What is a secondment?
Secondments involve temporarily transferring an employee from one organization to another. The employee performs work for the host organization but remains employed only by the transferring (or “home”) organization. This arrangement can help organizations fill positions, find uncommon skill sets, engage staff and reduce attrition. Secondments can be done domestically or internationally. In this article, we focus on domestic secondments within Canada.
Secondments have many benefits to employers and employees alike, including:
- Filling gaps in organizational skillsets.
- Staffing short-term or collaborative projects.
- Building new working relationships or strengthening existing ones.
- Developing employee skillsets.
- Increasing employee engagement by providing varied work opportunities.
Secondments can give rise to confusion regarding who is the true employer of a seconded worker. If the parties involved do not clearly define their rights and obligations, unexpected liabilities may arise.
In a typical secondment arrangement the home organization remains responsible for the core aspects of employment, including:
- Paying wages and making statutory wage deductions and contributions.
- Approving and supervising vacations, leaves, and accommodation requests.
- Disciplining the employee or terminating the employment relationship.
- Ensuring a position to return to upon completion of the secondment.
- Termination obligations.
In its purest form, the host organization is not the employer, and receives only the benefit of the employee’s work, with some responsibility for assigning or supervising that work. All other management tasks are left to the home organization. Blurring the identity of “employer” between the home and host organization can lead to the host organization acquiring employment liability. For example, a host organization may find itself defending against allegations that it owes a seconded employee damages for wrongful dismissal, statutory entitlements, or benefits it offers its other employees.
The risk of an employee wrongful dismissal claim is particularly high where the parties fail to plan for the end of secondment. If the home organization does not have a suitable position for the employee when secondment is over (whether following the full term of the secondment, or if the secondment is terminated early) the employee may view their employment as terminated and seek damages from one or both parties.
Regardless of who is technically the employer, both the home and host organization have obligations to prevent workplace discrimination, violence and harassment, and to take reasonable measures to ensure the safety of the employee. Breaching those obligations may carry liability for either or both organizations.
Mitigating risks with a secondment agreement
To mitigate risks, organizations execute a secondment agreement prior to hosting or seconding an employee. Secondment agreements can be bilateral agreements between the two organizations, or a tripartite agreement involving the seconded employee. Regardless, a secondment agreement should clarify each party’s responsibilities under the arrangement, apportion liability according to the parties’ intentions, and specify indemnification where appropriate.
Employers should be aware, however, that despite such an agreement, it is still possible for a host employer to face common law or statutory liability.
To mitigate the chances of inadvertently assuming liability, host organizations should leave as many responsibilities with the home organization as possible, such as payroll administration and decisions pertaining to hiring, firing, and remuneration.
Secondments offer Canadian organizations a creative tool to address staffing limitations, build alliances and offer their employees development opportunities. The success of these arrangements requires organizations to properly evaluate the secondment arrangement, and then negotiate and execute a tailored secondment agreement that apportions roles, responsibilities, and liabilities.
Employers requiring assistance with secondments, or any other employment-related matter, should contact the authors.