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When running a business, you may need to engage some extra staff for some time. For example, you might need some additional expertise when building your business but cannot bring on a new employee full-time. Alternatively, you might need an extra pair of hands while an employee goes away on leave. In such circumstances, you may wish to enter into a secondment agreement with another business, meaning they will send one of their employees for a specified period. This article will set out what you should look out for in a secondment agreement to protect the interests of your business.

Scope of the Role

When engaging a secondee, you must ensure they will properly fill the role you need. Therefore, the services set out in the secondment agreement need to be as broad as possible. Keeping the terms broad will ensure that the secondee will assist your business to the full extent you need them.

You should be cautious of any exclusions to the services that the other business may include in the contract. Often, businesses will exclude certain services from the scope of the secondment, meaning they can charge you separately for these services.

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

Therefore, carefully review the terms of your secondment agreement to see what services you will receive and whether the secondee will meet your commercial needs.

Confidentiality Clause

Confidentiality provisions are critical in almost every contract that you enter. However, these provisions are especially important in secondment agreements since a secondee is likely to access confidential information.

A 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 to sign a non-disclosure agreement to ensure that they know 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 benefit you and your secondee, this will not be ideal for the other business. This other business will now be without a good employee and will not be receiving revenue from you. 

As such, almost all secondment agreements will come with a non-compete clause, preventing you from hiring the secondee directly. Therefore, when entering a secondment agreement, you want to ensure that this restraint clause is as narrow and limited as possible. For example, it would be unwise to agree to a clause that would prevent that secondee from working for you at any point in the future. 

Limiting a Non-Compete Clause in a Commercially Reasonable Way

Limitation Benefit
Shorten the restraint period Shortening the restraint period will allow you to hire the employee shortly after their engagement ends. Without this clause, you would have to wait for a more extended period 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. 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 the secondee fills during their engagement. Therefore, you may be able to engage the secondee 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 once-off fee is similar to how a recruiter might charge a recruitment fee. You should ensure you carefully review the contract and consider the effect this could have on your business.

Workplace Policies and Procedures

Similar to a standard employment contract, a secondment agreement should outline your business’ standard policies and procedures. Ensuring your secondee understands your business’ policies and procedures is particularly pertinent when an employee is seconded to an external employer or host organisation rather than being seconded internally.

Secondments are essentially a three-way arrangement between the employee, the employer, and the host organisation.

 With several parties at play, a secondment agreement can be complex and give rise to issues relating to the management of the secondee. As such, the secondment agreement must outline the host organisation’s policies and procedures to avoid any disputes.

Some key terms to consider when preparing a secondment agreement include the following:

  • duration of the agreement, if  duration can be specified;
  • remuneration and benefits, including who is responsible for remunerating the employee and payment methods;
  • performance management procedures; 
  • leave entitlements; and
  • termination procedures, including the procedure to be followed for any of the parties to end or extend the period of secondment.

Essentially, a smooth secondment is contingent on ensuring that the secondee understands your business’ policies. 

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Key Takeaways

Secondments are useful for ensuring your business runs smoothly if you have a staffing shortage. However, it is crucial that you review the contract carefully to protect your key interests. Some key considerations in a secondment agreement include a:

  • broad scope of services;
  • confidentiality agreement; 
  • narrow restraint clause; and
  • outline of standard workplace policies and procedures. 

If you need assistance understanding secondment agreements, 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 1300 544 755 or visit our membership page.

Frequently Asked Questions

What is a secondment?

When running a business, you may need to engage extra staff for a period of time. For example, you might need to fill a role while an employee goes on leave. In such circumstances, you may wish to enter into a secondment agreement with another business, meaning they will send one of their employees for a specified period.

What should I include in a secondment agreement?

A secondment agreement should include several key elements, such as ensuring that the agreement accounts for a broad scope of services, including a confidentiality clause and a narrow restraint clause and accounting for standard workplace policies and procedures.

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