Employers often find themselves in a position where they have recruited an employee and spent a considerable amount of money on training them, either by sending them on external courses or by assisting them in attaining a professional qualification, only to see the employee leave shortly afterwards. This situation is often made far worse when the employee leaves the employer to join a competitor who then enjoys the benefits from the training without incurring the costs.

Agreement to cover the cost of training as a loan

It is becoming an increasingly common practice amongst employers to attempt to recover course and exam fees from employees who leave employment shortly after they have undertaken such training. The usual method adopted is to include a contractual repayment provision whereby the training costs are deemed to constitute a loan to the employee which is repayable if the employee leaves employment within a certain period after the course or training ends.

Provisions of this nature should be contained in a separate agreement to the contract of employment. This is to ensure that, as far as possible, the validity of a separate loan agreement for the recovery of training fees will not be affected if the employer has deliberately or inadvertently breached the contract of employment.

The agreement should also contain 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. Equally the training fees should also become repayable on the same sliding scale if the employee is dismissed during the repayment period for gross misconduct.

Right to Deduct from Wages

In order to recover the costs directly from the final salary a provision should be included in the agreement allowing the employer to deduct monies owed under the agreement directly from the employee’s salary or any other payments due to the employee on termination (including bonus, and any accrued holiday pay owing etc.). However, the employer may still need to pursue court action if there is a balance remaining.

The right to deduct monies from the employee’s salary or final payments must contain the following provisions:

(i) the employee must have signified in writing his agreement to the making of such deductions; and

(ii) there must be a clear statement that the deduction is to be made from the employee’s wages; and

(iii) the employee’s agreement must relate to the deduction being made from that source.