Temp agreements and agencies: rules and rights

Temp agencies are a firm part of the Danish labour market. Companies use them to cover sudden peaks in workload, sickness absence and special projects. But the rules of the Temporary Agency Work Act are complex, and many temps do not know their full rights. This guide reviews the rules for temp agencies and temp agreements in Denmark.

Three parties in a temp relationship

A temp relationship always involves three parties:

1. The temp agency, which employs the temp and is their formal employer
2. The temp, who is employed by the agency and sent out to the user
3. The user undertaking, which receives the temp's labour and pays the agency

It is essential to understand that the temp has their employment relationship with the temp agency, not with the user undertaking. It is the agency that pays the wage, pays the pension and issues the employment certificate.

The Temporary Agency Work Act: the central framework

The Act on the legal position of temporary agency workers on being sent out by a temp agency (the Temporary Agency Work Act, Act no. 595 of 12 June 2013) implements the EU Temporary Agency Work Directive (2008/104/EC) in Danish law.

The act's core principle is the equal treatment principle: during the assignment, the temp must at least be assured the same essential pay and working conditions as a comparable employee in the user undertaking.

The equal treatment principle in practice

What does equal treatment cover?

The temp as a rule has the right to the same essential terms as a comparable permanent employee in the user undertaking for:

• Pay, including collectively agreed supplements, inconvenience supplements and shift supplements
• Working hours, including overtime rules, breaks and rest periods
• Holiday, accrual and taking on the same level
• Public holiday pay
• Protection in connection with pregnancy and maternity
• Access to shared facilities at the user undertaking (canteen, transport arrangements, childcare)

What is a comparable permanent employee?

A comparable permanent employee is a person who does the same or similar work at the user undertaking and who is permanently employed. If there is no comparable permanent employee, a collective agreement or local practice is used as a reference.

Exception: derogation by collective agreement

The labour-market parties can, through a collective agreement, derogate from the equal treatment principle, provided the temp is still assured an adequate level of protection. This typically assumes that the temp is assured pay in periods without an assignment.

The temp's contract with the agency

The temp is employed by the agency. The employment contract must meet the Employment Certificate Act and as a minimum state:

• The identity of the agency and the temp
• The pay conditions
• The working hours, if fixed
• That the temp is sent out to user undertakings
• The notice period

The temp should always ask for a copy of the employment certificate and review it carefully.

The user undertaking's agreement with the agency

The agreement between the user undertaking and the agency is a commercial contract for the supply of labour. It should contain:

• The type of task and the qualifications needed
• The duration and timetable for the assignment
• The price (typically an hourly price)
• Any transfer clause (see below)
• Rules on extension and termination
• Responsibility for the working environment and the instruction of the temp

Transfer clause

Agencies often insert a transfer clause, where the user undertaking pays a fee if the company hires the temp permanently within a certain period. Under the Temporary Agency Work Directive, such clauses may not in reality prevent a hiring, but the agency can charge a reasonable fee for the services provided. Agree the point clearly, and be aware that certain collective agreements and contract-law principles can limit the scope of the clause.

The temp and the working environment

Even though the temp is employed by the agency, it is the user undertaking that is responsible for the temp under the working-environment legislation during the assignment:

• The user undertaking must instruct the temp in health and safety matters
• The Working Environment Authority can direct requirements at the user undertaking
• The temp is protected by the working-environment rules on a par with the company's own employees

The agency is, however, responsible for ensuring that the temp has the necessary training and certificates before being sent out, and the user undertaking must inform the agency of any special risks in the work.

Rights in the event of illness and maternity

Illness: the temp is employed by the agency and is entitled to pay or sickness benefit during illness under the usual rules, depending on the terms of employment.

Maternity: the temp has the same maternity rights as other employees. Maternity benefit is paid via Udbetaling Danmark, and the agency supplements to the extent it appears from the employment contract or a collective agreement.

Terminating the temp agreement

The agency can terminate the temp's employment with the notice that follows from the contract and the employment-law rules, including the Salaried Employees Act if the temp is a salaried employee. The user undertaking can end a specific assignment, but this does not directly affect the temp's employment relationship with the agency. The temp can themselves terminate the employment with the agency with the agreed notice.

A direct temp agreement without a temp agency

It is possible for a self-employed person to enter into a direct temp agreement with a company outside a temp agency. Here the self-employed person is as a rule not an employee, and rights and obligations are governed by the contract.

Note: the tax authorities are strict about the distinction between an employee and a self-employed person. If the self-employed person is in reality an employee, there can be tax and duty consequences.

Frequent mistakes in temp relationships

The temp is paid below what equal treatment requires: contrary to the Temporary Agency Work Act. The temp should keep informed about the pay level at the user undertaking.

The user undertaking does not give access to shared facilities: equal treatment also covers the canteen, transport arrangements and the like, not just pay.

No information about dangerous work: the user undertaking must inform the agency of any special risks before the assignment.

The transfer clause is misunderstood: both the user undertaking and the temp should know the terms of the clause.

Frequently asked questions about temp agreements

Can the user undertaking hire the temp directly?

Yes, but typically against payment of a reasonable transfer fee to the agency. Agree this clearly in the contract with the agency.

Does the temp have the right to holiday?

Yes. The temp accrues holiday on a par with other employees under the Holiday Act.

Can the temp refuse a task at the user undertaking?

The temp is obliged to carry out the tasks agreed with the agency. A demand for unlawful or health-hazardous work can be refused.

Who is responsible if the temp causes damage?

The user undertaking as a rule is liable for damage the temp causes during the assignment, by virtue of the employer's liability of the party that directs the work. The agency or the user undertaking may have liability insurance that covers it.

Does a collective agreement apply to temps?

It depends on the agency's collective-agreement coverage and the user undertaking's sector. Many agencies are covered by a collective agreement. Check this on employment.

Conclusion

Temp relationships are practically necessary for flexible labour but require clarity about rights and obligations for all three parties. The temp must secure proper terms, the user undertaking must ensure equal treatment, and the agency must fulfil its obligations as the formal employer. A clear contract is the starting point for a well-functioning temp relationship.

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The content of this article is for guidance only and does not constitute legal advice. Consult a business lawyer for advice on your specific situation.