"Personnel leasing" is the literal English translation of Personalleasing, a marketing term used across the German-speaking business world for the paid assignment of employees to another company. In Germany, the word has no legal standing at all: the correct legal category is Arbeitnehmerüberlassung (statutory employee assignment), governed by the Arbeitnehmerüberlassungsgesetz (AÜG).
This article stays narrowly on the term itself: where it comes from, why it doesn't hold up legally, where it's still used, and how it differs from nine related terms. For the full model — the three parties involved, how an assignment runs, and when it makes sense — see Zeitarbeit: how the German staffing model works. For the legal structure in detail — the contractual triangle and the line between assignment, service, and works contracts — see Arbeitnehmerüberlassung: the legal structure. The permit procedure itself is a separate topic and isn't covered here.
Where does the term "personnel leasing" come from?
Leasing has been an established German business term since the 1960s, describing the paid, temporary use of movable assets — first machinery and vehicles, later IT equipment — without transferring ownership. The analogy was easy to sell: a company "leases" a resource for a limited period instead of buying it, then hands it back. When the commercial assignment of workers grew in importance during the 1970s and 80s, the same familiar image got applied to people: a company that "leases" staff doesn't have to hire them permanently. The term sounded more modern and more neutral than "Verleih" (hiring-out) or "Leiharbeit" (agency work) — both carry decades of association with precarious employment — which is why "personnel leasing" survived mainly in provider marketing, even though it never made it into the statute book.
Why doesn't "leasing" fit the legal reality?
A leasing contract, in the legal sense, is an agreement to use a thing — a movable or immovable object. People aren't things, and the paid assignment of workers follows its own body of law: the Arbeitnehmerüberlassungsgesetz. Under Section 1(1) AÜG, an employer acting as a lender that wants to assign its own employees to a third party (the host company) as part of its business activity needs a permit — and the statute calls this act "Arbeitnehmerüberlassung," never leasing. More importantly, the law explicitly requires the lending and host company to designate the arrangement in their contract as "Arbeitnehmerüberlassung" before the assignment starts (Section 1(1) sentence 5 AÜG; source and date: gesetze-im-internet.de/a_g/__1.html, retrieved September 11, 2026). "Personnel leasing" isn't just imprecise — written into a contract, it's the wrong label entirely. The full contractual triangle between lending company, host company, and assigned employee is explained in Arbeitnehmerüberlassung: the legal structure.
Where is the term still used, and what does "employee leasing" mean in English?
Three contexts keep "personnel leasing" alive despite its shaky legal footing:
- Provider marketing: On landing pages and in sales conversations, "leasing" sounds more polished and less bureaucratic than "Arbeitnehmerüberlassung" or "Verleih" — terms tied more closely to the formal statutory procedure and to the image of traditional agency work.
- Everyday language: HR staff without a legal background, job ads, and advice portals use the term interchangeably with Zeitarbeit because it's intuitive.
- A genuinely different concept in English: in the United States, "employee leasing" is an actual, recognized arrangement, typically run through a Professional Employer Organization (PEO), which becomes a co-employer of a client company's workforce for payroll, benefits, and compliance purposes. It's regulated at the state level in most US states through PEO licensing rules, and it is not the same relationship as the German Arbeitnehmerüberlassung, which centers on assigning workers to perform tasks under a third party's day-to-day direction. Anyone researching "employee leasing" in an English-language context shouldn't assume it maps directly onto the German model.
Switzerland and Austria add two more variants, each with its own official name. In Switzerland, the legally correct term is Personalverleih, governed by the Arbeitsvermittlungsgesetz (AVG) and subject to a permit from the cantonal labour office, or from SECO for cross-border assignments — "Verleih" (hiring-out), unlike in Germany, is the actual official term there. In Austria, the statutory term is Arbeitskräfteüberlassung, governed by the Austrian Arbeitskräfteüberlassungsgesetz — a separate law that happens to share the abbreviation "AÜG" with the German act, despite covering a different legal system.
Nine terms that actually mean different things
The table below sorts out terms that regularly get mixed up in job ads, contracts, and buyer's guides:
| Term | What it describes | Defined in law? | Where it gets confused |
|---|---|---|---|
| Personnel leasing (Personalleasing) | Colloquial marketing term for the paid assignment of employees to another company | No | Treated as identical to Arbeitnehmerüberlassung, though the term alone doesn't satisfy the contract wording the law requires |
| Arbeitnehmerüberlassung | The statutory term for the same model: a lending company assigns its own employees to a host company | Yes, Section 1 AÜG | Low – it's the reference term |
| Zeitarbeit | The most common everyday German term for Arbeitnehmerüberlassung | No, colloquial; substantively identical to Arbeitnehmerüberlassung | Low, it almost always means the same thing |
| Temporärarbeit | The everyday Swiss term for fixed-term staff assignment (the Swiss counterpart to Zeitarbeit) | No, colloquial; the official Swiss term is Personalverleih | Confused with the German model, though a different legal system applies |
| Leiharbeit | Everyday term focused on the perspective of the assigned worker, the "Leiharbeitnehmer" | Not as its own term, but "Leiharbeitnehmer" appears in the AÜG | Low in substance, but often carries a negative connotation |
| Personalvermittlung (recruitment/placement) | Placing candidates into a permanent role at the client company – no assignment involved | No dedicated assignment term; governed by separate placement rules | High: often confused with Arbeitnehmerüberlassung, though no employment relationship with the placement firm is created |
| Arbeitskräfteüberlassung (Austria) | The Austrian legal term for the same model as the German Arbeitnehmerüberlassung | Yes, the Austrian Arbeitskräfteüberlassungsgesetz | High: a separate law from a different legal system that happens to share the abbreviation "AÜG" |
| Outsourcing | Handing an entire task or process to an external provider who works with its own staff and its own right to instruct them | No single legal term | Confused with Arbeitnehmerüberlassung, though the right to give instructions stays with the provider |
| Werkvertrag (contract for work) | A contract for a defined result (the "Werk"), delivered by the contractor's own staff, free from the client's instructions | Yes, Sections 631 et seq. of the German Civil Code (BGB) | High: if the client actually directs the workers day-to-day, it can amount to disguised Arbeitnehmerüberlassung |
What does the confusion mean in practice?
