The AUG license is an important permit to understand for companies looking to hire temporary workers or contractors located in Germany.
What is AUG?
AUG (or more accurately, AÜG), is short for Arbeitnehmerüberlassungsgesetz, or the Temporary Employment Act. In Germany, the Temporary Employment Act lays out a number of regulations related to Arbeitnehmerüberlassung, or temporary employment.
The AUG license is an employment permit that allows a staffing company to lease or contract out labor to an end-user (“Hirer”).
Staffing companies are companies like an agency, labor leasing company, or Employer of Record (the “Staffing Companies”) that help other companies employ workers without having to deal with the complexities of officially hiring a permanent employee.
Who needs an AUG license?
Any company or person who employs workers and contracts them out to a third party requires an AUG license to operate. Leasing workers without a license can result in fines of up to 500,000 euros for the Staffing Company.
What conditions are part of the AUG license?
The AUG license imposes an 18-month cap on contracts between Deel and a specific company. After this period, the Hirer will have to change or stop for at least 3 months before resuming engagement with the same employee.
Workers contracted under AUG are also entitled to other rights under the Act, such as the right to a minimum wage, access to communal work facilities, and access to information on job openings with the employer.
What should I know if I want to hire someone from Germany?
Many international companies are eager to hire from Germany’s talent pool and may be looking to hire a German worker remotely. AUG regulations do not apply to you if you’re hiring employees or contractors directly. However, direct hiring will require your payroll and compliance group to understand and follow German payroll regulations and employment standards.
Hiring through an AUG-licensed employer of record
Instead of having to set up a local entity, you can use an employer of record (EOR) service to hire on your behalf. The EOR is responsible for calculating mandatory taxes, social security, and health insurance contributions. This solution simplifies your hiring process, letting you attract and retain top talent without having to navigate local employment and tax laws.
If you hire through AUG, the contract between a specific company and the Employer of Record cannot exceed 18 months. After completing the 18-month contract the Hirer should observe a 3-month reset period before signing a new contract for the same employee or should be hired by another company.
If you know you want to hire a German employee for an indefinite period, there are other compliant solutions that will allow you to operate without having to deal with the 18-month cap. You can chat with a Deel hiring specialist to see if this case applies to you.
Who manages the implementation of AUG rules?
The Federal Employment Agency (Bundesagentur für Arbeit) in Germany is responsible for implementing the Act.
How long is an AUG license valid for?
The AUG license is valid for one year. After three consecutive years of operations, an “unrestricted” permit with no expiration can be granted by the Federal Employment Agency.
Is an AUG license the same as an ANÜ permit?
Yes, these terms refer to the same licensing requirement.
Deel is the global hiring and compliance solution for international groups. Deel works with over 200 legal experts for up-to-date compliance in over 150 countries, including Germany. Learn more about hiring employees and contractors in Germany or book a free demo to see Deel in action.