Secondment Agreement: Talent Mobility and Legal Risk

Talent mobility is a massive advantage in today’s market, but it creates a paperwork headache. Think about it: your star engineer wants to spend six months with a client, your marketing lead needs cross-functional experience, or you’re trying to avoid layoffs during a slow quarter. Secondment agreements solve these problems beautifully.

A secondment agreement is the legal scaffolding for a three-way relationship between an employee, their original employer, and a host organization. 

We’re going to walk through what actually qualifies as a secondment, why they’re becoming more common, and the ten essential terms your legal team absolutely needs to nail down before anyone sets foot in a new office.

What actually counts as a secondment agreement?

A secondment isn’t just “lending an employee” to another team for a few weeks. It’s a specific legal structure where an employee temporarily works for a different part of their organization or an entirely different company while maintaining their original employment relationship.

As Raj Sarkar, former marketing lead at Atlassian, puts it, secondments offer employees the chance to explore new functional areas quickly and intensively, but that intensity requires careful legal planning.

Why are secondment agreements rising

The business case for secondments has never been stronger. Here’s what the numbers tell us:

1. Retention is the primary driver

Attrition rates across European tech stabilized at around 17.4% in 2025, down slightly from the previous year but still high enough to cause serious concern. When employees leave, the damage goes beyond just filling an empty chair.

SHRM reports that replacing an employee costs between six to nine months of their annual salary. For a mid-level employee earning $60,000, you’re looking at $30,000 to $45,000 in recruitment and training expenses. Factor in lost productivity, knowledge gaps, and the strain on remaining team members, and total replacement costs can reach 50% to 200% of the departing employee’s salary.

Secondments offer a compelling alternative. Instead of losing talented employees who feel stagnant, you give them growth opportunities within your organizational ecosystem. It’s talent retention disguised as professional development.

2. Cost efficiency beyond retention

Beyond preventing turnover, secondments help organizations deploy talent strategically during fluctuating business cycles. When one department faces a temporary slowdown while another is overwhelmed, internal secondments let you redistribute resources without the expense and risk of layoffs followed by rehiring.

According to Gallup & SHRM Estimates, the cost to replace an employee is significant, often 1.5x to 2x their annual salary for mid-to-senior roles when factoring in recruitment, training, and lost productivity.

3. Internal vs. external secondments

Internal secondments happen within the same corporate structure, moving between departments, subsidiaries, or geographic locations. These are generally more straightforward since you’re dealing with consistent HR policies, IT systems, and cultural norms. But don’t let that fool you into skipping documentation. Even internal moves need clear agreements about contract duration, reporting lines, and what happens when the secondment ends.

External secondments involve temporary assignments to clients, partners, joint ventures, or completely separate organizations. These carry significantly higher risk, particularly around intellectual property ownership and liability exposure. When your employee is creating a work product at another company’s office using their resources, who owns what they create? The answer should be spelled out in writing.

Secondment agreement vs. Permanent transfer

Here’s the critical distinction: a secondment is temporary with an expectation of return, while a transfer is permanent.

This distinction matters enormously for termination dates, redundancy calculations, and pension contributions. Blur this line in your documentation, and you’re inviting legal challenges.

The 10 essential terms your secondment agreement needs

• Quarterly reviews might be required
• Insurance coverage needs to be maintained
• Reporting requirements to home offices
• Periodic assessments of IP created
• Non-solicitation monitoring after termination

Each of these terms addresses a specific friction point that will absolutely cause problems if left undefined. We’ve seen it happen.

1. The basics: Parties and duration

Who’s who in this arrangement

Your agreement needs a crystal-clear identification of three parties: the employee (secondee), the original employer (seconder), and the host employer. Include full legal names, addresses, and, for corporate entities, registration numbers.

Fixed-term vs. rolling arrangements

Specify exact start and end dates. If you need flexibility, define contract extension procedures upfront rather than treating them as informal handshake deals later. Extensions should require written agreement from all parties, and you should document any changes to terms that accompany the extension.

Most secondments run from six months to two years. Shorter periods don’t justify the overhead. Longer ones increase tax and employment status risks.

2. Job duties and reporting lines

Who’s actually managing this employee day-to-day?

