The labour leasing agreement regulates the cooperation between the leasing agency and the client company in situations where the leasing agency temporarily sends a leased employee to work for the client company.
The basic structure of the labour leasing agreement is suitable for situations where the lessor and the client company wish to regulate their cooperation regarding labour leasing, and when a single leased employee is sent to work for the client 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 agreements are needed for labour leasing?
Between the lessor and the employee
In a labour leasing relationship, the employer (leasing agency) enters into an employment contract with the leased employee, based on which the employee is sent to work temporarily for a third party (the client company) under their direction and supervision. While the general rule is that employment contracts are indefinite, the law allows for a fixed-term contract in labour leasing situations if the temporary nature of the work at the client company justifies it (TLS § 9 (1)). However, the conclusion of a fixed-term contract must be justified and agreed upon in the employment contract, as this requires a special agreement under TLS § 6 (2). In principle, it is also possible to enter into an indefinite employment contract with the employee.
The conclusion of a fixed-term employment contract is regulated under TLS § 9. The employer and employee can conclude a fixed-term contract when there are valid reasons for the temporary nature of the work, such as a temporary increase in workload or seasonal work. In the case of labour leasing, a fixed-term contract can also be concluded if it is related to the temporary nature of the client company's work. Therefore, an employer can enter into a fixed-term employment contract with a leased employee in two cases:
- When the employer has reasons related to the temporary nature of the work (e.g., needing a replacement or experiencing a temporary increase in workload).
- When the client company has reasons related to the temporary nature of the work (e.g., needing an employee to replace another employee or requiring additional labor for seasonal work).
Between the lessor and the client company
The leasing agency and the client company enter into a civil law agreement. The labour leasing agreement is concluded between the employer (lessor) and the client company to regulate their cooperation. The agreement outlines the obligations of both the client company and the leasing agency, as well as the qualifications of the leased employee and the tasks to be performed.
What protection does the employee have in labour leasing?
According to § 61 of TLS, conditions that prevent a leased employee from concluding an employment contract with the client company after the temporary employment ends are invalid. The aim of this provision is to protect the rights of the leased employee. Since the temporary nature of the work is a characteristic of labour leasing, and given that it is easier to conclude a fixed-term contract with a leased employee (TLS § 10 (2)), labour leasing may be seen as a less stable form of employment in terms of job security. Therefore, if a leased employee has the opportunity to enter into a more stable employment relationship, this should not be hindered. Restrictions may be included in the agreement between the leasing agency and the client company, the employment contract between the employee and the leasing agency, or any applicable collective agreements. All conditions that prevent a leased employee who has performed tasks for the client company from entering into an employment contract with the client company after their temporary work ends are invalid.
TLS § 10 also imposes restrictions on the employer regarding the extension or consecutive conclusion of fixed-term contracts with an employee. For labour leasing, these restrictions apply to each client company separately. For example, if an employer concludes a fixed-term contract with a leased employee to work for the same client company more than twice, the contract will be deemed indefinite from the beginning. If the leased employee works under fixed-term contracts with different client companies, the restriction on consecutive or extended fixed-term contracts applies separately to each client company.
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 are the occupational health and safety requirements for the leased employee?
Under the Occupational Health and Safety Act (TTOS) § 12 (1), the client company must ensure that occupational health and safety requirements are met for the leased employee as they would for regular employees. The client company must verify that the leased employee’s professional qualifications and skills match the tasks to be performed before allowing them to work. The client company is also responsible for providing the necessary training and supervision.
The client company must provide the leased employee with protective clothing and equipment. If health checks are required, the client company is responsible for arranging these, although a special agreement can be made for the leasing agency to bear the cost.
What are the rules regarding personal data processing in labour leasing?
Under the General Data Protection Regulation (GDPR) Article 6, personal data processing is lawful when it is necessary for the performance of a contract to which the data subject is a party, or for the implementation of pre-contractual measures taken at the request of the data subject.
For labour leasing, there are two separate contracts: 1) the employment contract between the employee and the leasing agency, and 2) the agreement between the leasing agency and the client company. Personal data processing in the first case is clearly linked to the fulfillment of the contract. However, questions arise regarding the basis for data processing by the client company, as the employee has not signed a contract with the client company. Since consent cannot be the basis for personal data processing in employment relationships (including labour leasing), it is more appropriate to consider personal data processing in the context of the contract between the employee and the leasing agency, as well as the contract between the leasing agency and the client company. The client company is responsible for the processing of the leased employee's personal data while the employee is working under its supervision and when data processing is justified under the contract.
