Secondment in Labour Law

Secondment refers to a temporary transfer of an employee from one entity to another. The seconding company may assign its employee to a subsidiary or any other entity related to the seconding company.

The Industrial Court of Malaysia in the case of Bank SimpananNasional Finance Bhd&Anor v Omar Hashim (2002) 1 ILR 272 (Award NO. 1013 of 2005) further explained the meaning of the term “secondment” as follows:

“The ordinary dictionary meaning of secondment as a temporary transfer has on the face of it the connotation that the employee is subject to recall by his employer. So he is not a permanent employee of the other.”

The same court in Come Services Asia Pacific Region, Miri v Grame Ashley Power (1987) 2 ILR 34 reinforced the idea of a temporary transfer stating:

“Therefore so long as the contract is not terminated, a new contract is not made and the employee continues to be in the employment of the original employer. Even if the employer orders the employee to do certain work for another person, the employee still continues to be in his employment.”

The only thing that happens in such cases is that the employee carries out the orders of the master hence he has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired. It may be that such third party may pay his wages during the period he had hired his services, but that is because of his agreement with his real employer. However, that does not have the effect of transferring the service of the employee to the other employer. The hirer may exercise control and direction in the doing of the thing for which he has hired the employee; or even the manner in which it is to be done. But if the employee fails to carry out his direction he cannot dismiss him and can only complain to the actual employer. The right of dismissal is vested in the employer.

In the Dairibord Zimbabwe Limited v Lazarus Muyambi SC 22/02 the Supreme Court had the occasion to deal with the issue of secondment. The facts of the matter briefly were that Muyambi was employed by Dairibord as an auditor in 1985. Subsequently, with effect from 1 January 1998 he was seconded to Dairibord Malawi Limited as that company’s Managing Director.

The terms and conditions of the secondment were set out in a contract of assignment entered into by the employee and Dairibord. However, in June 1999 Dairibord ordered the employee to go on paid leave for an indefinite period pending the completion of what it called extensive investigations into the operations of Dairibord Malawi.

The employee was also ordered to return to Zimbabwe in order to facilitate the investigations. Thereafter, on 3 September 1999 the employee was summoned to a hearing on 14 September 1999. Dairibord subsequently withdrew the proceedings and instead opted to give the employee three months’ notice of termination of assignment contract.

The main issue for determination was whether the notice was intended to terminate the contract of assignment with Dairibord Malawi as well as the employee’s contract with Dairibord Zimbabwe. The court held that quite clearly, the two contracts were separate. The termination of the contract of assignment did not affect the 1985 contract of employment. At the end of the contract of assignment the respondent was to return to Zimbabwe and resume his usual duties.

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