Secondment agreements allow for an employer to assign an employee to another organisation for a specified duration, for purposes of developing good business relationships; enhancing an employee’s particular skill set or for sharing the particular expertise of that employee with the host company.
The employer and host company are required to enter into a secondment agreement in order to regulate the terms and conditions of the secondment. Generally, secondment agreements should be reduced to writing, signed by the parties. It is particularly important to reduce the agreement to writing where the secondee is required to apply for a work visa.
There are some essential terms that an employer and host must be aware of when entering into a secondment agreement:
1. Employment relationship
When agreeing to participate in a secondment, the terms of the secondee’s employment contract will inevitably be varied. The secondment agreement must therefore provide that the secondee agrees to the variation of the terms of their employment. The employer must therefore ensure that the secondee agrees to the arrangement before concluding the secondment agreement. The secondee must be a party to the agreement or otherwise consent to the terms affecting the secondee.
2. Duration of the agreement
Where the secondee is a citizen or resident of the Republic of South Africa and is seconded to work in South Africa, there are no limitations to the duration of a secondment agreement. There is a risk that an unduly long secondment may create an expectation of employment by the host, despite the provisions of the secondment agreement. It is therefore prudent to stipulate the purpose and period of the secondment. The agreement may contain provisions pertaining to the potential extension of the secondment.
Where the secondee is a foreign national, the secondment period is limited to the duration specified in the secondee’s work visa. Section 19 of the Immigration Act 2002 requires foreign nationals who intend to work in South Africa to hold work visas (in the form of a general work visa, critical skills work visa or an intra-company transfer visa). General work visas are valid for the duration of the employment contract subject to a maximum period of five years; critical skills work visas are valid for a period not exceeding five years and intra-company transfer work visas are issued for a period of four years and cannot be renewed or extended.
3. Remuneration and benefits
The employer and host must determine who will be responsible for remunerating the secondee for the duration of the secondment. Where the employer agrees to remunerate the secondee, the employer and host must negotiate the terms and manner in which the host will pay for the services of the secondee. The parties must also consider who will be responsible for the payment of expenses incurred by the secondee whilst performing the services, if applicable. The contractual arrangements between the employer and the secondee in relation to retirement funding and medical aid will not be affected, unless otherwise agreed. It is important to record any agreements relating to remuneration and benefits as precisely as possible, to avoid any disputes.
4. Services, policies and performance management
To avoid any service-related issues arising, it is advisable to set out the work hours, type of work and the person or team to which the secondee will report for the duration of the secondment.
A secondment agreement ought to record that the secondee will comply with the host’s policies and procedures. Discipline remains the responsibility of the employer. However, a breach of the host’s policies will require the host’s cooperation for purposes of a disciplinary hearing.
Performance management whilst an employee is on secondment ought not to be neglected, particularly in the case of a lengthy secondment. The parties may include a mechanism as to how the employer will be kept abreast of the secondee’s performance. If key performance areas will differ during a secondment on account of the services being provided, the secondee must be advised beforehand.
An employee’s contractual leave entitlement may not be reduced without their consent. Generally the parties will agree that the secondee will be entitled to annual leave as stipulated in the employment contract. However, the employer and host will have to make provision for how leave requests should be dealt with during the secondment, for example, to whom must leave requests be submitted for approval.
The employer and secondee must undertake to keep confidential all information acquired by the secondee from the host during the secondment period. This obligation ought to survive the termination of the agreement. The parties must also agree to the circumstances under which confidential information may be disclosed.
7. Termination of the agreement
Ideally the agreement will stipulate the duration of the secondment. There are other circumstance in which parties may wish to provide for termination of the agreement. For example, the parties must consider whether they ought to terminate the agreement in the event of a supervening impossibility of performance or through cancellation for breach of the agreement or if the secondee proves unsuitable for the work. Parties may also wish to provide for cancellation on notice or by agreement.
The agreement may contain provisions restricting the host offering the secondee employment during or for a stated period after the secondment.
9. Intellectual property
In the absence of any agreement to the contrary, the ownership of intellectual property created by an employee in the course and scope of their employment vests in the employer. Therefore, in instances where the secondment involves creating new intellectual property, the host and employer must specify in the agreement who will own the intellectual property created by the secondee to avoid disputes arising at a later date.
10. Liability and indemnity
Consideration should be given to whether the secondee will be deemed an agent of the host and who will be responsible for the secondee’s acts, omissions and errors of judgment that may arise in the performance of the secondee’s duties. This is crucially important in the indemnification of either the employer or host. The parties must ensure that if necessary the host’s insurance policies extend to cover the activities of the secondee.
For further information, contact the Norton Rose Fulbright Employment and Labour Team.