[Employment] EMPLOYMENT CONTRACTS FOR SECONDED EXPATRIATES
20 November 2020
Many of our international clients, headquartered outside of the UK, regularly send their expatriates to this country on secondment. A secondment takes place when an employee (or a group of employees) is temporarily assigned to work for a different part of their employer or for another organisation.
During the secondment the seconded employee (secondee) will remain employed by their original employer and will return to it following the termination of the secondment. The secondee brings the expertise, skills and experience of the employer to the UK business, and returns with a better understanding of the UK market, domestic regulation and laws.
Many of 3CS’s UK-based international clients are subsidiaries of overseas operations that have sent expatriates here on secondment. Many secondments take place within an employer or group of companies and may be relatively informal. In these circumstances, it may only be necessary to make minor changes to the secondee’s employment contract, for example changing the place of work or hours. However, if the secondment is to a separate legal entity, for example another member of the employer’s group or to a client or other external organisation, it is likely the parties will wish the arrangement to be formally documented through a secondment agreement.
Even when it is not intended by the parties, under the laws of England and Wales there is a risk an employment relationship between the secondee and host will be established. An Employment Tribunal (ET) will look beyond the secondee’s title in any contract to the reality of the arrangement. To assess employment status there are a number of tests an ET will consider, including:
• The control test - this weighs up a number of factors connected to control of the secondee, including what, where, how and when they work.
• The mutuality of obligation test - this addresses whether there is a continuing obligation on the part of the host to provide work, and a continuing obligation on the part of the secondee to do the work.
In the event an employment relationship between the host and the secondee does exist, the law imposes a number of liabilities on the host. These will include the secondee’s right to:
• Statutory sick pay
• Statutory maternity/paternity pay and leave
• Statutory minimum level of paid holiday
• Statutory minimum level of pay
• Protection from discrimination
• Protection from unfair dismissal
Even in the event an employment relationship is not established between the host and the secondee, an ET may establish the secondee has worker status. Workers are entitled to fewer statutory rights than employees, but do have some key legal rights, including:
• Protection from discrimination
• Protection against unlawful deduction from wages
• Entitlement to the national minimum wage
Considerations for seconding employers
In order to avoid the risk of the secondee being found to have become the host’s employee, the parties will want to ensure that:
• The secondee does not owe any duties directly to the host, but only the seconder;
• The host does not owe any duties to the secondee;
• The seconder retains overall control, and where possible, day to day control of the secondee;
• The seconder deals with matters that involve the secondee e.g. appraisals, disciplinary etc.; and
• The secondee is not integrated into the UK business where possible, e.g. there is no requirement for the secondee to comply with the UK company’s policies, procedures and codes - for example, compulsory membership of the UK pension scheme under the auto-enrolment regulations.
In order to protect the employer/seconder and to lessen the scope for future disputes, it is recommended that a detailed secondment agreement be put in place, documenting the liabilities on both sides i.e. payment of salary, benefits and reporting arrangements.
If you would like advice on secondment arrangements or other matters relating to UK based staff, please contact a member of our Employment team.
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