Secondment Agreements In New Zealand: Key Clauses, Liability And Risk Control

If you’re running a growing business, chances are you’ll eventually need extra capability without committing to a permanent hire. Maybe you’ve won a project, you’re covering parental leave, or you need a specialist to steady the ship during a busy period.

That’s where secondment arrangements (supported by a well-drafted secondment agreement) can be a practical tool. But they can also create “grey areas” around who employs the worker day-to-day, who is responsible if something goes wrong, and what happens to confidential information and IP.

In this guide, we’ll break down how secondment arrangements typically work in New Zealand, what clauses you’ll usually want in a secondment agreement, and the key liability and risk controls small businesses should think about before someone starts work.

What Is A Secondment Agreement (And When Should Your Business Use One)?

A secondment is where an employee (or sometimes a contractor) is temporarily assigned to work for another business or within another part of a group, usually for a specific period or project.

A secondment agreement is the legal document that sets out how that arrangement will work. It’s commonly used in situations like:

• Short-term skills gaps (e.g. finance support, HR, project management, IT security).
• Project work where you need niche expertise for 3–12 months.
• Covering leave (parental leave, long-term sick leave, sabbaticals).
• Group companies where staff move between entities for operational reasons.
• Partnerships/joint ventures where one party provides staff to deliver part of a contract.

In practice, secondments often involve three parties:

• The employee (the person being seconded).
• The original employer (sometimes called the “home employer” or “seconder”).
• The host business (the business receiving the secondee).

One of the most important things to understand is this: a secondment doesn’t automatically “transfer” the employment relationship. If the paperwork and day-to-day management aren’t handled properly, you can end up with confusion about who is legally responsible for employment obligations and workplace issues.

How Secondments Usually Work In NZ (Who Employs The Worker And Who Manages Them)?

Most secondments are structured so that:

• the worker remains employed by their original employer; and
• the host business gets the benefit of their work for a defined period.

However, the “legal employer” and the “business that directs the work” aren’t always the same thing during a secondment. That’s why it’s so important to clearly document:

• Who pays wages/salary and benefits;
• Who gives instructions day-to-day;
• Who handles performance issues and discipline;
• Who approves leave and expenses; and
• Who is responsible for health and safety in the host workplace.

From a small business perspective, the main risk is assuming “they’re not our employee, so it’s not our problem”. In reality, even if you’re not the legal employer, you can still have duties and exposure (especially around health and safety, privacy, and confidentiality).

If the arrangement is being used as a “trial” before you hire someone permanently, it’s still worth having the secondment documented properly. If you plan to offer ongoing employment afterwards, you’ll usually want a tailored Employment Contract ready to go so the transition is clean and expectations don’t get muddled.

Essential Clauses To Include In A Secondment Agreement

There’s no single “one size fits all” secondment agreement in New Zealand. Your clauses should reflect the reality of how the secondee will work, and where the risks sit in your particular industry.

That said, most well-drafted secondment agreements cover the following essentials.

1) Parties, Roles And The Structure Of The Arrangement

You want to clearly identify:

• who the parties are (home employer, host, and sometimes the employee as a signatory);
• whether the employee remains employed by the home employer; and
• whether the host has any authority to direct the work (and the limits of that authority).

This is where you avoid misunderstandings like “we thought you were doing payroll” or “we assumed you were managing performance”.

2) Term, Start Date, And Early Termination Rights

Secondments work best when they’re clearly time-bound. Your secondment agreement usually needs:

• start date and end date (or an end event, like “completion of the project”);
• extension options (and how they’re agreed);
• termination triggers (e.g. misconduct, performance concerns, project cancellation); and
• what notice is required and who can give it.

It’s also worth being clear about what happens if the secondee resigns or becomes unavailable, and how quickly the home employer must replace them (if that’s expected).

3) Duties, Reporting Lines, Location And Work Rules

A secondment agreement should define the role properly, including:

• position/title and a high-level description of duties;
• reporting manager at the host;
• work location (including remote work rules if relevant);
• work hours and any overtime expectations; and
• host workplace policies the secondee must follow (e.g. IT security, code of conduct, safety policies).

