Employment Law, Government & Legislation

Revolving door contracts

Or: how to avoid entering into numerous, consecutive fixed term agreements with the same employee (and running the risk that the employee is considered permanent later).

In Germany, equal pay provisions provide that temp workers (should) be paid the same as ordinary employees. Unless the temp worker is hired through an agency/ company which is covered by a collective agreement, which conditions are less favourable.

Now, you can probably already see where this is going. In order to save costs, companies in Germany have therefore increasingly hired temp workers through specifically set-up companies covered by these less favourable (aka cheaper) collectives.  But heres the clever bit: some (or rather many) companies have not only hired new temp workers that way to save costs, but they have also made existing employees redundant only to hire them back through specifically set-up temp companies. In other words, after the dismissal, they are getting the same employee back who does the same work for less money. 

And thats all legal.

Well, it was till the Temporary Labour Act was amended in 2011 and now includes a ‘revolving door clause’. Now it is prohibited to re-hire the same employee again if he had been previously employed within the last 6 months.

We will see whether a revolving-door tactic will also be adopted in New Zealand…given that it is quite common to see ex-employees returning as external consultants, there might be a market here for those kind of arrangements too.