HISTORY OF TEMPORARY EMPLOYMENT
“Dammit, what else do we have to put up with”, the American lawyers Elmer L. Winter and Aaron Scheinfeld may have thought as they were trying to find a qualified replacement for a sick secretary, to no avail, back in 1948.
As they realised that they probably weren’t the only ones that were grappling with such problems, in the very same year, they founded the company Manpower Inc. in Milwaukee, USA. The idea became established and the new sector of modern temporary employment took off on its huge triumphal course across the USA in the following years. The unstoppable expansion in the United States proceeded in Europe with the opening of two offices in Paris and London in 1956.
Employment Agency Act
The history of temporary employment in Germany goes back to the era after World War II. The placement of workers in return for money is regulated for the first time by the 1922 Employment Agency Cct. Parts of it were adopted in the new Job Placement and Unemployment Insurance Act, in short AVAVG, on 16 July 1927. An emergency decree by the Reich President on as early as 6 October 1931 put the burden of the full employer obligations on the placement agencies. Due to the reign of the National Socialists in the Third Reich, all placement activities of this sector became an unrestricted monopoly on 5 November 1935. Temporary employment at that time was thus all but dead.
AVAG (Recognition and Enforcement Implementation Law)
It wasn’t until years after the end of this terror regime, after the so-called Federal Agency for Job Placement and Unemployment Insurance had been founded on 10 March 1952, when the regulations of the AVAVG dated 1927 became effective again. Yet understandably, the Germans had other worries at that time rather than adopting, further developing and modernising good ideas of times gone by.
In the meantime, the expansion of temporary employment had also secured Europe. The pioneer of modern-time temporary employment was the Swiss company ADIA Interim, which set up a branch in Hamburg in 1962. The work of ADIA – Interim immediately attracted the attention of the Federal Employment Agency, how could it be otherwise, who saw their placement monopoly at risk and filed a complaint. The test case went through all levels of jurisdiction. On 4 April 1967, the Federal Constitutional Court in Karlsruhe passed the judgement: The expansion of the employment placement monopoly to temporary employment contracts via Section 37 AVAVG is not compatible with the basic right of free choice of employment as defined by Section 12 of the German Constitution.
The triumphal procession of the service “temporary employment” then also began in Germany. In order to ensure the minimum social protection of temporary workers as called for by the Federal Social Court in a judgement in 1970, the law on the regulation of the supply of temporary workers (the German Law on Labour Leasing – in short AÜG) was passed in 1972 and also came into effect. With the introduction of this law, the legislator pursues various objectives:
- To make the operating of temporary employment agencies dependent on a licence
- To distinguish the temporary employment agencies from employment agencies
- To prohibit the long-term supply of temporary workers
- To subject the supply of temporary workers to state monitoring
- To ensure the protection of temporary workers under employment and social security laws
- To guarantee special protection for foreign workers.
At the same time as the passing of the AÜG, the Federal Government was commissioned to produce a report every four years on the experiences with the application of this law. Unfortunately, even this young, highly promising and modern sector was not spared ruthless racketeers. Black sheep did not pay any attention to the regulations employers had and social matters of course. The cases uncovered were included in the field reports by the Federal Government. This resulted in the prohibition to supply temporary workers to the main construction trades, because that was where the most violations were registered back then. On 01 January 1982, “the supply of temporary workers to businesses in the construction trades for work that is usually performed by workers” was prohibited by law. A complaint of unconstitutionality directed against this was unsuccessful as per the judgement of February 1988.
Various amendments to the AÜG have been made since then. Even temporary employment has to constantly adapt to changing markets and conditions. Particularly in the course of the “Hartz proposals”, the framework conditions for the supply of temporary workers have been changed significantly. Since 01 January 2004, for example, there has been no limitation on the longest duration of leasing anymore; the prohibition of synchronisation and the re-employment band have been abolished. In parallel to this, the non-discrimination precept of the temporary workforce with the comparable permanent staff in the client’s company (equal pay/equal treatment principle) was introduced by law and the bargaining agents were granted the right to regulate the specifics of the temporary employment sector by negotiation.
This has happened in the meantime. iGZ, for example, has made a deal with the wage committee for temporary employment of all individual trade unions of the Confederation of German Trade Unions (DGB), which defines balanced work conditions for all parties. With the further AÜG reform in April 2011, necessary adaptions to the EU Directive Temporary Work, a generally binding minimum wage level were introduced as well as the so-called “revolving door effect” was eliminated, so that temporary employment cannot be abused for wage dumping.
Our globalised economy of today cannot be imagined without temporary employment. Most companies now make use of this modern service, trend: upwards. Even the acceptance of this flexible way of working has become much better especially due to the conclusion of across-the-board collective wage agreements.
Normal working relationship
One thing is certain: Temporary employment agencies are run-of-the-mill companies. Temporary workers are run-of-the-mill workers. Other run-of-the-mill companies are dependent on the support of temporary employment agencies with their flexible temporary workers. Temporary work does not mean working temporarily, but different client assignments with no restrictions in time. Temporary employment is a three-way relationship between the temporary employment agency, the temporary worker and the client (the hirer). Temporary employment agencies assume all employer obligations, grant and pay for leave, pay social insurance contributions and tax on wages, and are also bound by all existing employment and social laws. Temporary employment agencies conclude a contract with the client companies covering the temporary worker’s job performance.