Secondments Explained: Australian Legal Best Practices

Secondments can be a clever, flexible way to place talent where it’s needed most. Whether you’re lending a team member to a client for a project, rotating staff across your corporate group, or upskilling an employee with on‑the‑job experience, a well-structured secondment can deliver real value for everyone involved.

To make it work in Australia, you’ll want the right foundations. That means clear contracts, Fair Work compliance, a joined-up approach to privacy, safety and insurance, and a practical plan for how work will be supervised day to day.

In this guide, we break down what a secondment is, when to use it, how to structure the arrangement, and the legal best practices to follow so you can manage risk and set your people up for success.

What Is A Secondment In Australia?

A secondment is a temporary arrangement where an employee of one business (the “home” employer) works for another business or another part of the same corporate group (the “host”) for a defined period. During the secondment, the employee usually performs work under the host’s day‑to‑day direction, while their employment generally remains with the home employer.

Common scenarios include:

• Client placements - for example, sending a lawyer, accountant or engineer to support a client project in-house.
• Group rotations - moving talent between subsidiaries or related entities to build capability and share knowledge.
• Capability building - embedding an employee with a partner or supplier to learn systems and bring expertise back.

Secondments can be full-time or part-time. Usually, the home employer continues paying salary and entitlements and recovers costs from the host. In some cases, the host pays directly, but this requires careful drafting to avoid confusion about who the legal employer is and who carries which risks.

When Should You Use A Secondment?

Secondments are most effective when you want to:

• Support a client or partner without permanently losing a valued employee.
• Build internal capability by exposing staff to new tools, industries or ways of working.
• Resource a short‑term project faster than a standard hiring cycle allows.
• Offer career development and retention opportunities through variety and stretch assignments.

If the host intends to permanently employ the person, a secondment usually isn’t the right fit. In that case, consider a transfer of employment or issuing a new Employment Contract following your usual recruitment process.

How Do You Structure A Secondment Agreement?

The best practice is to document the arrangement between the entities in a tailored Secondment Agreement. This sits alongside the employee’s existing employment terms and clearly allocates roles and responsibilities between the home employer and the host.

Key Clauses To Include

• Term and scope: Start and end dates, role title, duties, hours and location (including remote or hybrid expectations).
• Direction and supervision: Confirm the host manages day‑to‑day supervision, while the home employer manages employment matters (like leave approvals and formal performance processes).
• Pay and cost recovery: Who pays salary, super and allowances; how on‑costs and expenses are invoiced; and whether any margin applies.
• Leave and entitlements: Who approves and records leave; how public holidays, overtime or penalty rates are handled under any applicable modern award or enterprise agreement.
• Performance and conduct: Reporting lines, feedback loop, escalation paths, and which entity leads any formal processes.
• Work health and safety (WHS): Which party controls the workplace, induction requirements, equipment provision, hazard reporting and incident response.
• Confidentiality and privacy: What information the secondee can access and how it must be protected, often supported by a separate Non-Disclosure Agreement and the host’s internal policies.
• Intellectual property (IP): Ownership of any new IP created during the secondment and how pre‑existing (background) IP is licensed or used.
• Insurance and liability: Workers’ compensation coverage, professional indemnity/public liability, indemnities and liability caps aligned to the services performed.
• Early termination and return: When the secondment can end early, notice requirements, and the employee’s guaranteed return position.
• Post‑engagement restrictions: Reasonable non‑solicitation and non‑dealing settings to protect both parties’ client and staff relationships, supported by tailored Restraint of Trade provisions.

Clear drafting on these points helps prevent disputes, protects your commercial relationships and keeps the secondee safe and supported.

Legal Best Practices And Compliance In Australia

Secondments touch a range of Australian legal obligations. Getting these right from day one will save time and stress later.

Employment Status And Fair Work Obligations

In most secondments, the home entity remains the legal employer. That means it must ensure ongoing compliance with the National Employment Standards (NES), any relevant modern award or enterprise agreement, superannuation and payroll obligations.

Check that base pay, allowances, hours and any overtime or penalty rates remain compliant in light of the host’s roster and location. Where hours or location change, consult if required under the applicable industrial instrument and record any variations in writing. If your arrangement starts to look more like a contractor model, it’s wise to get targeted employee vs contractor advice before proceeding.

