Table of Contents
In Short
- Secondments let you temporarily bring in skilled workers, offering flexibility and cost savings.
- A well-structured agreement protects the rights and responsibilities of all parties.
- You still have legal obligations, including tax, employment rights and health and safety.
Tips for Businesses
Ensure your secondment agreement clearly outlines each party’s obligations, including payment terms and legal responsibilities. Investing in professional legal advice will help you avoid potential risks and ensure compliance with tax, employment law, and health and safety regulations, protecting both your business and the secondee.
As a business owner in the UK, you may find yourself in need of additional skilled workers for a specific project or busy period. Rather than going through the lengthy and costly process of hiring permanent employees, you could consider taking on staff through a secondment agreement. A secondment allows you to hire experienced professionals temporarily by ‘borrowing’ them from another company for a set timeframe. This article outlines the secondment process and how your business can benefit from this arrangement.
What is a Secondment?
A secondment is when an employer (the ‘seconder’ or ‘sending employer’) temporarily releases one of their employees to work for a separate company (the ‘second company’ or ‘receiving company’).
During this secondment period, the worker (known as the ‘secondee’) remains employed by their original seconder company. However, they work under the day-to-day supervision, direction, and control of you, the second company.
The Benefits of Secondments for SMEs
For small and medium enterprises, taking on seconded workers through a well-structured secondment agreement can offer numerous advantages over permanent hiring or using typical temporary staffing agencies.
Some of the key benefits are:
- Access to Specialised Skills: You gain access to experienced professionals with niche skills and expertise for a specific project or time period without having to recruit and hire them permanently.
- Cost Savings: Secondments can be more cost-effective than hiring permanent employees or paying temp agency fees, especially for short-term resourcing needs.
- Staffing Flexibility: You can quickly bring in additional staffing support when required while avoiding the hassle and costs of full-time recruitment.
- Knowledge Sharing: Secondees can transfer valuable skills and knowledge to your existing team during the secondment period.
Essentially, secondments provide a flexible, low-risk way for SMEs to enhance their available skills and resources without a long-term commitment.
As an employer, it is crucial to stay compliant with ever-evolving employment law. This factsheet outlines key changes in 2024 that will affect how you manage your workforce.
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Key Terms in a Secondment Agreement
Any secondment arrangement needs to be properly documented in a legally binding secondment agreement. This contract should clearly set out the obligations and rights of all three parties involved: the seconder company, the secondee, and you as the receiving second company. As the host, you will need to enter into a secondment agreement with the seconder company.
The seconder company has the responsibility of ensuring that the provisions in the secondment agreement are accurately reflected in a letter to the secondee.
Here are some of the key terms that should be covered.
Secondment Period
Specifying the exact start and end dates for the temporary secondment is crucial. Periods can range from a couple of weeks to a few years. The agreement should also cover provisions for extending or renewing the secondment period.
Secondee Duties and Standards
There should be clauses covering details of the secondee’s:
- work role;
- duties;
- targets; and
- performance expectations.
You should also include how you will review and manage performance.
Seconder Obligations
The seconding employer’s ongoing responsibilities, such as paying the secondee’s salary, benefits, and insurance. This also includes managing ongoing employee relations issues and performance management.
Second Company Obligations
Your obligations as the receiving company, which must be outlined in the contract, may include:
- day-to-day supervision;
- providing equipment;
- training the seconding employee for your workplace; and
- potentially reimbursing some employment costs, such as travel expenses.
By comprehensively documenting each party’s responsibilities in a robust secondment agreement, you minimise the risks and ensure all sides understand exactly what is expected during the temporary working arrangement.
Payment Terms
How and what the second company will pay the second, whether a fee, reimbursement of salary/employer costs, or a combination, must be included within the contract. Ensure that payment terms are detailed, including any administration fees or overheads.
Working Arrangements
The contract should have practical details, such as:
- working hours;
- office/equipment provisions;
- reporting lines;
- any training requirements; and
- potential remote working arrangements.
Confidentiality and Intellectual Property
To protect commercially sensitive information, restrict what data the secondee can share. Additionally, you may suggest including non-disclosure agreements (NDAs) to safeguard confidential information.
A further consideration is who owns any IP created by the secondee during the secondment period, which the contract should specify.
Early Termination
This will allow either party to terminate the secondment early if the agreement terms are breached or the arrangement is no longer viable. Define notice periods required for early termination and any conditions or compensations tied to early termination.
Other Legal Considerations
While the secondee remains employed by the original seconder company, as the second ‘receiving’ company you still have some key legal obligations to be aware of, outlined below.
Tax and National Insurance
In most cases, the original employer continues to pay the secondee’s wages, they also remain for handling all the tax-related matters, including PAYE and National Insurance Contributions. However, although less common, you may decide to pay the secondee directly. If this is the case, you may need to handle the PAYE and National Insurance Contributions yourself.
This means you need to add the secondee to your own payroll system. When considering the secondment agreement, you should clearly set out who will handle pay and taxes to avoid confusion later on down the line.
Employment Rights
Although not their direct employer, you must still uphold the secondee’s basic statutory employment rights around matters such as:
- working hours;
- discrimination;
- fair dismissal;
- minimum wage; and
- holiday entitlements.
This includes adhering to various relevant employment laws and regulations.
Health and Safety
You have the same legal duty of care regarding health and safety for seconded workers as your own staff. This includes providing a safe workplace, conducting appropriate risk assessments, and offering the necessary training and protective equipment for their role.
By being aware of these legal responsibilities upfront, you can ensure your secondment agreements and working practices are fully compliant.
Key Takeaways
As a receiving business, secondments offer you a flexible and cost-effective way to bring in skilled workers on a temporary basis, giving you access to specialised expertise without the long-term commitment of permanent hires. A well-structured secondment agreement is essential to ensure everyone’s rights and obligations are clear. Even though the secondee remains employed by their original employer, you still have important responsibilities, including tax, employment rights, and health and safety. By seeking professional drafting advice, you can minimise legal risks and ensure a smooth secondment, allowing you to focus on the benefits of enhanced skills and resources for your business.
If you are drafting a secondment agreement, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
With typical temporary staffing, you take on ‘temps’ as your own employees for a fixed period through an agency. In a secondment, the worker remains employed by their original company but works under your supervision temporarily.
Many secondment agreements include a provision allowing the second company to permanently hire the seconded worker after the secondment ends if both parties agree. This allows a ‘try before you buy’ scenario.
Secondment agreements should include clauses that allow either the seconder or second company to terminate the arrangement before the intended end date if circumstances require it, such as the secondee not meeting performance standards. Define notice periods and any conditions or compensations tied to early termination.
By taking the time to understand secondments and put robust legal agreements in place, SMEs can benefit from this flexible resourcing solution while remaining compliant and protected.
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