Using a residual current device when there is an isolation transformer
What would be the safety approach for the secondary side? Can we say that the transformer already isolates the earth so an RCD is not necessary both at secondary and primary sides? 


Yes, but only until the first earth fault occurs. Until that happens the circuit is isolated and theoretically touching either wire will not result in electric shock. In practice, capacitive coupling between the primary and secondary may cause a small current to flow.

The problem is that there is no monitoring of the circuit so the user will not be aware of the first fault grounding one of the output wires thereby making the second one live.


  Or is there still some benefit to have an RCD before the isolation transformer.


It will protect the user if the transformer chassis were to go live.


  I mean if the secondary in above diagram is earthed accidentally the isolation will be defeated; 


Yes, but you won't get a big fault current as you would by accidentally shorting the L wire to earth. This can be very useful in fault finding, for example.

Clarification 1: If you plug a defective piece of equipment into the mains and there is an L-E fault a very large fault current may flow. With the equipment plugged into the secondary no fault current will flow. This gives you time to trace the fault.


  ... in that case would the RCD in primary side will still trip if someone touches the live chassis of the load?


No. The L + N current in the primary would still sum to zero so the RCD would not trip.







simulate this circuit &ndash; Schematic created using CircuitLab

Figure 1. Float monitoring.

By adding a couple of very low wattage (high resistance) lamps or secondary voltage-rated AC LED indicators the secondary voltages will be pulled to centre around earth voltage (0 V). For example, if the secondary voltage is 200 V then the lamps will cause the secondary to be like a split-phase 100 - 0 - 100 secondary. Both lamps will glow at half voltage.

If an earth fault occurs on one 'phase' that lamp will go out and the other will go to full brightness.

This may be useful in your application.



From the comments:


  
  "Yes, but only until the first earth fault occurs." Yes to what? 
  


See Clarification 1.


  
  About having RCD before primary first you write "It will protect the user if the transformer chassis were to go live" then you write "No. The L + N current in the primary would still sum to zero so the RCD would not trip." 
  


The transformer itself has a metal core and may have a metal case. The RCD would protect the user should s/he touch the live core or case.

RCDs work by monitoring the live and neutral wires by passing them both through what is a small  current transformer. If everything is OK the current in on the live wire returns on the neutral and cancels out exactly resulting in a sum of zero. If there is an earth fault some of the current returns to the supply via the earth path, the neutral current is reduced and now the sum of live and neutral currents is non-zero, the RCD detects this and trips in milliseconds.