Federal Employment Agency: what it checks about your company, not just the job

Does the Federal Employment Agency check the employer company or only the job?

Yes. The Federal Employment Agency examines the employment relationship as a whole, and your company is part of it. A residence permit for employment requires the agency's approval, unless a law, the Employment Ordinance or an intergovernmental agreement provides otherwise. One statutory condition is that the foreign worker is not employed on less favourable terms than comparable workers in Germany.

To assess that, the agency depends on you. Section 39 of the Residence Act obliges the employer to give information on pay, working hours and other working conditions. The same provision names details on social insurance and on whether a licence to practise the occupation is needed. For seasonal employment, information on accommodation, the rental terms and the rent is added. Who decides what in this procedure is set out in our overview of employer and authority roles.

What the Federal Employment Agency looks at in the pay and hours you offer

The agency compares your pay and working hours with what comparable workers in Germany receive. This check of working conditions is part of the labour market check and takes place in every case. The basis is the job description that you, the employer, complete and sign.

The first benchmark is the collectively agreed pay and conditions for the work. If no collective agreement applies to your company, the agency examines whether a sector minimum wage applies, or what the locally customary pay for comparable work is. For the local level it draws on representative and reliable sources taken together. If the working conditions are not comparable, the agency may not give its approval. The reverse does not follow: comparable conditions do not produce approval by themselves, because the agency decides each case on its own.

Checks about the job compared with checks about your company

Which circumstances in your company can lead to a refusal of approval?

Section 40 of the Residence Act names reasons that lie with the employer, not with the post and not with the person. Approval has to be refused if the employment relationship came about through unlawful placement or recruitment. It also has to be refused if the person is to work as a temporary agency worker, meaning hired out to another company. What changes between the two models is described in our comparison of direct hiring and staffing agencies.

Further grounds allow a refusal, and the agency weighs them at its discretion:

• the employer was fined or convicted for certain offences within the last five years
• insolvency proceedings are under way or the business is being closed down
• the employer carries on no business activity
• the presence of the foreign worker is to be used to influence industrial disputes or negotiations
• the employer or the employment relationship was created mainly to enable foreigners to enter and stay in Germany for employment
• the employer or the receiving establishment has not met its social-security, tax or labour-law obligations

The law lists these points; it does not rank them by how often they occur. "Can be refused" is not the same as "is refused". The agency looks at the file in front of it and decides.

Which details about your company you have to put on paper

Your company data goes into the declaration of the employment relationship, the form with which an employer confirms a concrete job offer. The Federal Employment Agency asks there, among other things, for:

• company name, address, contact person and contact details
• the company number (Betriebsnummer) of the establishment where the person will work
• start of the employment, any fixed term, and whether this is temporary agency work
• the place of work and a precise description of the duties, including field, function and sector
• whether your company is bound by a collective agreement and whether you employ under its terms

The company number is the point where your business becomes visible as an employer. Every establishment needs one to take part in the social-insurance reporting procedure, and the number identifies the establishment for the social-insurance institutions. You need it from your first employee onwards, including minijobs and apprentices, and the application has to be made electronically. What you report includes the name of the establishment, its legal form, the address where people work and its economic activity. Small firms are not excluded from any of this, as our page on hiring a foreign worker as a small company explains.

Can the approval be withdrawn after your employee has started work?

The approval can be withdrawn and the work permit taken away later. Section 41 of the Residence Act allows this where the foreign worker is employed on less favourable conditions than comparable workers in Germany. It also allows it where the grounds of Section 40 apply, that is, the employer-related reasons for refusing approval.

Practically, the file does not close on the first working day. What you declared about pay, hours and duties is what you have to deliver. If the role or the pay changes substantially, treat that as a question for the responsible office, not as an internal matter. Employers who employ foreign nationals also have to give the Federal Employment Agency information on request, even in cases where no approval was required at all.

Who checks later whether you actually pay what you agreed?

The Finanzkontrolle Schwarzarbeit, the undeclared work unit of the German customs administration, is responsible for checking that the minimum wage is paid and for penalising breaches. It is a separate authority from the Federal Employment Agency, with its own powers and its own inspections.

Both strands meet in your file. Section 40 of the Residence Act allows a refusal where the employer was fined or convicted for certain offences within the last five years. A wage inspection today can therefore matter in a hiring case tomorrow. The level of the statutory minimum wage and of any sector minimum wage changes over time; what counts is the figure stated by the responsible authority for the period in question.

If you want help with the employer side of the paperwork for a hire from Albania or Kosovo, you can register as an employer and tell us which role you need to fill.