In May 2016 the German government coalition agreed on a draft law to amend the law for personnel leasing. The purpose of this paper is to evaluate the consequences of the draft bill on the IT-Consultancy industry and the human resources departments of companies from all sectors.
In order to analyze the relationship between the draft law and the IT-Consultancy industry, some legal aspects concerning labor laws are explained first. After a description of the prupose of the new law, possible consequences on the IT-Consultancy industry and on human resource planning are presented.
Table of contents
1 Introduction
2 Current situation in Germany
2.1 Forms of contract
2.1.1 Personnel leasing
2.1.2 "Werkvertrag"
2.1.3 "Dienstvertrag"
2.2 Bogus self-employment
2.3 IT-Consulting services
3 The draft bill
3.1 Purpose
3.2 Significant changes
3.3 Consequences on the IT-Consulting industry
3.4 Consequences for companies human resource planning
4 Conclusions
Research Objectives and Core Themes
The primary objective of this assignment is to evaluate the implications of the new draft bill on the German employee lending law, specifically focusing on its impact on the IT consultancy sector and corporate human resources planning. The paper aims to clarify how these legal changes affect the classification of freelancers and the subsequent operational challenges for companies relying on external expertise.
- Legal frameworks for employment contracts in Germany.
- Challenges associated with bogus self-employment.
- Provisions of the draft bill and its intended regulatory scope.
- Consequences for the IT consultancy industry and external staffing strategies.
Excerpt from the Book
3.2 Significant changes
There are three significant changes in the law concerning personnel leasing, the use of Werkverträge, and the definition of bogus self-employment.
In the future personal leasing contracts will be limited to 18 months. The salary of the temporary worker has to be equal to that of an equivalent permanent worker in the hiring company at the latest after 9 months. It will be prohibited to engage temporary workers as strikebreakers.
If external personnel are deployed by a service contract (Werkvertrag or Dienstvertrag) but the deployment is actually more comparable with a personnel leasing, this construct will be classified as a hidden personnel leasing. Until now, a hidden personnel leasing remained without consequences for the subscribing firm, as long as it was able to present a permission for personnel leasing after determination. In the future this possibility for remaining unpunished will not be possible anymore. This will be an administrative offence and a permanent employment contract between the temporary worker and the hiring company will be assumed. This also applies, if there are additional companies involved as middlemen in the contract construct.
An additional very relevant aspect is the legal clarification of dependent employment, especially in order to determine if somebody is self-employed or bogus self-employed. This regulation will be written down as a new § 611a BGB as supplement to the regulations of the Dienstvertrag. Unfortunately, there will still not be a clear definition to distinguish between a dependent employee and a self employed person. A catalogue of measures, that was originally written down in the first draft, and that would have probably classified the vast majority of freelancers as bogus self-employed, was removed after a wave of protests. Instead there is now only a very general definition of a dependent worker:
Summary of Chapters
1 Introduction: This chapter provides an overview of the trend towards flexible employment contracts in Germany and the emergence of modern labor market laws since 2002.
2 Current situation in Germany: This section details the existing legal forms of employment contracts, the concept of bogus self-employment, and the specific reliance on freelancers within the IT consulting industry.
3 The draft bill: This chapter analyzes the purpose of the new legislation, highlights the three significant legal modifications, and discusses the consequences for both the IT industry and corporate HR strategies.
4 Conclusions: The final chapter summarizes the findings, emphasizing the uncertainty surrounding the law's impact and the potential challenges for companies and freelancers alike.
Keywords
Employee lending, Personnel leasing, IT-Consulting, Freelancers, Bogus self-employment, Labor law, Service contract, Werkvertrag, Dienstvertrag, Human resources, German labor market, Employment contract, Legislation, Hidden personnel leasing, Social security.
Frequently Asked Questions
What is the core subject of this paper?
The paper examines the proposed draft bill aimed at amending German employee lending laws and its potential repercussions for companies utilizing IT consultancy services.
What are the primary themes discussed?
Key themes include contract types in Germany, the legal definition of self-employment versus dependent employment, and the operational risks businesses face when hiring external specialists.
What is the main objective of this study?
The goal is to analyze how the new regulations might change the landscape for IT freelancers and influence the HR planning and recruitment strategies of companies across different sectors.
Which scientific methods were applied?
The paper uses a descriptive and analytical approach, reviewing current labor laws, existing draft legislation, and statistical data regarding the IT freelance market in Germany.
What topics are covered in the main body?
The body covers the current state of labor market regulations, definitions of contract types, specific amendments in the draft bill, and the practical consequences for the IT sector and HR management.
Which keywords define this work?
Significant keywords include Employee lending, IT-Consulting, Bogus self-employment, and Labor law.
How does the draft bill affect the definition of 'hidden personnel leasing'?
The draft bill aims to punish firms that use service contracts as a disguise for personnel leasing, declaring it an administrative offense and assuming a permanent employment contract between the worker and the hiring company.
Why are IT freelancers particularly concerned about these changes?
Freelancers fear that the new, tighter regulations and the threat of being classified as 'bogus self-employed' will discourage companies from hiring them, making it harder to secure new contracts.
- Quote paper
- Erik Somssich (Author), 2016, The draft bill to amend the German employee lending law and its consequences on the IT-Consultancy industry, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/356697
