An employer's guide to secondment agreements

Organisations use secondments for a variety of reasons, such as, providing opportunities for employees to develop skills, as a means of avoiding redundancies or to provide cover in other areas of the business.  Secondments can be to other parts of the business, other businesses within the group or to completely separate organisations, e.g., a client.

Where the secondment is within the same business, organisations do not always record this in writing, but it is sensible to do so. If there are any changes to the section 1 statement terms, then the employee should be notified of these in any event. Recording the arrangement can avoid problems of uncertainty arising in the future; for example, has the employee just been seconded to the area or is it a permanent move?

If the secondment is to another business, whether in the same group or not, then the secondment arrangement should be clearly set out in terms of how it will work and the parties involved, i.e., the employer, the employee (secondee) and the organisation that the employee is seconded to (the host employer). Roles and responsibilities should be clearly delineated. 

When an employee is seconded, the secondee remains employed by the original employer and there is no break in the continuity of employment; the secondee is effectively 'hired-out' or 'lent' to the host employer.  The secondee does not become the host employer’s employee, unless the way the arrangement is handled gives the secondee scope to argue that it this is the case. For this reason, it is important that the arrangements make it clear that the secondee’s duties are owed to his original employer and not the host employer. Similarly, the duties on the host employer are between him and the original employer and not the host employer and the secondee. The original employer should continue to have day-to-day control of the secondee, be responsible for disciplinary and grievance issues, pay reviews etc., with the host’s obligations being limited to day to day instruction.

Right to second?

The first question for an employer looking at secondment is whether there is a right in the contract for it to second an employee. It is unusual for there to be such a clause in the contract and so, in the absence of such a term, the employer will need the employee’s agreement to the secondment.

Even if there is a contractual term, then the employer must take care in exercising the right as there could still be a risk of an indirect discrimination claim if the requirement for the employee to move puts the employee at a disadvantage because of a protected characteristic and this can’t be justified. Alternatively, if the handling of the arrangements for putting the employee on secondment is in breach of the implied term of trust and confidence, the employee could resign and claim constructive dismissal.

What will the seconded role look like?

As the secondee’s contract of employment will remain with the employer, discussions need to take place with the host employer as to what is expected of the secondee during the period of secondment. The secondee can only be required to perform the role and duties set out in his contract with the employer although the phrasing of the contract may be wide enough to encompass a number of activities. If the duties during the period of secondment are going to be different and aren’t covered within the existing contract, then the employer and secondee will need to agree a change, albeit on a temporary basis.

Management of the secondee

The secondee, as an employee of the original employer and not the host, will remain subject to the original employer’s policies and procedures and bound by the terms of secondee’s employment contract. The host may wish the secondee to follow its policies and procedures, e.g., equality and diversity, health and safety etc., and it is sensible to amend the secondee’s contract with the employer to ensure this is covered. This could be done via the secondment agreement letter. However, the host must be careful in terms of how its own policies and procedures are applied to the secondee and how any issues arising from breach of these procedures are dealt with, to avoid an argument that the secondee has become the host’s employee. In the event of a breach, it is sensible that the host refers the matter to the original employer to be managed and dealt with.

Other factors the employer and host need to consider include the following:

• How will performance be monitored during the secondment and who will be responsible for paying for any training?
• Who will supervise the secondee and to whom will they report?
• Will the secondee be subject to any pay increases that arise at the original employer’s organisation whilst they are seconded?
• How will disciplinary and grievance issues be dealt with? Whilst these should be dealt with by the original employer, consideration should be give to how these will be managed on a practical level.
• What holiday can the secondee take whilst on secondment and how this will be approved and managed? Again, it is prudent that the holiday requests go to the original employer, but the employer will no doubt want to liaise with the host.
• Reimbursement of the secondee’s expenses.
• Who takes on the liability for the secondee’s benefits during this period? Again, it is sensible that it is the original employer who maintains the responsibility for administering these, but the parties should consider who will bear the cost.
• What will happen if the secondee goes off sick? Although the secondee should be paid any sick pay by the original employer, does the original employer pick up the liability or will the host reimburse the employer for any monies paid out?
• Do both the employer and host have sufficient protection in terms of the secondee not disclosing confidential information and in terms of any restrictive covenants?

At the end of secondment

Typically, the secondment agreement will specify the length of the secondment. This may be for a fixed period of time or it may be for such time as it takes to complete a specific task.

Once the secondment has ended, then the big issue for the secondee is what will happen to them. Will they return to the same job they were doing before? Might they be returned to another suitable role within the employer’s organisation? Additionally, what will happen if there is no role for them to return to? It is best to address what will happen at the very outset of the secondment, so that expectations are clear. 

Can employment be terminated while on secondment?

Either way, consideration should be given as to whether either the original employer or secondee can terminate either the secondment and/or the employee’s employment during that period. Some aspects of this may depend on what has been agreed between the host employer and the original employer. It is sensible that, at all times, the secondment and the secondee’s employment may be terminated with immediate effect in the event of gross misconduct.

Depending on what arrangements the host employer and the original employer have in place for the secondment, if the employer or secondee terminate the secondee’s employment during the secondment, the employer may wish to consider whether the notice the secondee is required to give is adequate or should be increased in the secondment agreement for the duration of the secondment.