If you engage external IT talent in Germany through a provider, one law decides more about your risk profile than any other: the Arbeitnehmerüberlassungsgesetz, or AÜG, the statute governing labor leasing (Arbeitnehmerüberlassung). The AÜG is not just a concern for classic temp agencies. Any arrangement where a provider's employee works under your direction, embedded in your operation, can fall under it, whatever the contract is called, and operating inside the AÜG without a license carries some of the harshest consequences in German staffing law. This article walks through the AÜG in plain language for tech buyers. It is an educational overview, not legal advice; the classification of any real engagement should always be assessed with your own legal counsel.
The AÜG in plain language
Arbeitnehmerüberlassung means one company (the lender, Verleiher) employs a worker and makes that worker available to another company (the hirer, Entleiher), which integrates the worker into its own operation and directs their work. The AÜG puts this triangle under a regulatory regime with three pillars. First, licensing: commercial labor leasing requires an Arbeitnehmerüberlassungserlaubnis issued by the Federal Employment Agency; leasing without one is illegal. Second, transparency: the contract between lender and hirer must explicitly declare itself as labor leasing and identify the leased individuals, a hidden fallback license does not cure a contract that pretends to be something else. Third, worker protection: leased workers are entitled to equal treatment with comparable permanent staff of the hirer, with equal pay generally required after nine months at the latest (collective agreements can modify the path), and a statutory maximum assignment duration, 18 months with the same hirer by default, with deviations possible within limits set by collective bargaining.
When an IT engagement falls under the AÜG, and when it doesn't
The AÜG does not care what your contract is called. It cares who actually directs the work. That single question separates leasing from genuine contracts for services.
| Question | Points toward AÜG (leasing) | Points toward genuine Werk-/Dienstvertrag |
|---|---|---|
| Who assigns daily tasks? | The client's managers assign and re-prioritize tasks directly | The provider manages its people against an agreed scope |
| Who is the disciplinary lead? | Client sets working hours, approves absences, evaluates performance | The provider remains the employer in practice, not just on paper |
| What is owed? | Labor capacity: a person's working time under client direction | A defined result or service, with the provider bearing delivery responsibility |
| How embedded is the worker? | Indistinguishable from employees: same standups, same task board, same reporting lines | Works toward deliverables; coordination exists but direction stays with the provider |
| Who carries the delivery risk? | Client; the provider just bills hours regardless of outcome | Provider; defects and delays are the provider's problem to remedy |
What illegal labor leasing costs
The consequences of getting this wrong are structural, not cosmetic. If a provider leases workers without a license, or if an arrangement labeled as a service contract is in truth leasing (so-called disguised leasing, verdeckte Arbeitnehmerüberlassung), the AÜG's sanction mechanism can void the employment contract between worker and provider and deem an employment relationship between the worker and the client, by operation of law. The client suddenly has an employee it never hired, with the associated social-security contributions, payroll obligations and dismissal protection. On top of deemed employment come fines for the companies involved and retroactive social-contribution liability. Since a legal reform in 2017, having a license in the drawer does not save a disguised arrangement: the leasing must be openly declared as such from the start. This is why sophisticated buyers treat the leasing question as a gating item in provider due diligence, not fine print.
What buyers should verify with any staffing provider
- License: ask for the provider's current Arbeitnehmerüberlassungserlaubnis if the model is or might be leasing, and check that it is valid and not provisional in a way that matters for your timeline.
- Correct labeling: if the engagement is leasing, the contract must say so explicitly and identify the leased individuals before the assignment starts; a services label over a leasing reality is the dangerous configuration, not a paperwork detail.
- Direction in practice: agree and document who assigns tasks, who leads performance conversations and who controls working time; then check after go-live that reality matches, because drift toward client-side direction is the most common failure mode.
- Duration tracking: if leasing, track the maximum assignment duration per worker and hirer, including the rules on breaks between assignments, and plan rotations or conversions before the limit, not after.
- Equal treatment economics: understand what equal pay after the statutory period means for the rate card, a provider whose pricing ignores it is either non-compliant or planning to make it your problem.
How compliant IT staffing models handle this in practice
In practice, tech companies use three clean configurations. First, genuine outcome-based contracting: the provider owes deliverables, manages its own people, and the client steers through backlogs, acceptance and milestone reviews rather than day-to-day task assignment, no AÜG needed, but the discipline must be real. Second, openly declared leasing through a licensed provider: appropriate when the client genuinely wants direction over an external person for a bounded period, with duration limits and equal-treatment costs priced in from the start. Third, permanent placement: when the role is long-term and integration is the point, hiring directly (with or without a recruiting partner) is often the honest answer. What does not work is the fourth, unfortunately common configuration: a services contract on paper with leasing behavior in practice. A partner like Aiporate structures engagements deliberately into one of the three clean models and keeps the operating model aligned with the chosen contract, while the legal assessment of any specific setup belongs with your counsel.
