“Can I recover the cost of training if an employee leaves my company?” This is a question we get a lot before making an employee training repayment agreement. We understand a lot of business owners get frustrated that after investing in training, an employee chooses to leave them and move elsewhere.
Recovering the cost of training from an employee who leaves your company can be a complex issue and depends on various factors. This includes the contractual agreement between the employer and the employee, and the nature of the training.
In this blog, we’ll explore the multifaceted considerations that come into play when addressing training cost recovery from departing employees. The main consideration being an employee training repayment agreement.
Contractual Agreement
As an employer, you have no automatic right to recover costs of training if an employee decides to leave the company shortly after. The only way you can possibly do this is by adding a clause in to the employee’s employment documentation.
Some companies include a clause in their employment contracts that requires employees to repay training costs if they leave the company within a certain period after the training. These are often referred to as ‘training repayment agreements’.
Employee Training Repayment Agreement
It’s good practice to ask your employees to sign a training agreement prior to the training commencing. This lets them see the cost of the training and over what period they’re expected to make a repayment.
An example of this is 100% in the first year of completion, 50% year 2 etc. This, along with the clause in the contract ensures you’ve covered all bases and does not mean you are making an unlawful deduction from Payroll.
You should also advise the employee when you are acknowledging receipt of resignation and confirming final payment details, that the cost of the course will be deducted from final pay. This ensures you have communicated this to your employee. It also means you have a paper trail should the employee try to pursue it.
Reasonableness
The terms of the repayment in the employee training repayment agreement should be reasonable and proportional to the costs incurred by the employer and the benefit to the employee. The repayment amount might also be scaled depending on how long the employee remained with the company after the training.
End Relationships Positively
I also take the view that you don’t want people leaving under a cloud. Whilst you might be frustrated about them leaving you, it’s good practice to end the relationship positively. This employee could be someone who could be a future customer or influence others about your business. Negative publicity travels further than good news!
National Minimum Wage
It’s important to consider any national minimum wage implications before considering deducting money from an employee for training costs.
In Conclusion
If you’re considering including an employee training repayment agreement in your contracts, or if you’re facing a situation where an employee has left after receiving costly training, it’s advisable to consult with a legal professional to understand your rights and obligations. Feel free to contact our outsourced HR Consultants on our website now.
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