This section matters because it helps you manage scope creep. For example, if you’ve seconded someone as a project manager, you probably don’t want them being asked to do sales work, sign contracts, or handle HR issues unless that’s expressly part of the role.

4) Pay, Invoicing And Cost Recovery

Secondments can be paid in different ways. Common options include:

• home employer continues paying salary and invoices the host for costs (often called “salary recharge”);
• host pays a fixed secondment fee to the home employer; or
• the host reimburses specified costs (salary, KiwiSaver, ACC, benefits, training, and reasonable expenses).

The agreement should spell out:

• what costs are recoverable and what’s excluded;
• how/when invoices are issued and paid (including whether GST applies and how it will be treated);
• who covers expenses (travel, accommodation, tools, software); and
• who bears the cost if the secondee is not productive (for example, during downtime, training, or sick leave).

Getting this clear upfront can save a lot of awkward conversations later, especially if your business is the host and you’re trying to manage cash flow tightly.

5) Confidentiality And Information Security

Secondments often involve access to sensitive business information. Your secondment agreement should cover:

• what information is confidential (and that it includes customer lists, pricing, systems, and trade secrets);
• how information can be used (only for the host’s work purposes);
• security requirements (password controls, device policies, document handling); and
• what happens on exit (return/deletion of documents and access removal).

Confidentiality clauses are even more important if the secondee comes from a business that could be a competitor, supplier, or customer.

Depending on the setup, you might also want an additional Non-Disclosure Agreement, particularly if you’re discussing the project before the secondment formally starts.

6) Intellectual Property (IP) And Ownership Of Work Product

If the secondee is creating anything valuable during the secondment-documents, training materials, code, designs, processes, templates-your agreement should clearly state who owns it.

This is a common “silent risk” for small businesses. You might assume you own what you paid for, but ownership can get messy if the home employer claims rights or if the employee’s employment terms say IP belongs to the home employer.

A practical secondment agreement usually deals with:

• who owns new IP created during the secondment;
• whether the host gets an assignment of IP or a licence to use it;
• what pre-existing IP each party brings in (and that it stays theirs); and
• how the host can keep using the work after the secondment ends.

If IP ownership is a key reason you’re entering the arrangement (for example, building software or developing new branding assets), it’s worth getting this drafted carefully rather than relying on generic wording.

7) Conflicts Of Interest And Restraints (Where Appropriate)

Secondments can create conflicts. For example, the secondee might still have obligations to the home employer while working with you. The host may also be concerned about the secondee taking knowledge back to the home employer.

Common controls include:

• disclosing and managing conflicts;
• rules about working on competing projects;
• restrictions on approaching customers/suppliers for a period; and
• carefully scoped “no poaching” or non-solicitation obligations between the businesses, where appropriate.

Any restraint-type clause needs to be carefully tailored to be reasonable and enforceable in New Zealand, and “no poaching” style terms can also raise competition/anti-competitive concerns depending on how broadly they’re drafted and the context.

Liability: Who’s Responsible If Something Goes Wrong?

This is usually the part that business owners worry about most-and for good reason. When a secondee is working under your direction in your workplace, the risk profile can look a lot like having an employee, even if they aren’t technically on your payroll.

Health And Safety Duties Under The HSWA

Under the Health and Safety at Work Act 2015 (HSWA), businesses (PCBUs) have duties to ensure, so far as is reasonably practicable, the health and safety of workers influenced or directed by them.

That means if you’re the host business and the secondee is working in your operations, you should assume you have real health and safety responsibilities. Your secondment agreement should address:

• who provides induction and safety training;
• who provides PPE, tools and a safe work environment;
• incident reporting and investigation processes; and
• how the parties will cooperate on compliance, notifications, and the practical costs of responding to incidents or claims (to the extent the law allows).

Even with contractual allocation, you can’t “contract out” of HSWA duties, and you generally can’t rely on a contract to shift responsibility for regulatory penalties. But the agreement can help set clear operational responsibilities and reduce confusion when you need to act quickly.

Employment Issues, Conduct And Performance

Because the secondee is usually still employed by the home employer, disciplinary action and formal performance management will often sit with the home employer.