Direction And Control

Day‑to‑day direction typically sits with the host. Your contract should state this expressly, while confirming the home employer retains overall employment management (for example, formal performance management and leave approvals). Set a practical feedback loop so the employee receives consistent directions.

Work Health And Safety (WHS)

Both the host and home employer have WHS duties. The host controls the workplace, so it should induct the secondee into local safety procedures, systems and known hazards. The home employer should satisfy itself that appropriate controls are in place and cooperate to manage risks. Require incident reporting to both entities and make sure any required training is addressed upfront.

Workers’ Compensation And Insurance

Confirm where workers’ compensation coverage sits (usually with the legal employer, in the state or territory where the employee performs work). For cross‑border secondments, check state‑based rules. Also ensure professional indemnity and public liability insurance is appropriate for the work being performed and align your indemnity and liability clauses with that risk profile.

Privacy And Confidentiality

Secondments often involve access to customer data, internal systems and trade secrets. The host should provide relevant policies and require compliance. The home employer should ensure it maintains an up‑to‑date Privacy Policy covering relevant collections and disclosures. If data is shared between entities, set boundaries on what may be disclosed, for what purpose and how it will be secured and deleted at the end of the secondment.

Intellectual Property (IP)

Spell out who owns new IP created during the secondment and the terms on which each party can use the other’s background IP. If the employee will build products, software or content the host will commercialise, you’ll generally assign IP to the host on creation or on payment-make sure the mechanism is clear.

Restraints And Post‑Engagement Risk

Hosts often want comfort that the secondee won’t walk out and take clients or staff. Conversely, home employers won’t want a secondment to become a back‑door poaching exercise. Reasonable non‑solicitation and non‑dealing clauses (and occasionally limited non‑compete provisions) can help manage this balance. If you’re unsure whether your restraint settings are enforceable, obtain tailored Restraint of Trade guidance.

Payroll Tax And On‑Costs

If you recharge salary and on‑costs to the host, clarify the cost model and the GST treatment. Payroll tax can be complex-especially where grouping or multiple states are involved-so it’s prudent to seek tax advice specific to your circumstances. Document the invoicing cycle, payment terms and any margin applied.

Labour Hire Licensing (Important Jurisdictional Differences)

Supplying workers to an unrelated business for a fee, where the host directs the work, can resemble labour hire. Licensing requirements differ across Australia. At the time of writing, licensing regimes operate in Victoria, Queensland, South Australia and the ACT. New South Wales does not currently require labour hire licensing, but you should still assess whether your model falls within any local regulation or exemptions.

For context, see jurisdictional overviews such as NSW (which explains the current position) and specific regimes like the labour hire licence in Victoria. Build any required compliance steps into your Secondment Agreement and internal processes.

Visas And Right To Work

If a secondee holds a visa with employer, role or location conditions, check whether a secondment is permitted and whether notifications or variations are required. Always verify the right to work and retain evidence on file. Where visa conditions are involved, consult a migration specialist for advice.

Misconduct, Performance And Early Termination

Agree upfront how conduct and performance issues will be handled. The host should notify the home employer promptly of concerns, and the home employer should lead any formal processes, informed by the host’s feedback. Include clear rights to pause or end the secondment early for breach, safety concerns or unexpected project changes.

Step‑By‑Step: Setting Up A Secondment

Here’s a practical process you can adapt to your organisation.

1) Define Goals, Role And Scope

Clarify the purpose of the secondment, expected outcomes, role description, required skills, location, supervision model, technology access and success measures. Note constraints (awards, hours, travel, remote work settings). This scoping work keeps expectations aligned and reduces scope creep later.

2) Check Employment Settings And Industrial Instruments

Review the employee’s current terms, any applicable award or enterprise agreement, and whether changes to hours, duties or location require consultation or consent. If you’re changing core terms, record it in a short variation letter alongside the secondment paperwork. If the structure could be perceived as supplying services rather than an employment secondment, consider getting early employee vs contractor advice.

3) Align WHS, Systems And Induction

Exchange WHS information with the host, agree who provides equipment and PPE, and arrange induction and training. Establish a simple process for reporting hazards and incidents to both entities. Identify day‑to‑day contacts and escalation points so the secondee knows exactly who to go to for help.

4) Prepare The Paperwork

Finalise a clear, tailored Secondment Agreement between the home employer and the host. Where sensitive information will be shared, add a standalone Non-Disclosure Agreement or include robust confidentiality and data schedules. Confirm the employee’s Employment Contract and your workplace policies (for example, conflicts of interest and IT security) cover any gaps.

