When is a Secondee Not a Secondee? Update on the Use of Secondments in Outsourcings

The use of employee secondments in outsourcings is widespread. Staff, whose employment might otherwise transfer from customer to service provider pursuant to the Acquired Rights Directive ("ARD"), instead remain employees of the customer and are then seconded to the service provider. Customers, service providers and staff may often prefer such an arrangement to an outright transfer. Customers can retain staff who would otherwise transfer and service providers have access to, and the assistance of, key staff at the start of the contract. Staff also appreciate the element of choice which secondment gives them. In short, secondments often provide the desired flexibility which a strict application of the ARD does not allow. However, a recent House of Lords ("HL") decision in the UK suggests that the issue of secondment in the context of an ARD transfer needs to be approached with great caution to avoid unforeseen, and potentially unfavourable, consequences for all of those involved.