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Employers often spend a considerable amount of money on training their employees, only to see them leave shortly afterwards. In order to ensure that the employer can provide an employee with training and that the employee does not take advantage of the situation by leaving soon afterwards, it is becoming an increasingly common practice to attempt to recover these costs from employees. The usual method is to include a repayment provision in the contract of employment whereby the training costs are deemed to constitute a loan to the employee, which becomes repayable if the employee leaves employment within a certain period after the training ends.
Employers must be cautious to ensure that the amount of costs which the agreement permits the employer to recover is a genuine pre-estimate of the damages which the employer has suffered as a result of the employee leaving prematurely. In the event that it is not, the provision for recovery of costs could be considered a penalty clause against the employee, which would be legally unenforceable. Therefore, if the employer has derived some benefit from the employee undertaking the training course during the fixed repayment period (e.g. where an employer has been able to charge customers more for an employee’s services by virtue of that training or qualification) then the amounts which may be recovered from the employee should be reduced to reflect that benefit.
The contract 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. It is not uncommon to have a requirement for 100% of the fees to be repaid if the employee leaves within 6-12 months after the training has finished.
If the employer wants to deduct these fees from the employee’s pay, certain strict rules must be met. A provision allowing the employer to deduct monies from the employee’s salary must satisfy the following requirements:
If no specific provision exists allowing the employer to deduct the training costs from the employee’s wages, any deductions would amount to unlawful deduction of wages and can be challenged in an employment tribunal within 3 months of the actual deduction taking place, or in the county court thereafter.
If the employer is not deducting the training costs from the employee's wages, they could instead try and sue them in the county court, although whether the courts agree with their claim will depend on the employer satisfying them that the repayment clause was reasonable in the circumstances.
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