The reality is that the host organization typically directs the secondee’s daily work, but the original employer retains ultimate employment authority. Your agreement needs to address both operational management and employment relationship management.

Define this clearly:

• Who assigns daily tasks and projects?
• Who conducts performance reviews?
• Who approves vacation requests?
• Who handles workplace conduct issues?

Without clarity here, you’ll have two managers giving conflicting directions and an employee stuck in the middle, wondering whose authority actually matters.

3. Remuneration and benefits

This is where external secondments get complicated. Who’s actually cutting the paycheck?

Standard practice: The original employer maintains payroll and invoices the host for costs. This preserves employment continuity and simplifies benefits administration. Your compensation agreement should specify:

• Base salary responsibility
• Bonus and commission structures
• Benefits continuation(health insurance, retirement contributions)
• Reimbursement mechanisms between organizations
• Any allowances for relocation or travel

For internal secondments within the same company, compensation usually remains unchanged unless the new role involves significantly different responsibilities.

4. Integration with policies

Your employee is working at the host’s office, using their equipment, attending their meetings. Whose policies actually govern their behavior?

The host’s workplace policies apply to day-to-day conduct, everything from dress code to data security to harassment prevention. But, and this is critical, if a disciplinary issue arises, the original employer typically retains the right to impose formal discipline since they hold the employment contract.

This dual framework protects both organizations. The host can maintain consistent workplace standards, while the original employer protects their ongoing employment relationship with the secondee. Just make sure your agreement explicitly states which policies apply to which situations.

5. Intellectual property (the big risk)

This is where secondments can blow up spectacularly if you’re not careful.

The default position is dangerous: Without explicit agreement, IP ownership follows employment law principles, which often mean the original employer (who pays the salary) owns what the employee creates. That’s a disaster if the host organization is paying for the secondee to develop new products, processes, or technology.

The solution: Your agreement must explicitly assign IP rights to the host organization for work created during the secondment. This isn’t negotiable for external secondments where the host is actively directing project work.

For internal secondments, IP ownership is usually less contentious but still needs documentation. If your engineering team member seconds to your product team and develops new features, your company owns it regardless, but specifying this prevents later disputes about individual contribution claims.

6. Confidentiality and data

You’re creating a situation where one person has access to confidential information from two different organizations. Both need protection.

What your agreement needs:

• Continued obligations to protect the original employer ‘ s trade secrets
• New obligations to protect the host ‘ s confidential information
• Clear guidance on what the secondee can and cannot share between organizations
• Data protection compliance for personal data transfers(especially GDPR considerations in Europe)
• Post-secondment confidentiality obligations

Remember that confidentiality obligations typically survive the end of the secondment. Your employee can’t return to their original role and immediately share everything they learned about the host’s business operations.

7. Leave management

Who approves the secondee’s two-week vacation? What happens if they take extended sick leave in the middle of the secondment?

1. Annual leave: The host typically manages scheduling since they’re directing day-to-day work, but the original employer’s leave policy and accrual system usually still apply. Document who approves requests and how disputes get resolved.
2. Sick leave: Similar approach. Reporting may go to the host for immediate coverage purposes, but the original employer manages formal absence administration.
3. Parental leave: This is where things get interesting. If an employee goes on maternity leave during a secondment, does the secondment automatically end? Does it pause and resume later? Can the host organization bring in temporary coverage? Your agreement needs answers.

8. Liability and indemnity

If your seconded employee makes a mistake that costs the host organization, who pays?

This depends entirely on the nature of the error and your indemnity clauses. General framework:

• The original employer typically remains liable for employment-related claims (discrimination, wrongful termination)
• The host organization usually assumes liability for workplace injuries or negligence in its operations
• Indemnity provisions should address specific scenarios relevant to the role

For high-risk roles (think finance, healthcare, engineering), consider requiring additional insurance coverage and spell out exactly who bears responsibility for different types of losses.

9. Non-solicitation

Here’s an uncomfortable truth: host organizations sometimes fall in love with their secondees and want to hire them permanently.Your exclusivity agreement provisions should address:

• Whether the host can offer permanent employment(and under what circumstances)
• Any waiting periods before solicitation are permitted
• Compensation to the original employer if they lose the employee
• Restrictions on poaching other employees through the seconded employee ‘ s relationships

Be realistic here. If the secondee and host organization are a perfect match, fighting the inevitable just creates resentment. Many agreements allow permanent hiring after the secondment ends with proper notice and possibly a placement fee.

