10th May 2013

Ask the Expert – Training Costs

Over the last year or so we have invested a lot in the training and further qualification of our employees. One of our key employees, who received further training, has recently resigned. Our investment in the further development of this individual is now of no benefit to us as she is moving to a competitor company. Is there any way we can recover the costs of training from this employee?

Whether you would be able to recover the training costs from the employee depends on what has been agreed between the parties. What does the employee’s contract of employment provide? If the employee’s contract includes a repayment provision, which states that training costs are repayable if the employee leaves employment within a certain period after completion of the training, then you would be entitled to recover the costs from the employee. If not, then it is likely that the company will not be able to recover the training costs.
To avoid this happening in the future, the company should consider either incorporating such a clause into their contracts of employment going forward or alternatively enter into a separate training agreement with each employee that undergoes training.

A separate training agreement would ensure that the costs of training remain recoverable in the event of any breach of contract by the company. If the company were to breach the employee’s contract then any provision for the recovery of training costs may be unenforceable. A training agreement should provide a sliding scale of repayment whereby the amount which is to be repaid reduces according to the length of time the employee remains with the employer after the training has been completed. For example, if an employee leaves within 12 months of the completion of any training they could be asked to repay 100% of the training costs incurred by the company. If they leave within 18 months then the company may only require 50% of the costs to be repaid.

The company should also include a provision either in the contract of employment or training agreement allowing the company to deduct monies owed in respect of training directly from their salary. To be able to deduct monies, the employee must signify their agreement in writing to the making of such deductions and that such deductions can be made from their salary.

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10th May 2013