(Or: “Same Employee, Different Desk — Payroll Still Needs to Know What’s Going On”)
Secondments sound deceptively simple.
“We’re just sending them to another team.”
“They’re still employed by us.”
“It’s temporary — what could possibly go wrong?”
From a business point of view, secondments are a great way to share skills, cover gaps, or give someone development opportunities. From a payroll point of view, however, they come with a very specific set of rules that need to be handled properly.
Because while the role may change, payroll responsibilities don’t magically pause or relocate themselves.
So let’s walk through how payroll works during a secondment, what needs to be agreed upfront, and where employers most often get caught out.
First: What Is a Secondment?
According to Acas, a secondment is a temporary arrangement where an employee works:
- In a different role, department, or organisation
- For a fixed period
- While remaining employed by their original employer
The key payroll phrase here is “remaining employed”.
Unless the employment contract changes, the original employer usually remains responsible for:
- Paying the employee
- Running payroll
- Deducting tax and National Insurance
- Reporting to HMRC
Secondment does not automatically mean a change of employer.
Who Pays the Employee During a Secondment?
In most cases:
- The original employer continues to pay the employee through payroll
- PAYE and National Insurance are deducted as normal
- RTI submissions continue as usual
Sometimes, the host organisation reimburses the original employer for the cost — but this is a commercial arrangement, not a payroll one.
From a payroll perspective:
- The employee is still paid by their employer
- The payslip still comes from the same payroll
- Tax treatment does not change
This distinction is crucial. Reimbursement does not move payroll responsibility.
Pay, Hours, and Allowances: What Can Change?
Secondments often come with changes such as:
- Different working hours
- Additional responsibilities
- Temporary allowances or supplements
Payroll must only apply changes that are:
- Clearly agreed in writing
- Covered by the secondment agreement
- Time-limited where appropriate
Unilateral changes to pay or hours during a secondment can breach employment law, even if the employee verbally agrees.
Payroll follows contracts and agreements — not informal understandings.
Tax and National Insurance Still Apply
From an HMRC perspective, nothing fundamentally changes.
According to HMRC:
- The employee remains within PAYE
- Tax and National Insurance are calculated on total earnings
- RTI reporting continues on or before payday
Even if:
- The employee is working elsewhere
- Another organisation is funding the role
- The duties look very different
Payroll reporting remains exactly as before unless employment actually transfers.
Expenses and Benefits During a Secondment
This is where payroll needs to be particularly careful.
If an employee receives:
- Travel or accommodation expenses
- Temporary allowances
- Benefits linked to the host role
Payroll must assess:
- Whether expenses are taxable
- Whether they qualify as temporary workplace expenses
- Whether benefits should be payrolled or reported
Secondments can change the tax treatment of travel and subsistence, especially if the “temporary” arrangement becomes long-term.
This is an area where payroll and accounting should talk early — not after HMRC asks questions.
Pensions During a Secondment
In most cases:
- Pension deductions continue as normal
- Employer contributions continue
- Eligibility and assessment remain unchanged
Unless the secondment agreement explicitly changes pension arrangements (which is uncommon), payroll should continue pension processing exactly as before.
Again, reimbursement between organisations does not change pension duties.
International or Cross-Organisation Secondments
Things become more complex where:
- The secondment is to another legal entity
- The employee works overseas
- The arrangement lasts longer than planned
In these cases, payroll must consider:
- Ongoing PAYE obligations
- Potential shadow payroll requirements
- Social security implications
- Double taxation agreements
These are not “wait and see” situations. Payroll advice should be taken before the secondment starts.
Communication Is Key
From an Acas perspective, clarity and transparency are essential.
Employees should know:
- Who pays them
- Whether pay or benefits change
- How long the arrangement lasts
- What happens at the end of the secondment
Payroll is often the first place employees notice confusion — especially when payslips don’t look how they expect.
Common Secondment Payroll Mistakes
- Assuming payroll responsibility moves automatically
- Changing pay without written agreement
- Mishandling expenses and allowances
- Forgetting pension continuity
- Treating reimbursements as payroll transfers
Most secondment payroll issues aren’t dramatic — they’re just poorly communicated.
The Love Payroll Bit
At Love Payroll Limited, we help businesses handle secondment payroll properly from day one.
We:
- Confirm who remains the employer
- Ensure payroll stays compliant
- Review pay changes and allowances
- Assess expense tax treatment
- Keep HMRC reporting clean and accurate
Because secondments are meant to be opportunities — not payroll headaches.
Final Thought
Secondments don’t remove payroll responsibilities — they sharpen them.
Handled properly, payroll ticks along quietly in the background. Handled casually, secondments can create tax issues, employee confusion, and compliance risk.
If someone’s being seconded, payroll should be involved early — not brought in to untangle things later.
Because “it’s only temporary” is not a payroll exemption.
