The British Embassy in Germany has taken a lead role in negotiations about a controversial law change that would restrict contractors to working in 18 month stints.

It is feared that this labour market inflexibility could be echoed in Britain.

The German proposals have been opposed by companies in the international recruitment sector, with the Association of Professional Staffing Companies (APSCo) labelling the proposed changes ‘damaging’.

The British Embassy in Berlin has hosted executives from a number of large international recruiters and reportedly agreed to urge the German authorities to reconsider the reforms.

If it goes ahead, the rule change would affect the licence that companies need in order to ‘lease’ contractors to other organisations in Germany.

Currently, there are few restrictions on this licence. But under the reforms, from January 2017 contractors would become classified as employees if they worked in one place for longer than 18 months.  

These reforms would make life particularly difficult for contractors working on longer term contracts and could also limit the effectiveness of the flexible labour market.  

Tremayne Elson, Managing Director of APSCo Germany said: “In a world economy with an ever increasing flexibility in the professional workforce - and technology that is enabling a more creative work model – this is a leap backwards.”

Samantha Hurley, Head of External Relations at APSCo believes that the reforms will damage the supply of professional talent, which could have a knock on effect on domestic productivity and growth in Germany.

Worryingly, she also drew a parallel with the situation in the UK labour market.

“As in the UK, the German professional recruitment sector is in danger of falling victim to the restrictions of inappropriate, contradictory, ‘one size fits all’ legislation written to protect the potentially vulnerable workers in the blue collar staffing sector,” she said.

Could this policy change spread to the UK?

At present, it looks as though this policy change will have minimal impact in Britain. You are only likely to be directly affected if you are seeking long term work placements in Germany. However, the ghost of a policy previously thought dead could still come back to haunt British contractors.

Miles Grady, Director of Umbrella.co.uk explains: “Just before the Autumn Statement in November last year, at around the same time as the draft German legislation was released, we heard very loud rumours of a proposed one-month contractor cap. This proposal, which had apparently come from sources close to the Chancellor, would mean that contractors could only work independently at one site for a month before becoming an employee of the company.

“Thankfully, this policy never materialised in the Autumn Statement, but the threat has by no means disappeared. Whether it is an 18 month rule or a one month rule, these kinds of limits would make life difficult for a huge number of contractors, not to mention the companies that want to employ them.”

Contact: Umbrella.co.uk T: 01625 546610  E: team@umbrella.co.uk