I. Ruling of the Higher Social Court of Berlin-Brandenburg

In the case to be decided, a Foundation and a limited liability company [Gesellschaft mit beschränkter Haftung – GmbH] entered into a management agreement under which the Foundation put a managing director at the GmbH’s disposal who was employed in the Foundation’s executive board. As agreed, the managing director was subject to instructions not only vis-à-vis the shareholders’ meeting, but also towards another managing director. He worked on a concretely described area of responsibility within the premises of the GmbH and was thus involved in its work organization. The managing director conducted a status determination procedure against the pension insurance aimed at determining the lack of his insurance obligation. The Higher Social Court of Berlin-Brandenburg rejected his request, because the managing director was employed subject to instructions and was integrated in the work organization and thus, an unauthorized temporary employment within the meaning of the AÜG would have been the case.

II. Legal situation

According to section 1 para. 1 sentence 2 AÜG, employees are transferred for work performance if they are integrated into the hirer’s work organization and are subject to its instructions. However, it is not expressly regulated, whether the persons concerned must be regarded as employees only in relation to the lending company or only in relation to the hiring company or to both parties. Jurisprudence and legal literature have not yet finally clarified whether the determination of the employee status is to be made exclusively in relation to the lending company or exclusively in relation to the hiring company or in relation to both the hiring and the lending company.
In the end it should be accurate to include both relations during an examination. Therefore, if a person is to be regarded as self-employed in relation to the potential lending company or in relation to the potential hiring company, i.e. the person is not subject to instructions or is not integrated in the work organization, there is no temporary employment within the meaning of the AÜG. On the other hand, if the person is in both relations to be regarded as dependently employed, a temporary employment can be assumed. This distinction can prove to be difficult in both relations on a case-by-case basis.
In a decision at the end of 2016 the Federal Labor Court [Bundesarbeitsgericht – BAG] expressly ruled that a managing partner of the lending company who is transferred to another company for dependent employment and who holds at least 50 % of the shares in the lending company, cannot be an employee within the meaning of the AÜG. However, the BAG also emphasized in its decision that in such cases it is necessary to examine whether, as a result of an abuse of rights, something different should apply if a one-man limited liability company (“Ein-Mann-GmbH”) is operated with the exclusive aim of handing over its sole shareholder and managing director to other companies.

III. Conclusion

Against this background, it can be stated that the decision of the Higher Social Court of Berlin-Brandenburg is not sufficient in the justification. Although the Higher Social Court ruled that the claimant there was employed in the company, it did not conclude in any way whether such dependence also existed in relation to the “transferring” Foundation. However, this relationship would also be important in the case of temporary employment.
For the employment of a managing director of the lending company as an employee or managing director at another company, it is recommended for both sides to carefully check the position in the lending company as well as the position in the operating company in advance. The application of the AÜG with negative consequences in terms of labor law and/or social insurance is only excluded if there is clearly no dependent employment in either of the two relations.