Don't Forget Your Secondment Wind

Practical Law Legal Update w-001-3034 (Approx. 5 pages)

Don't Forget Your Secondment Wind

by Practical Law Labor & Employment

Published on 12 Jan 2016 • USA (National/Federal)

This Legal Update highlights resources to assist employers that are considering secondment arrangements or drafting secondment agreements.

Early in the new year, companies often have temporary needs for highly skilled workers who either have working knowledge of their business operations or can learn them quickly. Sometimes companies overextend their staff with end of year promises of new projects, audits or product launches to be delivered in the first quarter. Sometimes staffers becomes overextended because of unforeseen turnover of key personnel (often following year-end bonus payments), requiring lengthy recruitment and hiring processes. Regardless of what created the temporary staffing need, when brainstorming short-term internal and external staffing solutions, companies should not forget the boost or "secondment wind" that secondment arrangements can provide.

A secondment arrangement is often worth considering when it is not desireable or feasible to hire a new employee immediately or engage an independent contractor. Counsel charged with guiding companies through staffing and contracting for labor should know the practical and legal implications of secondment arrangements.

A secondment is a temporary assignment of an employee from one organization (employer) to another (often referred to as the host) for a specified time period, usually to carry out a particular project or cover for a critical employee who has departed or is on a leave of absence. A secondment can be a transfer within the same organization or between two unrelated business entities. It also can be a domestic or overseas (expatriate) assignment. An employer and a host typically memorialize their secondment arrangement in a formal secondment agreement. The employer often supplies the seconded employee with a separate letter describing the secondment's terms.

Parties often enter secondment agreements to:

Fill temporary needs of the host with an employee who:
- has specialized training or skills;
- is vested in performing assigned tasks well to strengthen the relationship between his employer and the host; and
- has been vetted by the employer for the assignment.
Train the seconded employee on the practices and processes of the host, often a client of his employer.
Strengthen ties between the employer and the host.

During a secondment, the employer continues to employ the seconded employee. The parties generally anticipate that the seconded employee will return to his original position with the employer at the end of the secondment.

Although the terms in secondment agreements vary, especially between domestic and expatriate agreements, they typically include provisions that:

Clarify that the employer maintains the employment relationship.
Set dates or achievements that, when reached, terminate the secondment.
Identify:
- how the host will compensate the employer for the use of the seconded employee, if at all;
- which entity will provide for the seconded employee's salary and benefits during the secondment; and
- which entity will manage the seconded employee's daily activities.

Expatriate secondment agreements often raise additional and more complex issues, such as multinational immigration and tax law compliance.

Practical Law has a collection of resources to help employers develop domestic and expatriate secondment agreements. These resources address the various legal, negotiating and drafting issues that employers should consider when:

Deciding whether to form secondment relationships.
Entering secondment agreements.

For more information about these issues, see the following key resources:

Don't Forget Your Secondment Wind | Practical Law