement making the worker pay a placement fee: the conversion fee is strictly a matter between provider and client, never a cost passed to the employee.

This section explains the legal framework and is not a substitute for individual legal advice.

What does the same hire cost across the three routes?

The following example makes the cost logic concrete, with disclosed assumptions that will move with role, sector, and negotiation: target salary at the client 3,500 €/month gross (42,000 €/year); a direct-placement fee assumed at 25% of gross annual salary; a temp-staffing markup at a factor of 1.9 on gross salary (6,650 €/month); and for try-and-hire, a six-month assignment followed by conversion with an assumed, staggered-down conversion fee of 15% of gross annual salary.

The pattern is structural: direct placement is cheapest in year one because only a one-time fee sits on top of the regular salary. Pure temp staffing gets most expensive the longer it runs, because the markup applies to every paid month – and it's capped by law at 18 months per client anyway. Try-and-hire sits in between: pricier than direct placement because the trial period is paid at a markup, but cheaper than ongoing temp staffing because the markup stops once conversion happens. Different fee percentages, markup factors, or trial lengths shift the numbers – the pattern holds.

Which route fits which situation?

Direct placement fits when requirements are clear, a mismatch can be cushioned through a contractual guarantee period, and a live trial before signing isn't necessary or possible – typical for specialist and leadership roles in a tight candidate market. Temp staffing fits when the need is temporary or workload fluctuates and there's no intent to convert. Try-and-hire fits when both sides want a genuine trial before committing long-term – the premium over pure direct placement is then the price of a lower mismatch risk, not the price of the process itself.

The choice also shifts risk on the staffing provider's side. In direct placement, the provider carries no utilisation risk – it earns only on a successful signature, but that earning is one-time and comes without ongoing payroll, social-security, or equal-pay administration. In temp staffing and try-and-hire, the provider stays the employer for the whole assignment, carrying more duties but earning on an ongoing basis instead of once. A provider offering both models picks per mandate, not by default.

Frequently asked questions about direct placement

What is the difference between direct placement and temp staffing?

In direct placement, the employment contract runs straight between candidate and client company; the staffing provider only places them and needs no licence under the AÜG. In temp staffing, the provider stays the employer, the client only directs the work, and the provider needs a mandatory leasing licence under Section 1 AÜG.

Does a staffing provider need an AÜG licence for direct placement?

No. The licence requirement in Section 1(1) AÜG applies only to temporary staffing, where the provider stays the employer. Pure placement – the candidate is hired directly by the client – falls outside it, as Section 1(2) AÜG confirms explicitly for the borderline case.

Is a conversion fee legal in try-and-hire?

Yes. Section 9(1) No. 3 AÜG only bans an outright conversion ban; it explicitly allows a reasonable fee between provider and client for a placement following a prior assignment. Under Section 9(1) No. 5 AÜG, the candidate themselves can never be made to pay it.

How does direct-placement cost compare to temp staffing?

Direct placement costs a one-time success fee, often a percentage of gross annual salary. Temp staffing costs an ongoing monthly markup for as long as the assignment lasts. Over a short period temp staffing can be cheaper; over a long commitment, direct placement usually wins once the ongoing markup is removed from the equation.

When is try-and-hire worth it over pure direct placement?

Try-and-hire pays off when the client or candidate genuinely needs a trial period – for example, uncertain team fit or a career changer. The premium over direct placement equals the value of that trial; it disappears once both sides would commit confidently without one.

Can a temp staffing agency also offer direct placement?

Yes, many staffing providers offer both under the same brand. Legally, though, these are two separate services with different contracts: a leasing licence is required for temp staffing, but not for pure direct placement.