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Training Costs

There is a general expectation that employers will provide reasonable and adequate training to their employees, to enable them to do the work for which they are employed. An employer should not require an employee to undertake a task requiring a special skill or skills unless it has ensured that the employee possesses that skill or skills, or unless the employer has trained the employee.

In practice employers sometimes face the situation where they have spent considerable amounts of money on training an employee – for example by funding their study for professional qualifications, or sending them on external courses- to then have that employee leave their job very shortly after. This is particularly aggravated if the ex-employee then goes and sets up in direct competition, or for a direct competitor. The costs that the employer has incurred in providing this training will NOT normally be recoverable without an express agreement to that effect, and this will be the case even if the employee has not given the proper notice to the employer before leaving.

There are a number of ways in which an employer might seek to recover all or some of the training costs that it has incurred. However, in all cases the employer needs to ensure that the provisions for recovering the training costs do not amount to a pure penalty cause. This means that the recovery provisions have to be prepared in such a way that they represent an honest attempt to pre-estimate the loss suffered by the employer. For example, the court is likely to rule that a clause that purports to entitle the employer to recover ALL of the training costs relating to a particular employee many years after the earliest of those costs were incurred is actually a penalty clause – and hence will be unenforceable.

Options available to an employer are :-

  1. To include a clause in the main contract of employment (link to PYG contract) that sets out a provision whereby the training costs that have been incurred by the employer are treated as having been repaid at a certain date or period after each course of training has ended. (link PAYG training repayment clause).

    The only significant risk with this approach is that if the EMPLOYER breaks any other term of the contract of employment and the employee leaves, claiming a constructive dismissal, then the employer might not be able to enforce the training costs recovery clause. However, if the recovery provision is found in the contract of employment it is perhaps more likely to be signed by the employee then than if the same employee is presented with a separate agreement later (when he/she is feeling more confident in the job).
  2. The use of a separate costs agreement may be used. This should avoid the risks linked to the inclusion of this type of clause in the main contract of employment. The validity and enforceability of the agreement should not be affected if the employer either accidentally or deliberately breaches the contact of employment.

    Employers ought still to use this type of agreement at the earliest possible stage of the employment, and better still as part of the overall terms of the job offer. Alternatively this type of agreement can be used in the event of the employee about to undertake important training, - such as for a vital qualification necessary for future promotion. (see PAYG recovery of training costs agreement)


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