Immigration law aspects pertaining labour leasing of third-country nationals

In order to meet the challenges posed by the shortage of skilled workers in Germany, companies increasingly have to draw on their own expertise at foreign locations or outside their own company. In this context, the use of external personnel within the framework of labour leasing, including cross-border use of third-country nationals, is increasing. According to Section 1 (1) sentence 2 of the German Law on Temporary Employment (Arbeitnehmerüberlassungsgesetz – AÜG), a temporary employment relationship exists if the respective employees of the temporary employment agency are integrated into the work organisation of the domestic enterprise (hirer) and are subject to its instructions. Third-country nationals in the above sense are those who do not belong to the EU/EEA states or Switzerland and therefore cannot claim the right to freedom of movement. 

In addition to the much-discussed labour law requirements and pitfalls of cross-border assignments, residence law restrictions must also be taken into account when planning such assignments. According to Section 40 (1) No. 2 of the German Residence Act (AufenthG), the Federal Employment Agency (Bundes­agentur­ für ­Arbeit) must refuse its approval as part of the visa/residence permit procedure if the third-country national is to work in Germany as part of a temporary employment agency. Third-country nationals always require a visa/residence permit with the corresponding permission to take up employment if they are to work in Germany. The following problem may arise: If there is a work assignment and the Federal Employment Agency has to give its approval as part of the procedure, this consent cannot be given and the residence permit will be refused.

Conversely, the temporary employment of third-country nationals is always possible if these third-country nationals can obtain a residence permit without the approval of the Federal Employment Agency. Such residence permits include the EU Blue Card in the higher minimum salary bracket, which is adjusted annually (Euro 45,300 gross per year for 2024), settlement permits and residence permits for the purpose of family reunification. As the EU Blue Card requires an employment contract with the receiving company in Germany that is valid for at least six months, there is often a lack of flexibility and short-term options. However, obtaining an EU Blue Card in Germany can be a good solution for companies that want to subcontract their employees within Germany. This is often a viable option, particularly in the IT sector. For example, a company could consider setting up a branch in Germany and employing third-country nationals in Germany via the EU Blue Card in order to then subcontract these skilled workers locally on a project basis. However, this is only advisable if the establishment is not set up solely to facilitate the entry or employment of third-country nationals.

Examples of residence permits requiring approval include residence permits for skilled workers with vocational training (Section 18a of the Residence Act), for skilled workers with academic education (Section 18b of the Residence Act) and the ICT card (Section 19 of the Residence Act). ICT stands for Intra-Company Transfer. While the residence permits according to Sections 18a and b of the Residence Act apply to situations in which permanent employment in Germany is planned, the ICT card is used for intra-company transfers. However, the residence permits mentioned here must generally be refused if the employment is temporary. Yet, the following exceptions should be noted: The reason for refusal under Section 40 (1) No. 2 of the Residence Act cannot be applied in the case of cross-border, intra-group hiring out to Germany under Section 1 (3) No. 2 of the Temporary Employment Act. This means that the Federal Employment Agency's approval of residence permits for the purpose of posting, such as the ICT card, can be granted if there is an intra-group supply of labour. 

Failure to comply with the immigration law requirements described above can have a number of consequences. For example, it may result in the refusal of a residence permit in an ongoing process. This in turn may lead to delays/cancellations in the recruitment of the required skilled workers. Furthermore, residence permits that have already been issued may be revoked if the conditions of Section 40 of the Residence Act are met at a later date. If a residence permit is revoked, the third-country national (and possibly also their family members) may be obliged to leave the country. The consequences for employees and employers are therefore not insignificant.

In addition to labour law aspects, immigration law aspects must also be taken into account when structuring the temporary employment of third-country nationals. This applies both to cross-border postings and to postings of third-country nationals within Germany.