German employment law has a thing where permanent contracts expire

Set up a permanent employment contract for our German hire through an EOR a while back, thought we were good, and then a few months in our legal contact flagged something in the paperwork that I’d skimmed past.

Under German labour law, there’s a statute called the Arbeitnehmerüberlassungsgesetz (AÜG) that limits how long a worker can be deployed to the same company to a year and a half (18 months) before it starts being classified as labour-leasing (a different arrangement with different obligations attached to it).

The contract said permanent on it, so I’d read that and assumed we were fine, but our legal contact spent a long call explaining why permanent and without a time limit are two different things in this particular context and why the AÜG clock had already been running since the contract phase months earlier, before we’d even moved them onto the permanent employment.

What worked in our favour was that the EOR we use (Workmotion in our case, though Deel or Remote is structured the same way) sets up employment as direct local employment rather than labour-leasing.

That’s apparently the exact arrangement the AÜG targets, so the cap doesn’t apply in the same way when the EOR is the legal employer and not just a placement intermediary.

There are plenty of EOR threads in this sub but this one never seems to come up, so posting it for whoever’s about to bring someone on in Germany without having had this conversation yet.