5) Set Up Cost Recovery, Insurance And Invoicing

Agree the cost model (salary, superannuation, leave loading, payroll tax treatment, admin fee), invoicing cycle and payment terms. Confirm workers’ compensation, professional indemnity and public liability coverage, and reflect the allocation of risk in your contract. Keep certificates of currency on file.

6) Communicate With The Employee

Explain the purpose of the secondment, the development benefits and how support will work. Provide written details of the role, reporting lines and expectations, and confirm how leave, timesheets and expenses will be handled. Set regular check‑ins with both the host and the employee.

7) Track Progress, Review And Plan The Return

Schedule review points to check progress and wellbeing. As the end date approaches, plan handover, confirm the employee’s return role, any pay adjustments and how the experience will be recognised (for example, promotions or skills logged). If you need to extend, document the extension before the term ends.

What Documents Do You Need?

Every secondment is different, but most organisations benefit from having the following documents in place.

• Secondment Agreement: The core contract between home employer and host, setting scope, supervision, costs, WHS, IP, confidentiality, insurance and termination terms. Use a tailored Secondment Agreement rather than a generic services agreement.
• Employment Contract: The employee’s base terms remain crucial (pay, leave, hours, duties, conduct). If needed, add a short variation letter to the existing Employment Contract to record temporary changes.
• Confidentiality Protections: Where sensitive information will be shared, put a Non-Disclosure Agreement in place or include detailed confidentiality schedules (covering system access, permitted purposes and exit obligations).
• Privacy And Data Handling: Ensure your Privacy Policy covers relevant collections and disclosures. Address access controls, data security, retention and deletion at the end of the secondment.
• Policies And Induction Materials: Have the secondee acknowledge key policies (for example, code of conduct, WHS and IT/security) and ensure the host’s policies are provided and explained during induction.
• Restraints And Non‑Solicitation: Use reasonable restrictions (framed in the employment terms or the secondment contract) to protect client and staff relationships; seek Restraint of Trade advice if you’re unsure about enforceability.

Depending on your model, you may also need data processing clauses, equipment loan documents and expenses or travel policies.

Common Pitfalls To Avoid

• Unclear supervision: If both entities give conflicting directions, the secondee gets stuck. Nominate a single day‑to‑day manager at the host and keep the feedback loop simple.
• Award compliance gaps: Host rosters can trigger penalty rates or overtime that weren’t budgeted. Confirm coverage and assumptions up front and document any agreed variations.
• Loose confidentiality: Shared systems without access controls can cause privacy or IP leaks. Apply least‑privilege access, track system permissions and ensure secure deletion on exit.
• Insurance uncertainty: Assuming the other party has it covered can leave you exposed. Document who covers workers’ compensation and professional risks, and keep certificates current.
• Labour hire blind spots: Fee‑for‑service deployments can look like worker supply. Assess licensing requirements in jurisdictions where licensing applies (VIC, QLD, SA, ACT) and adjust your model if needed.
• No exit plan: Projects overrun or priorities change. Include early termination rights and a clear return‑to‑role commitment for the employee.
• Ambiguous employment status: Direct host payment or control without clear paperwork can muddy who the employer is. Keep the structure and documentation consistent, and seek employee vs contractor advice if in doubt.

Key Takeaways

• A secondment is a temporary placement where an employee works under a host’s direction while remaining employed by the home entity.
• Document the arrangement with a clear Secondment Agreement covering scope, supervision, pay and cost recovery, WHS, confidentiality, IP, insurance and exit rights.
• Stay compliant with Fair Work obligations, confirm workers’ compensation coverage and align safety induction and incident reporting between entities.
• Protect information and relationships with a Non-Disclosure Agreement, a current Privacy Policy and reasonable restraint settings.
• Assess labour hire licensing exposure carefully-licensing regimes apply in VIC, QLD, SA and ACT (NSW does not currently require labour hire licensing).
• Clarify payroll tax, GST and on‑costs in writing and obtain tax advice where needed; seek migration advice for any visa‑related secondments.
• Plan onboarding, regular check‑ins and the return‑to‑role pathway to make the experience positive for the employee and both businesses.

If you’d like a consultation on setting up a secondment for your team, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.