HOW IT WORKS

Temporary work functions in a so-called three-way relationship. The vertices in this three-way relationship are

the temporary worker
the temporary employment agency
the place of employment (also: client company)

The temporary worker has an employment contract with the temporary employment agency. The temporary employment agency is their employer – with all the rights and obligations resulting from this fact. This means, for example, that the temporary worker also receives their wages from the temporary employment agency.

The temporary worker does not, however, render their work performance at the employer’s premises but at the assignment company (or from the temporary employment agency’s point of view also frequently called the “client company”). They work there under the professional instruction of the superior on site. They more or less help the company out.

This assignment is regulated by law in a so-called “temporary employment contract”. It is concluded between the temporary employment agency and the assignment company. It regulates among other things how much the assignment company has to pay the temporary employment agency per hour for the assignment of the temporary worker. This amount is called “charge rate”.

The charge rate is always higher than the temporary worker’s wage, as the temporary employment agency has to cover, among others, the following costs from this income:

The temporary worker’s wages
The employer’s contribution to social insurance and the trade association
Reserves for leave and sick leave taken by the worker (during which there is naturally an entitlement to continued pay)
Reserves for “lease-free times”, i.e. phases where there is no assignment for the worker, yet they naturally still have entitlement to their wages
Costs for “internal staff”, e.g. the staffing managers that coordinate and accompany the assignment of the workers and try to acquire new assignments
Costs for wage accounting
General office costs (rent, electricity, telephone, paper, …)

Source: iGZ