Repayment of Training Costs

George Heron

George Heron

Email Click to email
Phone 01952 566918

15 June 2016

It’s a cliché, but it’s true… employees really are the most important asset within a business. It is therefore vital to look after your staff and develop them where appropriate. This brings benefits to the employees themselves, but it can also bring huge benefits to the Company. Money spent prudently on training for your staff can bring significant financial dividends further down the line. However, if there is nothing to stop an employee walking away once their training is complete, you would be forgiven for thinking that this risk makes paying for course fees an unattractive proposition.

A ‘repayment of training costs’ agreement can help mitigate the risk. This could form a stand-alone agreement or can form part of an employee’s contract of employment. Essentially it provides that, should an employee leave within a defined period of time, they must repay the training costs. This cannot be a penalty clause. It is essential that the clause goes no further than recouping the actual expenditure of the Company and is not there simply to penalise employees for leaving.

It is also important that the clause is proportionate. For instance, a staggered schedule could state that if the employee leaves within 6 months they must pay 100% of the costs, whereas after 12 months this will decrease to 75% and then 50% after 18 months. This approach ensures that any repayment is in direct proportion to the actual costs incurred, given that the employer will have benefitted from the employee’s new qualification for a certain time period.

If incorrectly drafted, a training repayment clause risks being unenforceable. It is therefore imperative that sound legal advice is sought.

At Alpha, we have a vast experience in providing bespoke, practical advice on HR and employment law issues. This includes the preparation of bespoke training agreements that are legally compliant and meet the needs of our clients. We are proud of our commercial outlook and do not sit on the fence. If you would like to have Alpha on your side, please feel free to contact us.

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