AUG License

If you’re planning to supply temporary workers for other businesses in Germany, just a good recruitment network isn’t going to cut it. You’ll need an Arbeitnehmerüberlassung (AÜG or AUG) or labour leasing license. This permit isn’t optional, either. It’s a legal must-have for any business that wants to lease employees to another company. Also, this is very much applicable to Employer of Record companies.

The AUG license regulates employee leasing under the German Temporary Employment Act and this ensures fair treatment, proper contracts, and compliance with labor rights. Without the license, you risk huge fines, contract nullification, and a very awkward conversation with the authorities.

As we all know, German labor laws are strict. This license is mandatory, and you want to make sure your business complies with all the rules.

In Germany, the AUG license is the legal permit companies need in order to “loan out” employees to another business. This is to put it simply.

The law behind it has been designed to guarantee fair treatment for temporary staff. It aligns pay, benefits, and working conditions with those of permanent employees. Without an AUG license, these arrangements can quickly turn from a smart staffing solution into a compliance headache (and possibly a conversation with the labor authorities you’d rather avoid).

If you’re in Germany and you want to hire out or lease employees, the AUG license is your golden ticket. But unlike Willy Wonka’s, this one comes with a lot of paperwork instead of chocolate.

In Germany, an AUG license is your golden ticket if you plan to legally supply temporary workers to other businesses. Without it, you’d be bending the rules (possibly breaking them), and you’d get in serious trouble with the German authorities. No one wants that.

The process is handled by the Federal Employment Agency (Bundesagentur für Arbeit). This is how you can typically get your AUG license.

1. Prepare your documentation: You’ll need proof of your company’s legal status, financial stability, and compliance with labor laws.
2. Submit your application: This is done at the regional office of the Federal Employment Agency. Fill in all forms completely. Missing details can turn a two-month wait into a six-month headache.
3. Meet the requirements: You must follow German labor and social security regulations, pay the correct wages, and treat temporary workers fairly.
4. Await approval: Initial licenses are usually granted for one year. If you stay compliant, renewals can be extended to three years at a time.

It’s best to keep records of all contracts, payroll, and worker assignments. It makes possible audits far less like a surprise exam you forgot to study for. Better to have it and not need it, than to need it and not have it.

Typically, getting an AUG license takes anywhere from a few weeks to a few months. This depends on how quickly you complete the required steps and how promptly the relevant authorities process your application. The timeline typically involves submitting documentation, attending any necessary training, and undergoing the standard review period.

If your paperwork is in order and you respond quickly to any requests, you’ll keep things moving along. Delays usually happen when information is missing or additional verification is needed, so double-checking before submission can save you weeks.

The AUG license comes with a few ground rules. Nothing too scary, but enough to keep things clear, fair, and compliant. By obtaining and using the license, you agree to operate within the permitted scope, respect applicable regulations, and avoid any activities that could land either of us in awkward conversations with legal departments.

Licensees are expected to:

• Use AUG-protected materials only for the purposes outlined in the agreement.
• Maintain accurate records of usage (yes, even the boring paperwork).
• Ensure any sub-licensing or transfer follows the approval process. So no surprise handoffs to “a friend who’s good with computers.”
• Stay up-to-date with any amendments, because licenses occasionally get updates.

Failure to comply may result in suspension, revocation, or, in extreme cases, the dreaded combination of both. If you have any doubts, it might be better to consult a lawyer.

Yes. In Germany, an AUG license is mandatory if your business intends to engage in employee leasing.  As per German labor law, an EOR falls into the category of labor leasing.

It’s worth noting that not every form of cooperation counts as employee leasing. Genuine service contracts (Werkvertrag) or freelance arrangements may not require an AUG license, but they must be structured and executed very carefully to avoid being reclassified. German authorities are not particularly fond of “creative interpretations” in this area, and their audits don’t typically have a sense of humor. Which doesn’t really differ from the IRS in the United States. 

So, if there’s even a chance your business activities resemble staff leasing, getting an AUG license is the safer (and far less stressful) route. Again, better to have it and not need it.

If you’re looking to see whether an EOR that’s operating in Germany has a valid AUG license, you can check it directly on the German Ministry of Labour (Agentur für Arbeit) website by entering the provider’s GmbH details.

AUG offers several clear pros for employers in Germany. First and foremost, it provides flexible access to skilled temporary workers. This allows companies to quickly adjust their workforce according to fluctuating demands.

This flexibility helps reduce long-term hiring risks and costs, since employers can meet project peaks or seasonal needs without committing to permanent contracts right away. Plus, compliance with AUG ensures legal clarity, so companies avoid the costly mistakes of misclassification or unauthorized labor leasing. 

Additionally, the structured framework under the AUG promotes fair treatment of temporary workers, which contributes to a positive company reputation and better employee relations. You could say that the AUG is a strategic tool for smart staffing that keeps both employers and employees happy.

While an AUG license opens doors to flexible staffing solutions under German labor laws, it has its cons, too. First off, figuring out the legal stuff can feel a bit like assembling IKEA furniture without the manual. Compliance requirements are strict, which means that agencies must stay on their toes to avoid costly penalties. 

Also, the temporary nature of assignments can lead to job insecurity for workers, which may affect morale and productivity. Employers, too, face challenges with integration and training costs, since temporary staff might not be around long enough to fully settle in. 

So, while the AUG license offers flexibility, it demands careful management and a keen eye on legal details.

Check a Provider is AUG-Licensed, with Employsome.

At Employsome, we are experts in German labor law and hiring. If you are considering signing up with a German EOR, check out our comparison tool and best provider guide to see whether your provider of choice has an AUG licence. Otherwise, our German EOR experts would be happy to help.