May the legislator fix a highest period for employee leasing? First indications from Luxembourg

The German legislator plans at present to prevent abusive employment of leased employees by the introduction of a maximum leasing period of 18 months. Whether and under what conditions restrictions to leasing are in fact admissible will be decided, however, by the European Court of Justice (ECJ) and a clarification of this question is now in prospect since the ECJ will soon decide on the question which is hotly discussed in Germany whether and under what conditions the Member States may restrict leasing (Rs. C-533/13). This decision will also have to be accepted by the German legislator.

The first indication how the ECJ may decide can be taken from the final submissions of the Advocate General published on 20 November 2014. The Advocate General comes to the conclusion that Member State provisions restricting the assignment of leased employees to temporary tasks and preventing the replacement of permanent staff conforms to the Temporary Agency Work Directive (2008/104/EC). That need not, however, mean a “complimentary ticket” for the current plans of the legislator.

Preliminary questions from Finland

A Finnish labour court which had to decide on breach of provisions of a collective bargaining agreement according to which the use of leased employees was admissible only in special cases (e.g. order peaks) initiated the matter. The Finnish labour court availed of the occasion to review to what extent the national legislator may restrict leasing. The court therefore submitted the following question:

“Must Article 4(1) of the directive be interpreted as precluding a national provision under which the use of temporary agency labour is permitted only in the cases specially listed, such as to cope with peak periods of work or for work which cannot be given to an undertaking’s own employees to do? May the use of agency workers for a lengthy period in the ordinary work of an undertaking alongside the undertaking’s own employees be defined as a prohibited use of agency labour?”

Opinion of the Advocate General

The Advocate General made the following proposal to the ECJ:

“Art. 4 ss. 1 Directive 2008/104 does not, firstly, prevent national provisions limiting the assignment of temporary agency workers to temporary tasks which on objective grounds cannot be performed by the user business’s directly employed workers and which, secondly, prohibit the assignment of temporary agency workers together with the user business’s directly employed workers over a longer period to perform tasks identical to those of the latter”

The Advocate General based the opinion on the following considerations:

According to Art. 4 (1) Directive 2008/104/EC “prohibitions or restrictions on the use of temporary agency work shall be justified only on grounds of general interest...” which includes in particular “the protection of temporary agency workers.” In this respect, the Member States have significant discretion following from the authorisation to make political decisions relevant to the development of the labour market and to issue provisions accordingly. Among these reasons of common interests can also be the necessity to ensure orderly functioning of the labour market and prevent abuses of leasing. Such abuses are in particular assumed where the use of temporary agency workers departs from its essence – the temporary assignment of workers. It is not to be understood as a replacement for permanent employment.

This legitimate objective, to prevent abuses, may be restricted proportionately at national level. In the view of the Advocate General, the Finnish collective bargaining agreement partners also did this:

“Firstly, these restrictions are to a great degree linked to the legally pursued objective in which they only formulate the temporary nature of agency work in concrete terms and thereby avoid that this form of work replaces direct employment. Secondly, the restrictions appear to be sufficiently generally drafted to take account of the individual characteristics of various temporary agencies by using particular expressions such as “otherwise [limited] tasks” and “over a longer period”.

Restrictions preventing abuse of temporary working are therefore admissible provided they are proportionate – according to the Advocate General.

Effects on the planned amendments in Germany

Whether this also applies for the maximum leasing period planned in Germany will probably not be conclusively clarified by the ECJ in its judgement. Nevertheless, we should critically pursue the question which the Advocate General answered in the affirmative, at least with regard to the considerably more flexible Finnish provision. Does the restriction planned in Germany go beyond what is necessary to ensure the achievement of the objective pursued? More concretely, do we need against this background a fixed period if an objective and purpose-related approach offers a more individual and therefore appropriate but presumably also effective solution?

Initially, it remains to be seen to what extent the ECJ adopts the final submissions of the Advocate General. A date for the ECJ judgement has not yet been fixed. But even if it does so, it would not give free passage to a maximum leasing period. It would rather be desirable that the decision in Germany provides an impetus far away from the political tug-of-war in the direction of a really appropriate and proportionate alternative for the prevention of abuse of employee leasing.