What is temporary work?

• How does temporary employment work?
• Why should companies hire temporary workers?
• Other advantages and disadvantages for employers

How does temporary employment work?

Temporary work (often shortened to temp work) refers to a form of employee leasing. A personnel service provider (an agency) leases out a skilled worker—or their know-how—to an external company that requires personnel immediately. This follows previously agreed terms and conditions and is normally for a fixed period of time.

All in all, temporary employment is the only form of employment in which three parties are involved. However, although the borrowed employee (the temporary worker) is employed in an external company, they are not automatically employed there as well.

The temporary worker initially signs their employment contract with the staffing agency and remains employed by the former throughout their assignment at the third-party company. 

The temporary worker also receives their salary—after deducting some fees—from their actual employer (the temp agency).

The third-party company is responsible for onboarding and often for providing any material necessary to perform the job as well. However, issuing a certificate of employment for the assignment, is the responsibility of the staffing company.

Different countries will have different laws regarding how the parties work together. For example, in Germany all the important rights and obligations of the parties involved are laid down in the German Personnel Leasing Act (AÜG).

What happens when temporary workers are no longer needed?

If the company no longer needs the temporary worker’s services, they will simply stop the collaboration. The temporary worker initially ends up back in the staffing company’s talent pool until a new assignment is found for the employee. That is why temporary work is often also called staff leasing.

Can temporary workers also be taken on permanently?

Yes. If both the temporary worker and the company enjoy the collaboration, the temporary worker can in some cases also be hired and permanently employed by the company.

Personnel leasing (in addition to direct staff placement) is therefore used in many companies as an instrument for personnel recruitment and is sometimes even part of the recruitment strategy.

How long can temporary workers be leased out?

The regulations on this differ per country.

For example, according to the German Temporary Employment Act (AÜG), the maximum period for which a temporary worker can be leased out cannot exceed 18 months. This means that temporary workers may be employed for a maximum of 1.5 years in one and the same (third-party) company.

If the maximum assignment period is exceeded, an employment contract between the third-party company and the temporary worker may automatically come into effect.

Why should companies hire temporary workers?

Temporary staffing is an important part of the labour market. This is because temp agencies cover a broad spectrum of workers with a wide range of skills and qualifications. Companies can find both unskilled workers and well-trained specialists.

Sometimes it happens that several team members in a company resign shortly after each other, take maternity leave, or leave for early retirement. Sometimes, a company can struggle with immediate staff shortages due to illness (e.g. Corona or flu).

Another reason can be that the company is scaling rapidly and the workload is causing overwork and burnout in the team… Long story short: There are many reasons that can cause an urgent need for personnel.

In such situations, a company needs new employees ASAP. However, searching via a job ad can take too much time. This is when HR managers can use temporary staffing to provide replacements at very short notice in order to defuse urgent situations and take the pressure off the team.

Of course, alternatively, you can use JOIN to attract talent faster and more efficiently.

Other advantages and disadvantages for employers

In addition to short-term staffing options and a large talent pool, employers can expect other benefits—as well as a few drawbacks that recruiters should be aware of. We briefly outline both below.

Advantages of temporary staffing

• Custom-fit recruiting:

  Instead of having to search for the right talent in the broad mass of job seekers, recruiters can specifically request the hard skills they’re looking for from the staffing firm and find suitable talent faster.

• Significant cost savings in recruiting:

  A vacant position becomes more expensive the longer it remains unfilled. And the time spent on writing a job ad, applicant management, screening, and interviewing processes are also factors that can be shortened with staff leasing.

• More flexibility in staff scheduling:

  For companies looking to compensate for sick or maternity leave, temporary workers are a great solution. They are available quickly and can leave with very short notice (generally between 2 and 14 days, depending on the length of employment) when their help is no longer needed.

• Contributing to more diversity in the team:

  Temporary employment also contributes to integration. In fact, foreign professionals who experience problems finding work through the usual channels—for example, due to bad and unfair shortlisting practices—can often get a job through an agency more easily. Integrating them in the third-party company can contribute to the company’s diversity recruitment goals and provide valuable cultural add—that is, enriching the corporate culture with valuable skills—in the team.

• Easy to calculate:

  Because companies only compensate the temporary worker for hours actually worked, it’s easier to keep track of the staff leasing budget and costs can be better planned and estimated.

• No ancillary wage costs:

  In addition, companies only pay the gross remuneration and do not have to pay ancillary wage costs (i.e. social security contributions, holiday days, sick leave). The staffing agency deducts these (in addition to a service fee) before paying the net remuneration to the temporary worker.

Disadvantages of temporary employment

• Qualified staffing agencies hard to find:

  There are many staffing agencies, but not everyone signed up with them is truly qualified for the job. Companies should therefore ideally find out in advance about other recruiters’ experiences with a temporary staffing agency.

• “Equal Pay” after several months:

  In Germany, for example, temporary workers must be compensated at the same rate as the company’s permanent workforce after more than nine months of employment with the third-party company.

• Calculation of deadlines is complicated and often unclear:

  It is particularly important to know and keep an eye on the deadlines for the deployment of temporary workers (e.g. when equal pay sets in or the maximum transfer period). This can sometimes be difficult and confusing.

• Takeover is rarely seamless:

  If a company actively decides to hire temporary workers on a permanent basis, this rarely happens without a transitional phase. For example, the contract with the staffing service provider must first expire, or the temporary worker must give notice and wait for the notice period.

Are you looking for an alternative to temporary workers? Then hiring a trainee or freelancer could be a good solution for you.