Secondments – Getting it right

Secondment assignments are quite common in Bermuda, particularly in respect of start-up companies. This is where an employee (Secondee) from one organisation (Employer) is temporarily assigned to another part of the company group or to another organisation (Host). Generally, the Secondee retains the same terms and benefits of the employment agreement with the Employer (Employment Agreement). Secondments should always be documented in an agreement between the Employer and the Host which will deal with issues such as responsibility for payment of salary, reporting requirements, which employer retains overall control, managing work and protecting business interests.  However, as this is also a three way relationship the Employer should also ensure that they provide a letter of secondment to the Secondee (Secondment Letter). This will reduce the risk of complications arising and provide clarity if there is a dispute.

Generally, if the secondment is taking place between two entities within Bermuda, there will not be too many technical concerns to consider. Where the secondment is taking place between an Employer from another jurisdiction and a Bermuda Host, there are several points the parties must consider, particularly when the laws from the Employer’s jurisdiction do not align with Bermuda’s laws.

For example, in the United States, there is a concept of employment at will, whereby  employers can dismiss an employee for any reason without having to establish a fair cause and without notice, so long as the cause is not illegal (e.g. discriminatory). Bermuda does not have at will employment. The Employment Act 2000 (Employment Act) provides for statutory notice periods required for terminating a contract of employment.

In summary, the statutory notice periods in the Employment Act are comparative to the payroll schedule (i.e. where the employee is paid weekly, the statutory notice is one week) and can be up to one month (Statutory Notice Periods). While the Employment Act does provide certain instances where the Statutory Notice Periods do not apply (e.g. by contract or by custom), the Statutory are de minimis, in that the parties cannot contract to have a shorter notice period than the minimum Statutory Notice Period and any attempt to waive the statutory requirements in a contract will be void.

As such, where the Secondment Letter does not include terms regarding notice, the notice period in the Employment Agreement will be the applicable starting point. If the Secondee falls within the scope of the Employment Act (i.e. a person, over sixteen years of age, who is employed wholly or mainly in Bermuda for remuneration for more than 15 hours a week and employed for more than 3 months), the notice period in the Employment Agreement must be reconciled with the terms of the Employment Act. The result of which is that, if the notice period in the Employment Act is less favourable than the Statutory Notice Periods, such notice period will not be applicable and the terms of the Employment Act will prevail.

This note is intended as a high level overview of this topic and there are a number of other issues which will also require consideration on a secondment between a foreign jurisdiction and Bermuda. Legal advice should always be sought on a case by case basis.