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What is a secondment agreement? It is an arrangement whereby an employer (the lender) allows its own employee to temporarily work at and under the direction of another company (the borrower), while the employment relationship with the lender continues as normal. The employee receives their salary from the lender; the borrower pays the lender a rate and, in practice, determines the work. It is a triangular relationship: lender, employee, and borrower, with specific agreements for each relationship.
The short answer
- Who is the employer? The lending agency remains the legal employer of the seconded employee. The employment contract continues.
- Who is in charge? The hirer provides daily leadership and instruction, within the limits of the secondment agreement.
- Two contracts. There is an employment contract (lender-employee) and a secondment agreement (lender-borrower).
- The Waadi Act applies. Anyone who makes workers available must register this in the Trade Register.
- Note liability. The hirer may contribute to wages and payroll taxes if the lender defaults.
What exactly is a secondment agreement?
In secondment, an employer makes an employee available to a third party. The employee performs work under the supervision and direction of the hirer, but remains employed by the lender. Legally, this falls under the provision of labor. The secondment agreement sets out the commercial and legal arrangements between the lender and the hirer: which employee, which position, which rate, which period, and who is responsible for what.
The triangle is characteristic. The employee has an employment relationship with the lending agency pursuant to Article 7:610 of the Dutch Civil Code. The hiring agency does not have an employment contract with the seconded employee, but does exercise de facto authority. This separation between formal employership and de facto management is precisely what must be properly regulated in the secondment agreement.
Secondment versus temporary staffing
Secondment and temporary staffing are similar, but are not legally the same. A temporary staffing agreement is regulated in Article 7:690 of the Dutch Civil Code and presupposes an allocation function: the temporary staffing agency brings supply and demand together on the labor market and makes employees available to various clients. In the case of temporary staffing, a temporary staffing clause (Article 7:691 of the Dutch Civil Code) and a phase system from the collective labor agreement often apply, ensuring that the employment relationship ends smoothly as soon as the assignment stops.
Secondment is generally longer-term and person-specific. The lending agency makes a specific employee available to usually a single client for an extended period, continues to employ the employee on a permanent or temporary basis, and bears the wage risk if there is temporarily no assignment. There is usually no agency-based clause. Consequently, legal protection for the seconded employee is stronger than for a temporary agency worker. However, both forms are subject to the same rules regarding the provision of labor.
Waadi and registration obligation
The Labour Allocation by Intermediaries Act (Waadi) applies in almost all cases of secondment. Anyone who makes labour available commercially or for remuneration must register as such in the Trade Register of the Chamber of Commerce (Article 7a Waadi in conjunction with the Trade Register Act). This registration obligation applies even if lending is not your main activity. A company that occasionally seconds one of its own employees is therefore also subject to this.
If you fail to register, you risk a fine from the Labour Inspectorate, which can amount to a significant sum per seconded employee. In addition, the parity requirement of Article 8 of the Waadi applies: in principle, the seconded employee is entitled to at least the same employment conditions as comparable employees employed by the hirer, the so-called hirer's remuneration. This obligation belongs in the secondment agreement, so that both the lending and hiring parties know who bears which remuneration component.
Chain liability and risk
When hiring temporary workers, the hirer bears a financial risk. Pursuant to the Sham Employment Arrangements Act, Articles 7:616a through 7:616f of the Dutch Civil Code apply: if the lender fails to pay the collective labour agreement wage or minimum wage, the employee may hold the hirer jointly and severally liable for that wage. In addition, there is the fiscal hirer's liability under Article 34 of the Collection Act 1990. If the lender fails to pay the payroll taxes and VAT, the Tax and Customs Administration may hold the hirer liable.
A hirer limits that risk through clear agreements in the secondment contract, with a certified or demonstrably reliable lender, and sometimes by depositing funds into a G-account. For the lender, the reverse is important: guaranteeing that wages and contributions are paid properly and on time, so that they do not end up in a recourse situation.
Practical example: a software agency seconds a developer to a client for nine months. The developer remains employed by the agency, works under the supervision of the client's project manager, and the agency invoices a monthly hourly rate. The secondment agreement specifies the position, the rate, the notice period, a non-compete and solicitation clause, and the agreement that the agency remains responsible for wages and contributions. When the client wanted to hire the developer on a permanent basis, the compensation applicable was clear in advance due to the takeover clause.
Honest recommendation
You don't always need a lawyer. If you occasionally second an employee to a long-standing partner with whom you have enjoyed working, and use a solid model that you understand well, you will often get quite far. In that case, at the very least ensure Waadi registration, a clear rate, a notice period, and an agreement regarding liability and the takeover.
Be sure to seek assistance as soon as more is at stake: long-term secondment, high rates, foreign elements, a potentially applicable collective labour agreement, or a hirer wishing to take over the seconded employee later. In such cases, you want to be certain that the agreements regarding hirer's remuneration, chain liability, and takeover are correct. An improperly structured arrangement can lead to fines and back taxes that are many times greater than the cost of sound advice beforehand.
Want to know more or get started yourself? View the secondment agreement from MKB Juristen, read how to drafting a secondment agreement , and when it is better to choose to have a secondment agreement drafted by a professional .
Frequently Asked Questions
It is the agreement between a lender and a borrower whereby the lender has one of its own employees temporarily work for and under the direction of the borrower. The employee remains employed by the lender and retains their employment contract with them. The borrower pays a rate and provides day-to-day management.
Secondment falls under Article 7:690 of the Dutch Civil Code and presupposes an allocation function, often involving a secondment clause and a phase system. Detachment is usually longer-term and person-specific: the employee remains in the permanent or temporary service of the lending agency, which bears the wage risk. The legal protection of the seconded employee is generally stronger.
The lending party remains the legal employer. The employment contract and wage payments are handled through the lending party. The hiring party exercises only actual authority during the work but has no employment contract with the seconded employee.
Yes. Under the Waadi, anyone who makes workers available must register as such in the Trade Register, even if lending is not the main activity. Without registration, you risk a fine from the Labour Inspectorate for each employee involved.
Pursuant to Articles 7:616a et seq. of the Dutch Civil Code, a seconded employee may hold the hirer jointly and severally liable for wages that the lender fails to pay. In addition, the Tax and Customs Administration may hold the hirer liable under Article 34 of the Collection Act for unpaid payroll taxes and value added tax.
In principle, yes. The parity requirement of Article 8 of the Waadi Act stipulates that the seconded employee is entitled to at least the same essential terms and conditions of employment as comparable employees of the hiring company—the hiring company's remuneration. You specify who bears which part in the secondment agreement.
That is possible, but establish it in advance. A good secondment agreement includes a takeover clause with compensation if the hiring company hires the employee, and sometimes a non-solicitation or non-compete clause. Without an agreement, disputes regarding the costs of the takeover can quickly arise.