10. Termination and return

What happens when the music stops?

Early termination provisions

Sometimes secondments don’t work out. Your agreement needs termination procedures, including notice periods, termination clauses that specify grounds for early termination, and transition responsibilities.

The right to return

This is non-negotiable for the employee’s protection. They need a guaranteed right to return to their original position or a role of similar seniority and compensation. Without this guarantee, the secondment effectively becomes an involuntary transfer with uncertain outcomes.

Knowledge transfer

Don’t overlook the practical transition back. Your agreement should require the secondee to document their work and transfer knowledge before leaving the host organization. Similarly, their original team should plan for their reintegration.

The 5 critical pillars of a secondment agreement

If you’re drafting a secondment agreement today, these five elements absolutely must be covered:

Navigating the “tricky” employment rights in secondment agreements

Let’s address the questions that keep legal teams up at night.

1. Can you discipline an employee on secondment?

Yes, but it’s a coordinated effort. Here’s the standard framework:

The host organization reports conduct or performance issues to the original employer. They can take immediate action for serious workplace violations (think safety breaches or harassment), but formal disciplinary proceedings typically remain with the original employer, who holds the employment contract.

You can’t have the host organization issuing written warnings or conducting formal disciplinary hearings when they don’t actually employ the person. That creates legal exposure around unfair dismissal claims and jurisdictional confusion.

Your agreement should establish clear procedures: informal coaching by the host, formal notifications to the original employer for serious issues, and joint decision-making for significant discipline.

2. What happens with redundancies?

This is where the distinction between secondment and transfer becomes critical.

Typically, the original employer retains redundancy liability. The employee’s continuous service keeps ticking with their original employer for purposes of calculating redundancy pay, even while they’re working at the host organization.

This makes sense legally, but can feel unfair practically. If the host organization’s project fails and they no longer need the secondee, the original employer has to either reabsorb them or make them redundant and pay statutory redundancy based on their full service length.

Why bother? The pros and cons of secondment agreements

Let’s be honest about both sides of this equation.

The benefits (for employers and employees)

1. Skill acquisition without permanent commitment

Team members report gaining exposure to strategy execution, executive-level critical thinking, and autonomous working environments, experiences that would take years to acquire through traditional career progression.

For employers, you’re developing versatile employees who understand multiple aspects of your business. That cross-functional knowledge becomes invaluable for leadership roles.

2. Relationship building

External secondments to clients or partners strengthen business relationships in ways that formal meetings never can. Your employee becomes a bridge between organizations, facilitating communication and trust.

3. Avoiding layoffs

During slow periods, secondments let you redeploy talent instead of cutting headcount. When business picks up again, you’ve retained experienced employees instead of scrambling to recruit and train replacements.

4. Employee engagement

Professionals on secondment describe receiving opportunities for practical application of strategy, direct exposure to executives, and development of professional maturity. This type of accelerated growth is nearly impossible to replicate in traditional roles.

The risks (and how to mitigate them)

1. “Going native”

Your employee loves their secondment experience and doesn’t want to return. Or worse, the host organization wants to hire them permanently, and your employee is ready to jump ship.

Mitigation: Include clear contract conditions about permanent hiring possibilities. Consider allowing it with appropriate notice and possibly a placement fee. Fighting the inevitable just creates resentment.

2. Confusion over authority

Without clear reporting lines, your secondee gets conflicting direction from multiple managers and doesn’t know whose priorities to follow.

Mitigation: Document operational vs. employment authority explicitly in your agreement. One person directs daily work, another manages the employment relationship.

3. Administrative burden

Secondments create coordination overhead between organizations. Someone needs to manage the agreement, track obligations, and handle the administrative complexity.

Mitigation: This is where contract lifecycle management becomes essential. Don’t let secondments drown in spreadsheet chaos.

4. Role ambiguity

The secondee arrives at the host organization and discovers their role is totally different from what was discussed. Or they return to their original employer and find their old role has been substantially changed or filled.

