Secondment Agreement (Employers’ Guide)

Whether your organisation is considering a programme of secondments for a group of employees or arranging a single secondment for an individual employee, you will need to know how to go about achieving this, in particular, you will need to consider the contents of any secondment agreement.

Equally, if you are a host organisation looking to accept a seconded employee into a temporary job role, it will be important to understand, both legally and practically, how this works and how to safeguard your own interests.

In this guide, we look at what a secondment agreement is, what it should include to be effective and its role in the wider secondment process.

 

What counts as a secondment?

The term ‘secondment’ describes an arrangement under which an employee is temporarily assigned to work either for another part of their employer’s organisation or for a different employer within the same group, or for a different, ‘host’ organisation, such as an employer’s client or business partner. These are known as internal or external secondments respectively.

The use of internal secondments can be a useful way to meet short-term staffing needs, such as maternity cover, whilst external secondments can help to develop good business relationships with other organisations whilst enabling employees to gain new skills and experience that can benefit the business on their return.

In short, secondments can enhance both service delivery and staff development without losing a valued employee.

On expiry of the secondment term, the seconded employee will usually return to their original employer.

That said, before embarking on the use of secondments, employers should be clear about the aims and objectives behind this type of arrangement and how these are to be achieved. In particular, both the employer and, where relevant, any host organisation, will need to ensure they carefully match the right people to the right opportunities.

 

What is a secondment agreement?

The agreement has the effect of changing (or ‘varying’) certain terms of the employment contract for the duration of the secondment. As such, the employee’s agreement to the secondment, and therefore to any variation of their contract of employment, must be obtained before a secondment can commence.

By law, an employer cannot compel an employee to go on secondment, nor unilaterally vary an employee’s contract of employment. Even in cases where there is contractual provision for the employee to undertake a secondment, either in the form of a flexibility or mobility clause, the employer must act reasonably in enforcing the terms of any such clause having regard to the nature of the secondment and the personal circumstances of the employee.

As such, the releasing employer should consult with any affected employee and obtain their consent for a secondment to go ahead. They otherwise risk a claim for breach of contract, or even constructive dismissal where an employee feels forced to resign as a consequence.

Further, where agreement is reached for a secondment to proceed, this does not terminate an employee’s contract of employment with their employer, rather the contract continues to subsist during the period of secondment.

Indeed, a key element of any secondment is that the employee is ordinarily expected to return to their previous post when the secondment ends. As such, the releasing employer will also need to consider how they will cover the seconded employee’s post during the period of secondment, as well as how they will manage the employee’s re-introduction to the workplace once the secondment ends.

 

What should the secondment agreement include?

In the case of internal secondments, these can usually be arranged relatively informally.

However, where an employee is being seconded to a different employer or host organisation, prior to commencement of the secondment an agreement should be put in place between the parties to avoid confusion as to where certain responsibilities lie and other concerns such as who the seconded employee should report to.

It is not uncommon for complications to arise, particularly where the employee is seconded to a completely different employer. Here the secondment essentially amounts to a three-way arrangement between the employee, the releasing employer and the host organisation. There is the potential for issues to arise in relation to managing work, managing the seconded employee and protecting the interests of all involved.

As may be expected, just as no two secondment arrangements will be the same, there is no one-size-fits-all secondment agreement.

Each agreement should be tailored to the specific secondment, the employee and organisations involved, as well as the circumstances surrounding the secondment in question and any specific business needs at the relevant time.

As a minimum, an effective secondment agreement should include:

• The length of the secondment
• The nature of the seconded employee’s job role
• The specific contractual obligations the seconded employee will be required to fulfil, and for whom
• The identity of the employer for the seconded employee during the period of secondment
• The organisation responsible for paying the salary and/or any other costs or benefits to which the seconded employee is entitled
• The organisation responsible for the line management of the seconded employee on a day-to-day basis, for example, reporting absence due to sickness and approving any holidays
• The organisation responsible for dealing with appraisals, disciplinary and grievance issues during the period of secondment
• The nature and extent of any obligations between the releasing employer and host organisation, including any mutual indemnities for any acts or omissions of either party that lead to claims by the seconded employee
• The type of procedures and supervisory arrangements to be followed during the period of secondment
• The mechanisms to be put in place by the releasing employer so the seconded employee can keep in touch during the period of secondment
• The provisions to be put in place for the release of the seconded employee to undertake any necessary training and/or maintenance of professional qualifications during the period of secondment
• The procedure to be followed for any of the parties to curtail or extend the period of secondment, including any notice period to terminate.

Under an external secondment agreement, it is usually the intention of the parties that the seconded employee will undertake full-time duties for the host organisation and, as such, will not report on a day-to-day basis to the releasing employer during the period of secondment.

In other words, the releasing employer will not maintain a daily management relationship with the seconded employee, rather the employee’s line manager for day-to-day purposes will be as nominated by the host, whereby the releasing employer agrees to accept such control.

