When running a business, you may find that you need to engage some extra staff for a period of time. You might need expertise when building your business, but cannot bring on a new employee. Alternatively, you may need extra hands if an employee goes away on leaveHere, you may wish to enter into a secondment agreement with another business who will send one of their employees for a specified time period. This article will set out what you should look out for in a secondment agreement to protect your business. 

Fitting the Role

When you engage a secondee, you must ensure they will properly fill the role that you need them to. As such, when you set out the services in the secondment agreement, they need to be as broad as possible. This will ensure that the secondee will assist your business to the full extent that you need them to.

Be careful of any exclusions to the services that the other business may include in the contract. Often, businesses might exclude certain services from the scope of the secondment. This will mean that they might have the ability to charge you separately for these services. 

For example, you may engage an accounting firm to provide an accountant to fill in for your staff member on parental leave. Your staff member might ordinarily prepare tax returns for the business, along with their duties in the role. However, the firm may exclude preparing tax returns from the scope of the secondment and then charge you separately for this service.   

Carefully reviewing a secondment agreement to see what services you will receive is crucial. This is because it will ensure that the secondee will meet your commercial needs.

Confidentiality

Confidentiality provisions will be crucial in almost every contract that you enter into. However, as a secondee is likely to access a range of confidential information, they will be especially important within a secondment agreement.

The confidentiality provision within your secondment agreement should require the business providing the secondee to keep all information confidential. The clause should also state that the other business must ensure the secondee does the same. 

Additionally, you may wish for the secondee themselves to sign a non-disclosure agreement to make sure that they are aware of their responsibilities. 

Non-Compete Clauses

A key concern for businesses supplying secondees is that their employees will enjoy working for your business and quit their job to work for you. While this may be beneficial for you and your secondee, this will not be ideal for the other business. This is because they will be without a good employee and won’t be receiving revenue from you. 

As such, almost all secondment agreements will come with some form of a non-compete clause, which prevents you from hiring the secondee directly to your business. Therefore, when entering into a secondment agreement, you want to ensure that this restraint clause is as narrow and limited as possible.

For example, you do not want to agree to a clause that would prevent that employee from working for you at any point in the future. 

Limiting Clauses

Here are some ways in which you can limit a restraint clause in a commercially reasonable way:

Limitation Benefit
Shorten the restraint period This will allow you to hire the employee shortly after their engagement ends. This is in comparison to having to wait for a more extended period of time to pass.
Limit the location of the restraint Limiting the location of the restraint will allow you to hire the employee to work at another location without breaching the clause. 
Exclude advertised jobs If you have advertised a position at your business that suits the secondee’s skill set, they may wish to apply for this job without you encouraging them to do so. Here, it is reasonable to allow them to participate in the application process as any candidate normally would. By excluding this type of behaviour from the restraint clause, it will enable you to hire the secondee if they apply for a job through your standard procedure.
Make it role-specific You can limit the restraint clause to only apply to the specific role that the secondee is filling during their engagement. This means that you may be able to engage them for another role in the business without breaching the non-compete clause. 

 

Some secondment agreements will also include a once-off fee if you wish to hire the secondee. This is similar to how a recruiter might charge a recruitment fee. Make sure you carefully review the contract and consider the effect this could have on your business.

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Key Takeaways

Secondments are a useful tool for ensuring your business runs smoothly if you have a staffing shortfall. It is crucial that you review the contract carefully to make sure your key interests are protected. You will need to ensure that the secondee must complete all the services within their role while keeping matters confidential. Further, if you think you may end up wanting to hire the secondee later on, you must ensure that the secondment agreement does not restrict this. If you have questions about secondment agreements, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
James Adler

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