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Recruitment Agents involved in international contract recruitment often outsource the contractual relationship with the individual performing the duties of the contract to an international umbrella company. By doing this, there is an impression in some quarters that the whole risk burden of the deal has been passed on. This takes no account of the fact that it is normally the agency that signs the Master Agreement with the client and that at any rate in some countries (e.g.

There is often a tense dynamic in the relationship between Front Office and Back Office in the recruitment world and in my experience nowhere are the battle lines more tightly drawn than in the area of international contracting. This may be for a number of reasons such as that there are a greater number of variables, the risks are higher, contractor demands are more varied and more insistent and there are multiple layers of compliance and non-compliance.

There is very little that causes more unease among International Recruitment Agencies than the question of whether or not they are potentially on the hook if their contractors or service providers fail to comply with the tax law in the country in which the contractor is working. The confusion on this matter is exacerbated by the fact that international umbrella companies with different methodologies tend to spread different messages around the market place. Also, tax risk is often confused with labour law risk.

Germany is the second largest market in Europe for fixed-term contracts after the UK. The current German government regards fixed-term contracting as a vital element in a flexible labour market and actively promotes the use of temporary labour (in spite of the fact that it is not popular with the trade union movement).

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