Contributed By Luther Rechtsanwaltsgesellschaft mbH (Cologne)
As is the case for other countries in the EU, TUPE regulations apply for a transfer of undertakings, which have been implemented in German law in clause §613 of the BGB. Notably, whether or not there has been a transfer of undertakings depends on the individual case. German courts tend to be more likely to assume such a transfer rather than to reject it, although determination is very difficult and subject to the specific structure of the project. As a consequence, if there is a transfer of undertakings, the provider automatically assumes all employment contracts for the employees involved (unless the employees object to the transfer). The economic effect may be enormous and accordingly the TUPE regulations need explicit attention in the commercial and legal negotiation.
A distinction must be made between the transfer of an undertaking and the provision of temporary workers. The provider provides the customer with the manpower of its employees without the employment relationship being transferred to the customer or the customer concluding an additional employment contract with the employee concerned. The parties regulate the instruction authority vis-à-vis the employees contractually. As a rule, however, the customer can exercise this authority without restriction. In Germany, the model of employee hiring is regulated by the Temporary Employment Act (AÜG). For example, in order to protect the employees concerned, the provider requires a permit in accordance with the Law on Temporary Employment. Using temporary workers requires a number of formal processes to be strictly obeyed by both customer and provider, and the customer may be held responsible for the provider’s default.