To set this up, the following conditions must be true:

• The merc must be in tactical.
• The merc must be disguised. Note that this does not require that the merc has the covert trait, as anyone can disguise. However only those with that trait will be any good at this.
• The sector must be enemy-occupied.
• The enemy must not be aware of the merc (so no, this won't work once combat has been initiated).
• And the merc must be alone, no other mercs of militia allowed.

If all of these conditions apply, you can use the $ menu to assign the merc to the Hide or Get Intel assignment.

edit: found it, shift + 4.