However, because the contract of employment that the original employer has with the seconded employee continues in force for the period of secondment, continuity of employment will still be preserved for the purposes of calculating any service-related entitlements and statutory employment protection rights.

In other words, the seconded employee will continue to accrue time towards any minimum length of service entitling them to various statutory rights, such as the right not to be unfairly dismissed which usually requires a period of two years’ service. The clock will also continue to run for any contractual service-related benefits, such as a seniority-based salary increase or other benefits.

In rare cases, the original employment relationship will be deemed to transfer over to the new employer or host organisation, possibly where the releasing employer has surrendered all control over the seconded employee.

It is therefore important, for all parties involved, that the secondment agreement makes it clear that the original employer retains control over the employment relationship at all times. Further, any practical arrangements to be implemented on a day-to-day basis during the period of secondment should also reflect this.

 

Can an employee be disciplined or dismissed while on secondment?

In relation to disciplinary action, clear provision should be made within the secondment agreement as to how this should be dealt with. Typically, the releasing employer should retain direct control over any disciplinary proceedings or action, with the host employer or organisation providing input.

As to the question of dismissal, as the releasing employer retains control over the seconded employee’s contract of employment, if the host employer wanted to dismiss the employee, its powers would be limited to terminating the secondment agreement. As such, the original employer would then need to decide whether or not any alleged misconduct and/or poor performance justify bringing the employee’s contract to an end.

As previously indicated, careful consideration should always be given by both the releasing employer and host organisation as to matching the right people to the right opportunities. In particular, during the period of secondment, the host employer must ensure that any duties delegated to the seconded employee are appropriate to that individual’s status, skills and abilities.

It would be considered unfair to discipline or dismiss an employee for any failure on their part not to satisfactorily perform duties that they are neither sufficiently qualified nor experienced to undertake. Moreover, this could easily lead to a complaint of unfair dismissal before the employment tribunal.

 

Can an employee be made redundant while on secondment?

The agreement should set out whether the secondee’s role is to be kept open for them to return to after the secondment. If an employee’s substantive role is being considered for redundancy, a fair procedure should be followed to avoid unfair dismissal claims. This means the employer has to meet the relevant redundancy consultation requirements and should offer the employee any available alternative roles.

 

Imapct of secondment on holiday and sick leave?

In relation to sickness and holiday leave during a period of secondment, although this is subject to agreement between the parties, the seconded employee would normally be entitled to no less favourable terms than those enjoyed with the releasing employer.

This means that if the contract of employment provides for a greater length of paid annual leave than that to which an employee is statutorily entitled, or they originally benefitted from an occupational health scheme that provided them with the right to contractual sick pay, then the seconded employee should continue to benefit from these enhanced rights.

 

Who is responsible for paying the seconded employee?

The question of who will be responsible for paying the seconded employee is again a matter for agreement between the parties to the secondment. However, it is not uncommon for the employee to remain on their original employer’s payroll but for that employer to be reimbursed by the host organisation.

Equally, the host organisation may agree to directly pay a salary to the seconded employee equivalent to the employee’s normal salary or alternatively, the releasing employer may agree to continue to cover this cost.

In circumstances where agreement has been reached for the host organisation to pay the seconded employee an increase in salary during the period of secondment, on termination of the secondment agreement the employee’s salary will usually revert back to that payable under their contract of employment.

The host organisation will also usually agree to reimburse the seconded employee reasonable expenses incurred in the performance of their duties during the period of secondment, as well as for any additional hours incurred in performance of the agreed duties during this period.

 

How long do secondments last?

The length of time that the secondment is to last should be agreed from the outset and set out within the terms of the secondment agreement. In particular, it should be decided whether the arrangement is to be for longer than 23 months, and as such would qualify as a fixed term.

In circumstances where it is decided that a notice period should be given in order to terminate a fixed term secondment, this length of notice should also be established prior to commencement of the secondment.

 

Need assistance?

The use of a secondment agreement will be vital in determining, and proving, the nature and extent of responsibilities between the parties.

It will also provide the seconded employee with a clear basis upon which to decide whether or not to proceed with any secondment and how this will affect their working lives and entitlements.

For further information and guidance on how to safeguard your business when setting up a secondment arrangement, speak to our employment law experts for advice.

 

Secondment agreement FAQs

How long can you be on a secondment for?

Ordinarily secondments are short term with a period specified in the secondment agreement. If the secondment is to be for a period of longer than two years, the arrangement would be considered a fixed term contract.

How does a secondment work?

A secondment refers to an arrangement where an employee or group of employees is assigned on a temporary basis to work for a different part of their employer's organisation or for a different employer.

Who pays the secondee?

Depending on the circumstances and terms of the arrangement, the releasing employer typically continues to pay the secondee’s wages, expenses and other costs. The agreement should specify who is liable for any additional costs incurred relating to the secondment.

Last updated: 13 April 2023