The Borrowed Partner: Contracting Client Secondments Without Importing Employment Risk

A client secondment can look like the simplest way to deepen a relationship. A trusted adviser spends two days a week inside the client's office, attends management meetings, supervises a workstream and becomes the person the business calls first. Commercially, the logic is clear. Contractually, the arrangement often inherits an employment-shaped risk that the standard engagement letter was never drafted to address.

The commercial appeal and the contractual gap

Secondments are attractive because they shorten the distance between advice and execution. The client gets continuity; the firm gets insight and influence. But the arrangement sits between two legal categories. The secondee remains employed by the firm, yet the client may exercise day-to-day direction. Standard engagement letters tend to describe deliverables, fees and liability caps. They rarely set out who controls working hours, who approves leave, who handles disciplinary matters or what happens when the client wants a different person.

That gap matters in 2026 because clients are more sensitive to employment-status risk and more willing to ask firms to evidence their compliance. A secondment that looks like a temporary staff supply can attract scrutiny from tax, insurance and procurement teams even where the commercial intent was advisory.

Control is the fault line

Employment status is not decided by the label on the contract. Tribunals and HMRC look at substance, including control, integration, mutuality of obligation and the ability to substitute. In a secondment, the firm usually retains employment responsibility, while the client exercises operational supervision. The risk arises when operational supervision becomes managerial control.

The file should show a clear division. The firm remains responsible for pay, benefits, appraisal, discipline and professional development. The client directs the work within an agreed scope and reports concerns to a named firm contact. The secondee should not be treated as a client employee for holiday approval, grievances or internal promotion. If the client wants that level of integration, the arrangement is closer to staff supply and should be documented and priced accordingly.

IR35 and off-payroll: what the file must show

IR35 and the off-payroll working rules are often discussed in relation to contractors, but secondments can raise parallel questions where services are supplied through an intermediary. The firm should be able to explain the payment chain, who bears employer obligations and whether the client is treated as receiving services from the firm or from an individual. A status determination statement may not be the central document in every secondment, but the reasoning behind the engagement should be recorded.

The evidence should include the secondee's role, reporting line, scope of authority, substitution arrangements, duration and the commercial rationale for using the firm rather than a direct hire. It should also show that the firm retains real supervisory responsibility. A secondment agreement that gives the client unfettered control while the firm simply invoices for a named individual is difficult to defend as a genuine professional-services arrangement.

Insurance notifications and indemnity chains

Secondments can affect professional indemnity, public liability and employers' liability cover. The firm should notify its broker before the arrangement begins, particularly where the secondee will work at the client's premises, handle client money or take decisions under the client's governance. The client's insurance team may also need confirmation that the secondee is covered for on-site work.

The contract should align indemnities with the actual risk. The firm should not accept unlimited liability for acts carried out under client direction, and the client should not assume that the firm's PI policy covers every operational loss. A clear allocation of responsibility for supervision, data security, health and safety and third-party claims is more useful than a broad mutual indemnity that neither insurer will readily accept.

Clauses that keep the arrangement commercial

A secondment schedule should sit alongside the master engagement terms. It should define the secondee's role, the client supervisor, the firm's relationship partner, working hours, location, duration and the process for changing scope. It should state that the secondee remains employed by the firm and is not entitled to client benefits or permanent employment.

The schedule should also address substitution, confidentiality, data protection, intellectual property, expenses, timesheet approval and the return of client materials. A no-poach or direct-hire clause is common, but it should be drafted carefully and checked against applicable law. Termination rights should be mutual and practical: the client may ask for a replacement for a genuine performance or conduct concern, while the firm retains responsibility for employment decisions.

Most importantly, the contract should preserve the firm's supervisory role. The client can direct the work, but the firm should remain responsible for professional standards, quality review and people management. That distinction is not a formality. It is the clause that keeps the secondment from becoming quasi-employment by default.

A pre-secondment file review

Before the secondee starts, the firm should review the engagement letter, secondment schedule, insurance position, tax reasoning and internal approval. The review should identify who controls what, how concerns are escalated and what evidence exists if the arrangement is questioned. A short file note recording the commercial rationale and the control boundaries is worth more than a lengthy recital that nobody reads.

Conclusion

Secondments remain a valuable way for UK professional firms to deepen client relationships, but they reward contractual precision. The arrangement should be embedded commercially, not employed operationally. Firms that map control, document the payment chain, notify insurers and draft a clear secondment schedule can preserve the relationship while keeping the risk where it belongs.