Insufficient adaptability of the labour markets is frequently given as explanation for sustained employment problems in Germany and Europe. The lack of flexibility may be caused by regulations on employment security, such as standard protection against wrongful dismissal and the option to conclude short-term employment relationships. In Germany, these flexible forms of employment can be divided into three main categories: temporary work, loan employment, and agreements on free-lance work. The project investigates these three types of employment. We examine which factors determine the use of such employment relationships by German firms. On the basis of a panel data set for establishments (IAB-Betriebspanel), we find that institutional factors such as the existence of works councils are among the factors which influence the employment decision. Moreover, we find a link between the extent of employment protection for regular employees and the use of flexible working contracts. Other empirical results of the project concern the effect of flexible employment forms on the adjustment speed of German companies and the wage gap between fixed-term and regular employees. We further investigate employment and workplace dynamics. We find that a comparative large proportion (about 30 per cent) of all newly concluded employment relationships are made for a fixed duration. However, there does not seem to be a tendency over time for regular jobs to be replaced by fixed-term employment.