Mitigation: Before the secondment starts, both organizations should provide detailed role specifications. And the original employer should protect key aspects of the employee’s role during their absence or at least commit to finding them a comparable position upon return.

IP and liability complexities in secondment agreements 

Let’s talk about two scenarios that demonstrate why these agreements matter.

The IP disaster that didn’t happen (because of good drafting)

A software company sends one of its senior engineers to a client for a year-long digital transformation project. During that year, the engineer developed a proprietary algorithm that revolutionized the client’s operations and could be worth millions as a standalone product.

Without proper documentation, both companies could claim ownership. The software company argues that they employ the engineer and pay their salary. The client argues the algorithm was developed on their premises, using their resources, for their specific business needs. The resulting legal battle costs both organizations more than the algorithm’s worth.

With proper documentation, the secondment agreement explicitly assigns all IP created during the secondment to the client organization. The software company negotiated a fair compensation structure that reflects the value their employee would create. Everyone wins, no lawyers necessary.

Liability and “employer” status

A financial services firm secures an analyst for a partner organization. While working on a major client project, the analyst makes an error that costs the partner. Who pays?

The answer depends on your indemnity clauses. If the error resulted from the analyst’s negligence in performing work directed by the partner, the partner likely bears responsibility. If it resulted from the analyst’s failure to follow training or procedures from their original employer, they might bear responsibility. If the agreement fails to address this, both organizations are probably heading to court.

Best practice: Address specific liability scenarios relevant to the role. For positions involving financial transactions, data security, regulatory compliance, or safety, spell out exactly who bears responsibility for different types of errors.

Managing secondment agreements without the chaos

Even perfectly drafted secondment agreements need to be tracked to be effective.

The tracking problem

You’ve got five employees on secondments to three different client organizations, each with different end dates, different IP provisions, and different termination notice requirements. One secondment has a non-solicitation period that expires in four months. Another has a contract extension option that needs to be exercised 60 days before the current term ends. A third is approaching its end date, and you haven’t planned the employee’s return.

Managing this complexity in spreadsheets is a recipe for disaster. Miss an important date, and you’re either scrambling to extend contracts at the last minute or accidentally letting commitments lapse.

The obligation problem

Secondment agreements create ongoing obligations beyond just start and end dates:

Each of these obligations needs tracking, responsible parties need reminders, and someone needs to verify completion. When you’re dealing with multiple active secondments, this administrative burden multiplies quickly.

Why secondments need contract lifecycle management

This is where dedicated contract generation and management systems become essential. Your secondment agreements shouldn’t live in filing cabinets or shared drives where nobody can track obligations or approaching deadlines.

What you need:

• Automated tracking of key dates(end dates, extension deadlines, non-solicitation expiration)
• Obligation management that assigns and reminds responsible parties
• Centralized visibility into all active secondments across your organization
• Version control for amendments and extensions
• Integration with your broader contract repository

When your VP asks, “How many of our employees are currently seconded to external organizations, and which secondments need extension decisions in the next quarter,” you can answer immediately.

Drafting agreements is only half the battle. Keeping track of expiry dates, non-solicitation clauses, and IP obligations across dozens of employees is where teams struggle. See how HyperStart tracks contract obligations automatically.

Closing 

Secondments are powerful talent development and deployment tools when the paperwork matches the intent. They let you build skills, strengthen relationships, avoid redundancies, and keep talented employees engaged without the risks of external hiring or the permanence of internal transfers.

But they’re also complex three-way arrangements that create legal exposure if you don’t document them properly. The ten essential terms we’ve covered aren’t bureaucratic box-checking. They’re protection against real disputes that happen to real companies: Who owns the valuable IP? Who pays when something goes wrong? Can the host organization hire your employee permanently? What happens if the project gets cancelled?

Get these terms right up front, and secondments become smooth operations that benefit everyone involved. Leave them ambiguous, and you’re setting yourself up for conflicts that consume more time and money than the secondment was ever worth.

The other critical piece? Don’t let good agreements become unmanageable liabilities because you’re tracking them in spreadsheets. As your secondment program grows, you need proper contract lifecycle management that gives you visibility into obligations, deadlines, and risks across your entire portfolio.