The employment contract with a leased employee regulates the relationship between the leased employee and the leasing company in a situation where the leasing company assigns the leased employee to work for a third party, known as the user company.
The standard template for an employment contract with a leased employee is suitable for use when the leasing company sends one leased employee to the user company and when a labor leasing agreement has been concluded between the lessor and the user company.
What is labour leasing?
An employee can perform work temporarily under the direction and control of a third party, i.e., the client company, instead of their employer, in accordance with § 6 (5) of the Employment Contracts Act (hereinafter referred to as TLS). Labour leasing involves a tripartite employment relationship where the employer hires an individual with the goal of directing them to work for a third party, who gives the employee tasks and supervises their execution. This type of work for the client company is referred to as labour leasing under TLS. Labour leasing is characterized by performing tasks temporarily at the client company to meet the client company's demand for labor for a specific period.
Does the employee need to know that they are doing leased work?
When entering into an employment contract, the employee must be aware if they will temporarily work for another company instead of their employer. TLS requires the employer to inform the employee about the significant terms of the employment contract, and in accordance with § 6 (5) of TLS, the employer must inform the employee that the work will be performed as leased labor at the client company. Additionally, the employee must be informed about the name of the client company. In the absence of a written agreement, the law presumes that no agreement for labour leasing exists (TLS § 6 (9)). Therefore, to avoid future disputes, it is necessary to make a written agreement before leasing the employee to the client company so that the employee is aware that they are working as a leased employee.
What contracts are needed for labour leasing?
1. Between the staffing agency and the employee:
The staffing agency, acting as the employer, signs an employment contract with the agency worker. Under this contract, the agency worker is sent to perform work at the user company, under the user company’s supervision and management.
2. Between the staffing agency and the user company:
The staffing agency and the user company conclude a civil-law agreement called a labor leasing agreement. This agreement defines their cooperation, obligations, and the qualifications and duties of the agency worker. The Chamber of Commerce offers a template for a labor leasing agreement.
Is it possible to sign a fixed-term employment contract?
Although employment contracts are generally indefinite, the law allows for fixed-term contracts in agency work if justified by the temporary nature of the assignment at the user company (§ 9 (1) TLS). A fixed-term contract must be agreed upon in writing, as required by § 6 (2) TLS.
A fixed-term contract with an agency worker can be concluded if:
- The temporary nature of the work arises from the staffing agency’s needs (e.g., covering a peak period in accounting or substituting for an absent employee).
- The temporary nature of the work is due to the user company’s needs (e.g., covering for an employee on leave or fulfilling seasonal work demands).
What duties does the employer have to inform the leased employees?
The employer has various informational duties regarding leased employees:
According to § 28 (2) point 91 of the Employment Contracts Act, the employer is required to inform the leased employee about any available positions at the client company that match their qualifications, where the employee could enter into an indefinite employment contract. If the client company has already informed the employee about these available positions, the employer no longer has the duty to do so.
Under § 20 (1) point 1 of the Employee Representative Act, the employer must inform the company's employee representative about the leased employees when changes or planned decisions significantly impact the employer’s structure or workforce.
What occupational health and safety requirements must the lessor and the user company apply to a temporary agency worker?
According to Section 12(1) of the Occupational Health and Safety Act (hereinafter TTOS), the user company must ensure compliance with occupational health and safety requirements for the temporary agency worker at the user company’s premises. The occupational health and safety of temporary agency workers must be guaranteed on the same level as for regular employees.
Pursuant to Section 12(2) of TTOS, before allowing the temporary agency worker to start work, the user company must verify that the worker’s professional skills and qualifications match the job requirements. Additionally, the user company must ensure that the temporary agency worker has the necessary occupational health and safety knowledge.
The user company is responsible for providing instructions and training to the temporary agency worker. Since occupational safety and health training must take into account the worker’s qualifications and experience, the lessor and the user company must exchange information about the worker before training begins. It is also essential that the trainer can communicate clearly with the worker and provide understandable instructions. Among other obligations, it is specifically the user company’s duty to supply the temporary agency worker with work clothing and personal protective equipment.
According to the second sentence of Section 12(1) of TTOS, the user company is responsible for arranging the worker’s medical examination. The law does not prohibit the lessor and the user company from making a special agreement under which the user company organizes the medical examination at the lessor’s expense. In such cases, the temporary agency worker undergoes the same medical check as the user company’s regular employees, ensuring that the examination meets the user company’s standards and prevents unequal treatment of workers. At the same time, this arrangement does not create unreasonable costs for the user company.
Under Section 24(1) of TTOS, the circumstances and causes of a workplace accident or occupational disease must be investigated by the employer. However, Section 12(1) of TTOS assigns this responsibility to the user company as well. Therefore, if a workplace accident occurs involving a temporary agency worker, the user company must register the incident and investigate all circumstances, as the accident occurred while the worker was performing duties at the user company’s premises.
What protection does the employee have in labour leasing?
According to Section 61 of the Employment Contracts Act (TLS), any conditions that prevent a temporary agency worker from entering into an employment contract with the user company after the end of their temporary assignment are void. This provision aims to protect the rights of the temporary agency worker. Since temporary agency work is characterized by its short-term nature, it is easier to conclude fixed-term employment contracts with temporary agency workers (TLS § 10(2)). However, temporary agency work is generally considered a less stable form of employment. Therefore, if a temporary agency worker has an opportunity to secure a more stable employment relationship, it must not be obstructed. Restrictive conditions may be included, for example, in contracts between the agency and the user company, in the employment contract between the worker and the agency, or in a collective agreement applicable to the employment relationship. All conditions that prevent an agency worker from signing an employment contract with the user company after completing temporary work are invalid.
To protect employees, Section 10 of the TLS imposes restrictions on employers regarding the renewal or consecutive signing of fixed-term employment contracts. In temporary agency work, the limitation on consecutive fixed-term contracts applies separately for each user company. For example, if an employer signs a fixed-term contract with a temporary agency worker for the same user company more than twice, the employment contract becomes indefinite from the start. However, if the temporary agency worker performs work under separate fixed-term contracts for different user companies, the limitation on consecutive fixed-term contracts applies individually to each user company.
According to Section 111(21) of the Equal Treatment Act, a temporary agency worker may not be subjected to less favorable working conditions regarding occupational health and safety, working and rest time, or remuneration than a comparable employee of the user company. Additionally, a temporary agency worker is entitled to the same benefits as a comparable employee of the user company during their assignment. These benefits include, but are not limited to, access to catering, transportation, and childcare services provided by the user company.