Anyone who advertises, negotiates, or signs a contract for "personnel leasing" almost always means Arbeitnehmerüberlassung, with every obligation attached to it. For a provider, that means holding the permit under Section 1(1) AÜG before assigning any worker; without it, the contract between lender and host company is void (Section 9(1) no. 1 AÜG). For the contract text, it means the designation "Arbeitnehmerüberlassung" isn't a formality; it's a statutory requirement. If it's missing, and the contract only says "personnel leasing" or nothing at all, the employment contract between the lending company and the assigned employee can become void under Section 9(1) no. 1a AÜG. The consequence is significant: under Section 10(1) AÜG, an employment relationship between the assigned employee and the host company then arises by operation of law, with the very company that only intended to "lease staff" (source and date: gesetze-im-internet.de/a_g/__9.html and gesetze-im-internet.de/a_g/__10.html, retrieved September 11, 2026).
The commercial side of the confusion matters just as much. A staffing agency's assignment rate, a permanent-placement commission, and a cost-per-hire figure are three different pricing mechanics, even though marketing copy sometimes blurs them into one number. Buyers who want to compare agency fees, vendor splits, and cost-per-hire line by line can start with our recruitment budget templates.
The following table summarizes three typical situations and their consequence:
| Situation | Legal risk | What to do |
|---|---|---|
| A job ad or brief uses "personnel leasing" | No risk by itself, but confusing once a contract follows | Switch to Arbeitnehmerüberlassung/Zeitarbeit terminology as soon as terms are negotiated |
| The assignment contract only says "personnel leasing," not "Arbeitnehmerüberlassung" | The contract can be void under Section 9(1) no. 1a AÜG; an employment relationship with the host company can then arise by operation of law (Section 10(1) AÜG) | Review the contract wording and add the statutory designation |
| A provider advertises "personnel leasing" without holding a lending permit | The contract between lender and host company is void under Section 9(1) no. 1 AÜG | Confirm the permit under Section 1(1) AÜG with the Federal Employment Agency before any assignment starts |
This article maps the terminology and the legal landscape; it doesn't replace legal advice for a specific case.
Frequently asked questions about personnel leasing
Is personnel leasing the same as Arbeitnehmerüberlassung?
In substance, yes; in wording, no. Both describe the same paid assignment of employees to another company. "Arbeitnehmerüberlassung" is the statutory term from the AÜG, while "personnel leasing" is a colloquial label with no legal grounding, used mainly in provider marketing and everyday speech.
Is "personnel leasing" a legal term in Germany?
No. Neither the AÜG nor any other German statute uses the term "personnel leasing" (Personalleasing). Contracts between a lending and a host company must explicitly designate the arrangement as "Arbeitnehmerüberlassung" under Section 1(1) sentence 5 AÜG — the label "personnel leasing" alone doesn't satisfy that requirement.
What's the difference between personnel leasing and Zeitarbeit?
Nothing in substance: Zeitarbeit is the most common everyday German term for Arbeitnehmerüberlassung, and personnel leasing is a less common label for the same model. How Zeitarbeit works as a model in detail is covered in our article on Zeitarbeit.
What does "employee leasing" mean in the United States?
In the US, employee leasing typically refers to a Professional Employer Organization (PEO) becoming a co-employer of a client's workforce for payroll, benefits, and compliance. It's regulated at the state level and works differently from the German Arbeitnehmerüberlassung, so the two terms shouldn't be treated as equivalents.
What is personnel leasing called in Switzerland?
Personalverleih. Unlike in Germany, that's genuinely the official term there, governed by the Arbeitsvermittlungsgesetz (AVG). It requires a permit from the cantonal labour office, or from SECO in Bern for cross-border assignments — the German word "Personalleasing" carries no legal weight in Switzerland.
What is personnel leasing called in Austria?
Arbeitskräfteüberlassung, governed by the Austrian Arbeitskräfteüberlassungsgesetz. The abbreviation "AÜG" is used there too, but it refers to a separate statute from a different legal system than the German AÜG, with its own deadlines and exceptions, so the two sets of rules can't simply be transferred.
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.
