What Is A Secondment Agreement?

What Is a Secondment Agreement?

This post has been updated on the 25th of May 2022 for legal comprehensiveness.

Every once in a while, your loyal employees get bored with their jobs or need a change but don’t know how to go about it.

As an employer, you can help your employees expand their skill set and broaden their horizons with secondment arrangements!

In Australia, the use of secondments is on the rise even during the COVID 19 pandemic.

If you want to know what secondment agreements are, their benefits, their legal issues, the types of secondments and how they work and what must be included in a secondment agreement. Read along!

Table of Contents

What is a Secondment Agreement [Definition] 

A secondment agreement is when an employer decides to temporarily assign their employee to a different department, business, or office.

Benefits of Secondment Agreements

Here are the primary benefits of using secondment agreements:

  1. Employers can help build and expand an employee’s exposure to the workplace in the early stages of their career
  2. As employees on secondment (secondees) are generally placed in a different field to their own, they can learn and develop skills to use once they return to their original role
  3. Secondments allow employers to deal with genuine redundancies in their company or department 
  4. They’re a great tool to increase employee engagement and promote growth
  5. Secondment agreements are extremely useful in formalising the terms of a secondment
  6. They allow you to be proactive when facing multiple legal issues and provide assurance for you to focus on your employee’s professional development

Legal concerns surrounding secondments 

Secondments are useful but can also raise important employment law questions. Some of these questions include:

  • Who the employee will be legally reporting to
  • What to do if your employee resigns whilst on secondment

Types of Secondment Agreements 

Internal secondments

Internal secondments are the simplest type of secondments. In this secondment arrangement, an employee is transferred to a different department in the same company. 

The purpose of this is to encourage your employee to learn about how your business works in a different area. 

This will allow the employee to have a  broader perspective of the business and to develop skills that may benefit them in their regular position. This is how most graduate programs work, as it allows the employee and employer to determine which department is the best fit for the employee.

Example of an Internal secondment 

Your employee Jane from your marketing department receives an internal secondment to work full time in human resources for three months. 

This agreement is arranged because you want Jane to further develop her interpersonal skills and learn the recruitment process. Part of Jane’s role in the marketing team is to promote employment opportunities at your business. 

After her secondment, Jane has learned the recruitment process and feels more comfortable dealing with people. Through this, her job performance has improved, and she has attained knowledge that allows her to promote the business with more insight and expertise.

External secondments

External secondments are where employees are moved outside of the business for a period of time to a host organisation rather than within your business. The secondment can be local, national or even international. 

External secondments typically occur between businesses that have professional partnerships or offices interstate and overseas.

Example of an External secondment

You own a consulting business in Sydney and have a partnership with a law firm. The law firm is  Lawson & Sons, which has offices in several international locations.  

You choose Sally from your legal affairs Department to go on secondment at Lawson & Sons’ office located in Tokyo for six months. Sally will return to your main office after six months. 

Legal issues with external secondment agreements 

External secondment agreements raise several legal issues. This is because your employee is technically working for someone else whilst being employed by you. 

Some of these issues include:

  • What happens at the end of the secondment
  • Who will monitor your employee’s performance
  • How to end the arrangement early 
  • What is the legal relationship between each party
  • Who’s responsible for the employee’s safety
  • How can the employee’s contract be terminated
  • What happens if the employee resigns
  • Which laws apply to the employee

Legal questions also arise for employees who are working overseas as typically that country’s laws will apply.  

Similarly, Australian laws apply if an overseas employee is sent on secondment to your business.

For clarity, all parties should include new employment terms when drafting the external secondment agreement.

Sign up for our newsletter and be the first to find hand-picked articles on topics that we believe are crucial to successfully scale your unique small business.

Want more?

Sign up for our newsletter and be the first to find hand-picked articles on topics that we believe are crucial to successfully scale your unique small business.

By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions

By clicking ‘Sign up to newsletter’ you are agreeing to the Lawpath Terms and Conditions

Types of External Secondments

There are two types of external secondments generally used by businesses, which are placement secondments and transfer secondments.  

External secondments can also be used by government agencies through section 66 of the Government Sector Employment Act 2013.

Placement secondment

In placement secondments, a secondee of a company temporarily works at a third party company for a specified time period.

Example of a placement secondment

You own an accounting business, and your employee is Drew. Your business regularly receives auditing requests from automobile companies, and you want Drew to have a better understanding of automobile businesses.

Therefore, you and EZ Auto the company hosting Drew agree that he’ll work for EZ Auto for six months to improve his understanding of automobile businesses. 

During these six months, Drew remains your employee despite working for EZ. Following these six months, Drew returns to your company, and he uses his experience and knowledge gained from his secondment to do his job more efficiently.

Transfer secondment

In contrast, transfer secondments create an employment relationship between the host company and the employee. 

Generally in this type of secondment, the original employment agreement between the secondee and the original employer is terminated. In these situations, the seconded employee will no longer be paid by the original employer, nor will they work for them. 

In some cases, a dual employee arrangement is created if the original employment contract is put on hold. 

Transfer secondments are useful as they’ll assist you in removing redundancies in your business by offloading work to another business.

What should be included in a secondment agreement?

Secondary agreements should include the following provisions:

  • The terms of the secondment
  • The relationship between the secondee and the employer should be defined
  • The duration of the secondment period and the expiry date
  • How the secondee will receive remuneration for their work
  • The benefits the secondee will be receiving
  • Whether the secondee is provided with any entitlements, including leave entitlements 
  • The work policies the secondee must follow
  • Who’ll be managing the secondee’s performance
  • It should outline that the secondee isn’t allowed to disclose confidential information during or after their secondment
  • Who’s the owner of the intellectual property created by the secondee
  • Who’s responsible for the actions and omissions of the secondee whilst they’re performing their work 
  • Whether the secondee is provided with indemnity for their actions
  • The agreement should outline how the termination of the secondment will occur
  • A non-compete clause to prevent your employee from being hired by their host employer or leaving your business to work there instead

Conclusion

Secondment agreements are crucial for employers like you to outline key terms concerning an employee’s secondment. 

They ensure employers and employees know their obligations and that both parties benefit from the secondment arrangement.

You should hire a lawyer for further information and legal advice relating to sending your employee on a secondment, legal issues surrounding secondments and how to create a secondment agreement.

Find the perfect lawyer to help your business today!

Get a fixed-fee quote from Australia's largest lawyer marketplace.

Register for our free live webinar today!

Understanding ASIC Compliance: Essential Knowledge for Australian Startups

12:00pm AEDT
Wednesday 28th February 2024

By clicking on 'Register for webinar' you are agreeing to the Lawpath Terms & Conditions

You may also like

An ombudsman can help you if you have a complaint about a business or government agency. Read on to learn about the processes involved in having your issue heard.
A summary judgment is a judgment issued against one party without a trial taking place. Find out here when a summary judgment may be issued.
Are you approaching retirement and thinking about how you will manage your money? A superannuation income stream is a popular option. Read on to find out more.

Thank you!

Your registration is confirmed. Keep an eye on your inbox for an email with details on how to watch the webinar.