Training employees is necessary to allow them to meet expectations. Although costly, most employers consider it an investment which produces benefits on their balance sheets.
But forking out for training, only to see the newly-trained employee leave your employment shortly afterwards, is seriously annoying. Things are worse still when the employee takes their new skills and applies them for the benefit of one of your competitors.
Some employers therefore look to recover training costs from former employees. However, this is only possible where certain conditions are met.
Firstly, the employee must agree in writing to repay the training costs if they leave. An employer can include a relevant provision in an employee’s contract. If there is no such clause in the contract, an alternative is to require the employee to sign an appropriate agreement as a condition of receiving the training.
The second point is to allow for any period for which the employer has had the benefit of the training. No court is going to require an employee to repay training costs ten years after the training. The agreement should require repayment on a “sliding scale”, with the proportion of the cost to be repaid diminishing according to the time which has expired between the training and the departure.
The final step is to ensure the agreement authorises the employer to deduct the necessary amount out of the employee’s salary. Without that specific authorisation, an employer that does this will make an unlawful deduction of wages. Not only will this result in a costly employment tribunal dispute, it could also prevent the employer from claiming the balance of such money via another channel such as the county court.
If the written agreement requires the employee to repay training costs, but doesn’t authorise a deduction from wages, theoretically it’s still possible to pursue the employee for repayment. But if the employee does not pay up voluntarily, the legal costs involved in suing them are likely to exceed the amount at stake. This is therefore unlikely to be worthwhile.
The loss of skilled employees shortly after paying for their training is fortunately not an everyday problem. However, pre-empting it is a valuable way for employers to secure part of the investment they make in their employees.
Tom Potbury is a senior associate in the Employment Law department of Pinsent Masons