Secondment agreement

What is a secondment agreement?

A secondment agreement is a legal arrangement under which an employee, manager, consultant or other specialist is temporarily assigned to perform work for another entity, department, group company, client or project organisation, while maintaining an existing relationship with the original employer or service provider. It is commonly used in corporate groups, international projects, restructurings, joint ventures and specialist advisory work.

The main purpose of a secondment agreement is to define who directs the secondee’s work, who bears employment-related and operational costs, which entity remains the formal employer, where applicable, and what happens after the assignment ends. The agreement helps separate the practical supervision of the person from the legal obligations connected with employment, remuneration, social security, taxation, confidentiality and liability.

A secondment agreement may operate alongside an employment contract, management contract, service agreement or intra-group services arrangement. It does not automatically replace the original employment relationship. In many cases, the original employer remains responsible for salary payment and employment administration, while the host entity receives the benefit of the secondee’s work and may reimburse the relevant costs.

What does a secondment agreement regulate?

A properly drafted secondment agreement should describe the temporary assignment in clear operational and legal terms. It usually identifies the seconding entity, the host entity and the secondee, explains the business purpose of the assignment, and sets out the expected scope of duties. It should also address reporting lines, workplace location, working time arrangements, access to systems, health and safety obligations, and the rules for ending or extending the assignment.

In employment-related secondments, it is important to determine whether the host entity will only provide day-to-day instructions or whether it will exercise employer-like authority. This distinction may affect labour law obligations, liability for workplace incidents, employee claims and the assessment of whether the arrangement has been structured correctly. In cross-border cases, additional issues may arise, including immigration compliance, posted worker rules, social security coordination, tax residence, payroll obligations and permanent establishment risk.

Secondment agreements are also used in commercial and corporate contexts. For example, a parent company may second finance, legal, IT or management personnel to a subsidiary. A company involved in a business acquisition may second key staff to support integration. A contractor may provide specialists to a client’s project team. In each case, the agreement should reflect the actual way in which the work will be performed and supervised.

Key provisions often include:

• duration of the secondment and rules for early termination;
• scope of tasks and authority of the secondee;
• division of responsibilities between the seconding entity and the host entity;
• remuneration, cost reimbursement and invoicing mechanics;
• confidentiality, data protection and access to business information;
• intellectual property rights created during the assignment;
• liability for damage, misconduct or non-performance;
• compliance with internal policies, anti-corruption rules and sector regulations;
• return to the original employer after the secondment ends.

When is a secondment agreement needed?

A secondment agreement is useful whenever a person performs work in an organisational structure different from that of the formal employer or original contracting party. It is particularly important where the assignment is expected to last for a defined period, involves access to sensitive information, affects payroll or tax settlements, or creates operational dependence on the host entity.

Businesses use secondment agreements when they need specialist support without changing the formal employer of the secondee. This may include temporary management support, implementation of a new system, crisis management, compliance projects, expansion into a new market, post-acquisition integration or assistance within a corporate group. The agreement can also help document that the assignment has a legitimate business purpose and is not an artificial arrangement designed to avoid employment, tax or regulatory obligations.

From the secondee’s perspective, the agreement or accompanying documentation should make the assignment predictable. It should clarify who gives instructions, where the person works, whether employment benefits change, how expenses are handled and what rights apply during the assignment. Where the secondment changes essential employment conditions, additional employee consent or amendments to employment documentation may be required, depending on the governing law.

Early legal review of a secondment structure can help avoid disputes between group companies, employee claims, unexpected tax exposure, immigration issues, confidentiality breaches and uncertainty over ownership of work results. This is especially relevant in international secondments and regulated sectors, where operational arrangements may have legal consequences beyond ordinary HR administration.

Legal support for secondment agreements

Support from a law firm in relation to secondment agreements may include in particular:

• drafting and reviewing secondment agreements for domestic and cross-border assignments;
• assessing whether the proposed structure is consistent with employment law and commercial law requirements;
• preparing amendments to employment contracts and internal HR documentation;
• advising on allocation of costs, reimbursement models and intra-group settlements;
• reviewing confidentiality, data protection and intellectual property provisions;
• assessing tax, social security and permanent establishment risks with tax advisers where required;
• advising on termination or extension of secondment arrangements;
• supporting companies in disputes connected with seconded personnel.

Need assistance with a secondment agreement? Contact us.

See also

• Employment Contract
• Commercial Law
• Corporate tax
• Transfer pricing