Federal Labor Court (BAG) dated May 31, 2023; press release in the case 5 AZR 143/19

What is it about?

The plaintiff is seeking payment of a difference in wages in the amount of EUR 1,296.72. She was employed by the defendant as a temporary worker and was lent to a company in the retail sector. She was paid an hourly wage of EUR 9.23, while other comparable regular employees were paid EUR 13.63 per hour. The plaintiff argued that the applicable collective bargaining agreement was a violation of article 5 paragraph 3 of the Temporary Employment Directive (Directive 2008/104/EC) and the overall protection of temporary agency workers stipulated therein. The defendant argued that Union law was not violated.

Unequal treatment: yes – compensation: also yes!

The previous instances dismissed the claim. The plaintiff’s second appeal to the Federal Labor Court was also unsuccessful. The Fifth Senate had initially suspended the proceedings in order to obtain further clarification regarding the “overall protection of temporary agency workers” required by article 5 paragraph 3 of the Temporary Agency Work Directive. In December 2022, the ECJ ruled that temporary workers may only be paid less if a compensation is ensured by other means under the collective bargaining agreement.

The Federal Labor Court now ruled that the plaintiff is not entitled to the same remuneration as comparable regular employees. The defendant only has to pay the (lower) wage from the applicable collective bargaining agreement. This results from section 8 paragraph 2 sentence 2 of the German Temporary Employment Act (AÜG) and section 10 paragraph 4 sentence 1 of the former German Temporary Employment Act (AÜG, old version). The collective bargaining agreement – together with statutory protective provisions – does not violate article 5 paragraph 3 of the Temporary Employment Directive. The Federal Labor Court acknowledges that the plaintiff is in a worse position than comparable permanent employees due to the lower hourly wage. However, it clarifies that article 5 section 3 of the Temporary Employment Directive permits this worse position. Nevertheless, this is restricted by the requirements of the ECJ: a worse position is only permissible if a compensation benefit allows the worse position suffered to be offset. According to the ECJ, such offsetting can be achieved by the continued payment of wages even during periods when the employee is not being lent to others. A compensation in such non-hire periods are provided for and possible by law in Germany. They are also provided for in the disputed collective bargaining agreement. It is also argued that section 11 paragraph 4 sentence 2 of the AÜG assigns the economic and operational risk for non-lending periods to the temporary work agency because the entitlement to compensation for default of acceptance pursuant to section 615 sentence 1 of the German Civil Code (BGB) cannot be waived in temporary employment relationships. Furthermore, a collective bargaining agreement cannot result in a wage that is lower than the minimum wage set by the state (since April 2023: EUR 13/hour) or the statutory minimum wage (since October 2022: EUR 12/hour). The final restriction is the temporal aspect: A deviation from the principle of equality can only be made for the first nine months of the assignment (section 8 paragraph 4 sentence 1 AÜG). Thus, temporary workers have received a sufficient offset.

The plaintiff receives an appropriate compensation during non-hiring periods – which acts as an offsetting compensatory benefit – and thus, has no claim to payment of the wage difference.

Conclusion

In its ruling of January 18, 2023 – 5 AZR 108/22 (https://pwwl.de/geringfuegig-beschaeftigte-sind-keine-arbeitnehmenden-ii-klasse-lohngleichheit-bei-teilzeit/) the Federal Labor Court stated that marginally employed persons are not second-class employees. On first glance, the ruling establishes such a two-class society for temporary workers. However, due to the obligation to offset unequal treatment, temporary workers are not second-class employees either. Whether continued payment during non-hiring periods actually neutralizes a lower payment in monetary terms is likely to depend on the individual case. However, the ECJ and the Federal Labor Court do not focus solely on the monetary aspect. When it comes to offsetting, the essential working and employment conditions are what counts.