But in reality, if there’s a conduct issue at your workplace, you’ll want the ability to:

• direct the person not to attend site immediately (where necessary);
• request a replacement; and
• require the home employer to take certain steps (like investigation or training).

Secondment documentation can also align with your broader workplace settings, such as your Secondment Agreement framework (particularly if you use secondments regularly or across multiple teams).

Negligence, Losses And Third-Party Claims

If the secondee makes a mistake that causes loss-missed deadlines, incorrect advice, damaged equipment, or a customer claim-you’ll want clarity on who bears that risk.

Common approaches include:

• indemnities from the home employer for losses caused by the secondee’s negligence or misconduct (as far as legally permitted);
• limitations of liability (caps, exclusions for indirect loss);
• clear service standards or scope limitations (so the secondee isn’t treated as an “all purpose” fix); and
• requirements to maintain insurance (professional indemnity, public liability, etc.).

Liability clauses need to be commercially sensible. If they’re too one-sided, they may not be accepted, and they can also create practical issues if the home employer can’t actually bear the risk they’re signing up for.

Risk Controls For Small Businesses Hosting A Secondee

If you’re the host business (i.e. you’re receiving the secondee), a secondment can be a great way to scale up quickly. But it pays to put a few controls in place so you don’t accidentally create bigger problems than the one you’re trying to solve.

Set Clear Authority Limits

Be careful about what the secondee can do on your behalf. If they’re negotiating with suppliers, accessing bank accounts, or signing contracts, you should be explicit about:

• what approvals they need;
• what dollar limits apply; and
• whether they can bind your business legally.

If they need authority to deal with third parties, you may need something formal like an Authority To Act so it’s clear what they can and can’t do.

Manage Privacy And Personal Information Properly

Secondments often involve access to customer data, employee data, or commercially sensitive information. Under the Privacy Act 2020, you need to take reasonable steps to protect personal information from misuse, loss, and unauthorised access.

If the secondee will handle personal information, your controls should include:

• limited access permissions (only what they need);
• clear instructions for storing and sharing data; and
• return/deletion of personal information at the end of the secondment.

It’s also a good time to check that your outward-facing Privacy Policy matches what’s actually happening in your business, especially if personal information is being handled by people who aren’t your direct employees.

Control Access To Systems And Assets

From an operational risk perspective, treat onboarding and offboarding like you would for a senior hire:

• issue company devices (or set minimum standards if they use their own);
• set up individual logins (avoid shared passwords);
• keep an access register for software and key platforms; and
• schedule system access removal on the end date.

This also reduces the risk of accidental ongoing access after the secondment ends (which can happen surprisingly often).

Decide What Happens If You Want To Hire Them Permanently

Sometimes a secondment is effectively a “try before you buy” arrangement. That can be fine, but you should address it in writing so you don’t end up in a dispute with the home employer.

For example, you might agree:

• whether you can offer the secondee a role during the secondment;
• whether a fee applies if they accept; and
• what notice must be given to the home employer.

If you’re planning to bring them on, it also helps to prepare a compliant employment setup (including contracts, policies and any restraint clauses) early, so you’re not rushing after you’ve already made the offer.

Key Takeaways

• A secondment agreement helps you bring in capability quickly, but it needs to clearly allocate responsibilities between the home employer and the host business.
• Most secondments keep the worker employed by the home employer, but the host still takes on real operational risk-especially around workplace conduct, confidentiality and systems access.
• Essential clauses usually cover term and termination, duties and reporting lines, pay and cost recovery (including GST treatment where relevant), confidentiality, IP ownership, conflicts of interest, and authority limits.
• Under the Health and Safety at Work Act 2015, a host business can still have health and safety duties even if it isn’t the legal employer.
• Risk controls for hosts include clear approval limits, strong information security, privacy compliance under the Privacy Act 2020, and well-managed onboarding/offboarding.
• Secondments are not a great place for generic templates-these arrangements are highly practical, and the agreement should match what’s actually happening day-to-day.

If you’d like help putting a secondment agreement in place (or reviewing one before a secondee starts work), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.