Elliott has struggled for minutes so far this season and Emery has hinted he's not in his immediate nor long-term plans.
Liverpool do not have a recall option in the agreement for January, though Emery says talks are being held.
Emery said: "We are speaking with him and about his situation. He is not here with us. He is not here. Hopefully we can get the best for him and the best for us.
"I respect him as a player and as a person. He is training well, but we have one circumstance with him.
"Hopefully we can get a solution for him to try to play consistently and try to continue in his career with us or not. I have spoken with him two or three times.
"Firstly, my decision and also the situation. He is on loan playing with us but he is not definitely adding to us with a permanent contract."
Further complicating the situation is that Elliott has also played for Liverpool this season, meaning he cannot turn out for a third team before June.