international employment law firm alliance L&E Global

Germany: No equal pay for temporary agency workers

The plaintiff, a temporary agency worker in the retail sector, was seeking payment of a difference in wages compared to the remuneration of regular employees. She argued that the applicable collective bargaining agreement resulting in the lower wages was a violation of the relevant EU Directive and the overall protection of temporary agency workers stipulated therein.

Following a judgment by the European Court of Justice (ECJ), the Federal Labour Court now found that the claimant was not entitled to the same remuneration as comparable regular employees of the company. According to German statutory law, a collective bargaining agreement can deviate from the principle of equal pay. The employer (temporary work agency) only has to pay the lower wage under the relevant collective bargaining agreement. This does not violate the EU Directive.

Although the claimant is in a worse position than comparable permanent employees due to lower hourly wages, the Directive permits this. This principle is however restricted by the requirements of the ECJ: a worse position is only permissible if another compensation benefit offsets such worse position. This can for example be achieved by the continued payment of wages even during periods when the employee is not assigned to customers. Such a compensation during non-assignment periods was provided for in the disputed collective bargaining agreement.

Finally, collective bargaining agreements must not result in wage that is lower than the minimum wage and any deviations from the equal pay principle are only possible during the first nine months of an assignment.

Practical Point

  • Whether continued payment during non-hiring periods actually neutralises a lower payment in monetary terms is likely to depend on the individual case. However, the ECJ and the Federal Labour Court do not focus solely on the monetary aspect. When it comes to offsetting, the essential working and employment conditions are what counts.