During the last few years, agency work has received heightened legislative attention in Europe, on an EU level as well as on national level, since the early 1990s. This interest was spurred by the relative growth of the sector as well as by the hope that agency work might offer solutions to unemployment by providing enhanced flexibility. As a result, agency work is no longer considered as a form of employment to be shunned, but has gained in acceptance. This article undertakes to analyse the legislative development towards acceptance of agency work by comparing the EU approach with the German approach. Over and above the specific issue of agency work, the question whether needs for flexibility of employers and employees are capable of being reconciled by recourse to new methods of organising work and what regulatory policy is most likely to achieve this, forms a background to our considerations.After giving an overview of the definition of agency work with a specific reference to the inherent risks and the potential of enhancing flexibility and resulting regulatory approaches, we will consider the EU strategy on regulating agency work, especially within the conceptual framework of the EU employment policy. The next step is to analyse the German case with reference to the historical development of the approach towards agency work and an analysis of the latest legislative reform and its practical consequences. The conclusion assesses whether the German legislation complies with the draft directive, which national peculiarities shape its practical effects and what recommendations may be referred for the final version of the draft EU directive.