How to use training agreements

Peninsula Team

October 10 2016

Whilst companies are happy to spend the time and resources necessary to bring new employees up to scratch, they will often face a financial loss when the employee decides to leave soon after undertaking training and commencing employment. Where employers are facing this scenario often, a training agreement is a useful tool to set in place. Training agreements are written agreements between employer and employee which state the agreed terms and conditions of the training, including payment, used to cover training for professional qualifications and skills training, rather than in-house or induction training. The agreement should be entered in to before the training takes place to take effect and will usually state that the whole, or part, of the costs of training are recoverable by the company if the employee leaves within a certain time. Most agreements will incorporate a sliding scale so that the more time that passes after the training, the less that can be recouped from the employee. It used to be the case that training agreements were not effective at recouping training costs from lower paid workers because the recovery could not take pay below National Minimum Wage (NMW), or National Living Wage (NLW), so the investment would be lost. However, an Employment Appeal Tribunal decision clarified this issue and found that where deductions are because of the conduct of the worker, the deduction can take pay below NMW or NLW. Therefore, before carrying out deductions under valid training agreements, employers should determine the reason for the employment ending and whether this is due to the worker’s conduct. For example, a voluntary resignation is conduct the employee is responsible for but a redundancy dismissal is not. Where the circumstances of the termination are due to the worker’s conduct, the training agreement can be used to deduct costs for training which will take pay below NMW or NLW for that pay reference period. Employers who are finding themselves in this position frequently should also be taking steps to solve any underlying issues, lack of training or support which are causing recent employees to leave within a short period. Recovering money under training agreements should be the fall back position for employers and, instead, they should focus on retention, employee engagement and supporting new starters to ensure they remain with the company on a long term basis.

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