Introduction

As a small business, it is important to keep employee turnover as low as possible as the cost to replace can be a lot more than you think. Offering your staff training as an incentive is often a great way to do this.  However, when an employer agrees to pay for the cost of training for an employee it is common for it to want to see some return on that investment through retaining the skills of the newly trained employee. That doesn’t mean an employee can never leave.  it just means within a certain period of time after the training has been completed the employer could recoup some or all of the cost of the training.

Why have a Training Agreement?

It is important that before an employer agrees to go fund an employee to attend training (unless it is statutory) that both employer and employee has signed a training agreement.  The training agreement will state how much the course will cost if an employee should an employee leave or fail to attend that the employer has the right to recoup some or all of the costs.  In some instances you can also include if an employee should fail the course and have to reset.

Training fees agreements often operate on a sliding scale so that the longer an employee remains with the employer, the less he or she is due to refund on leaving. The sliding scale and its time periods will vary according to the length and cost of the training itself.

To provide further protection, the employer should also include a clause in the training agreement to allow it to make deductions from wages. This will give the employer the right to make a lawful deduction from the employee’s final salary in respect of any outstanding training fees if he or she leaves.

Deductions from wages

It is important to obtain this agreement otherwise it could be looked upon as an unauthorised deduction from wages.  A lawful deduction is made when it is authorised by statute, for example, tax or national insurance, when it is authorised by a relevant provision in the worker’s contract, or where the worker has previously signified in writing his or her agreement or consent to the making of the deduction.

As with anything having a blanket clause in a contract of employment may not cover you and also it does not state the value.  It is a lot more practical and safer to have a separate agreement for each course, and you can have more than one agreement running concurrently.

Note – Under the Employment Rights Act the Employer cannot get authorisation after an event, therefore, needs to complete a training agreement prior to the course starting.

Summary

  • To ensure a legal right to recover training fees from an employee, make certain that there is a training agreement between you and the employee.
  • Enter into the training fees agreement before the employee embarks on the training.
  • Use a sliding scale so that the employee’s liability reduces the longer an employee stays with the Company.
  • Make sure the agreement gives you the express right to deduct any outstanding training fees from pay – otherwise it could be an unlawful deduction from wages.
  • Using a System like BreatheHR to track training and costs, along with training agreements will ensure you don’t miss a trick.