How to secure your training costs against employees who leave

Peninsula Team

August 27 2010

Work-related training courses can be invaluable investments for both employees and employers: an employee spends their time learning new skills and widening their knowledge; an employer benefits from an individual who can play a more significant role in their organisation, in turn making them more money or improving internal processes etc. More often, employers are forking out the cost for the employee’s training, or at least, paying a substantial amount with the employee topping up the rest of the fees out of their own pocket. Knowledge can be a dangerous thing and, armed with new skills, an employee is a more attractive acquisition for another employer who can offer the employee a more prestigious employment opportunity than you can. In many cases, the employee is offered a ‘better’ job 3 months after completing the training and you lose him, together with your training investment. Where that particular employee is concerned, there is nothing you can do, however, you can take action in advance for other employees for whom you are considering financing a course. You cannot stop an employee leaving your organisation - staff turnover is inevitable - but you can take measures to recoup the investment you will make in these employees. You can introduce a policy of a claw back of company money spent on training fees upon the event of the employee resigning. This means that the employee will repay all, or a proportion of, the money that you have invested should they choose to leave after completing the training. The most effective way to do this is to decide on a staggered system of claw back whereby the amount to be repaid by the employee decreases with time until a certain period has lapsed after which no repayment is due. This staggered approach reflects the fact that the training is deemed to have proportionately ‘paid off’ over time. You can calculate your own specific schedule with regards to claw back but such training agreements usually stipulate a repayment of 100% of the training costs if the employee resigns within 3 months of completing training; 75% repayment after 3 – 6 months; 50% after 6 – 9 months and 25% after 9 – 12 months. After 12 months, no repayment would be due. This agreement should be in writing and given to the employee alongside a clear explanation of what it means. You should make sure you have the employee’s consent to this agreement by ensuring they sign it. Such repayments cannot be implemented retrospectively without the employee’s consent because the repayment constitutes a deduction from pay and employees are protected from any unlawful deductions – a deduction of this kind that is not agreed with the employee beforehand is an unlawful one. 5 top tips • Implement a contractual training agreement; • Ensure the figure to be repaid is an actual reflection of fees paid and not just an arbitrary sum. A sum that is not a true reflection is likely to be seen as a penalty and therefore be unenforceable; • Hand out the training agreement as a separate form from the contract of employment with a clear explanation of what it is; • Make sure you get the employee to sign their consent on the form; • If people are leaving shortly after training has completed, look at why. There may be other conditions of employment which are unattractive to employees. Want advice on how to go about securing your training costs? Call our Employment Law Service on 0844 892 2772.

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