How to protect investment made in employees

Peninsula Team

May 01 2015

Companies are becoming increasingly aware that employees are a businesses’ greatest asset and, in turn, are investing more and more time and resources in their staff. These investments can be lost where newly-trained staff “jump ship” and take positions with competitors.  Introducing a training agreement in to your business can help recoup the losses occurred where you have spent money on making sure staff have the necessary skills to perform their role.

Deductions for training costs need agreement from the employee before they can occur. Formal agreements should be entered in to with staff before their training has commenced, either an express written agreement or a contractual agreement. Without this agreement, the opportunity to recoup is lost and any attempt to deduct money is likely to result in a tribunal claim for an unlawful deduction of wages.

Training agreements are contracts between employer and employee which lay down the accepted terms and conditions for paying for training. The agreement will usually state that the whole, or part, of the cost paid for by the employer will be recoverable if the employee leaves the business within a certain period of time. A sliding scale is usually implemented which results in a decrease in the amount of payback the longer the length of service of the employee after training has completed. It is important to be aware that this type of deduction can affect National Minimum Wage calculations and specific advice should be taken in this regard so that your consultant can appraise your agreement in relation to the specific circumstances of the employee’s departure from your organisation.

It is likely that such an agreement will not cover the costs of any standard in-house training or on-the-job training. These types of training should be budgeted in to normal expenses even if the employee has left after a short period of time. If the company is paying for formal work-related training that the employees have opted to undertake, such as professional qualifications or soft skills such as management or technology skills etc., these costs will be those eligible to recover under the agreed training contract.

If you are finding that new starters are leaving on a regular basis once their training is complete, some focus should be placed on retention practices and promoting employee engagement; employees who are putting something in to the company and feel that they are valuable in return are more likely to stay with the business once their training has been completed. This will have the effect of reducing staff turnover and, in turn, reducing the costs of recruitment and in-house training.

 If you require further clarification or guidance on this issue then please contact the Peninsula Advice Service on 0844 892 2772. 

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