VDA statement on Federal Cabinet’s approval of new labor protection control act: subcontractors and agency workers are essential to vehicle production in Germany

    Berlin, July 28, 2020

    The German Association of the Automotive Industry (VDA) commented on the Federal Cabinet’s approval today of a new ‘labor protection control act’ (Arbeitsschutzkontrollgesetz) as follows:

    The automotive industry observes with concern that in connection with today’s Cabinet decision, discussions are already taking place on expanding the direct ban on using subcontractors and agency workers to other sectors.

    The global economy – and thus also the automotive industry – utilizes and depends on the division of labor. This means that in the value chain companies can concentrate on what they do best in competition. For example, we produce efficiently and thus also at the lowest prices for consumers. In the German automotive industry, suppliers account for 75 percent of value creation. The successful cooperation between OEMs, suppliers and external service providers is often organized through work or service contracts. That includes the supply of parts such as tires or car seats, and also work carried out by external service providers either on or off the client’s premises. This ranges from warehouse logistics to developing specialized software.

    The recurring debate on the possible abuse of subcontracting and agency work – abuse from which we explicitly distance ourselves – focuses on demarcation of the contractual relations with the attendant rights and obligations. This public discussion long ago sensitized the automotive companies to these issues and triggered a considerable amount of action to stop and prevent any more abuse.

    Sets of criteria and training measures have been developed based on the rulings of the Federal Labour Court so that businesses can optimize their own checks and controls. This involves examining, for instance, where exactly the employees work and who gives them instructions and allocates them tasks. Furthermore, with increasing digitization the automotive OEMs are working more and more with IT service providers. Although the providers have to attend internal meetings and have access to corporate data, their activities are governed by work contracts and therefore they are contractors and not employees. This effective cooperation must remain possible in Germany and should not be jeopardized by regulatory intervention.