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ARTICLE ORIGINALLY PUBLISHED March 2019

RECOVERY OF TRAINING COSTS - THE LATEST COMPLICATIONS

In your contract there is probably a paragraph giving you the facility to recover your training costs if an employee leaves your employment. This is probably within a predetermined period of time of them having completed some training.

Clearly the paragraph must be reasonable and non-discriminatory. For example, it is clear you couldn't require staff to remain in post for 10 years having been on a 1 day training course!

It’s a good idea for the employee to sign a training agreement for each training event then it:

a) reinforces the contract,

b) it advises them of the actual cost of the training

You might reasonably include travel costs and accommodation; but not the pay they received for attending the training.

It’s a good idea to have a specific paragraph giving you the right to recover the costs from their final salary.

Based on my experience I would recommend that when you receive their notice remind the employee of their commitments. Ideally, reach an agreement as to how and when you will recover the monies.

We should avoid the situation where the first time the employee is aware that their pay is being reduced is when they get their final pay and realise a significant chunk has been withheld.

Almost inevitably the employee dashes off to get legal advice.

Over the last 12 months I have seen these deductions being challenged on a range of grounds such as

  • that they were an unlawful deduction of pay
  • that the employee hadn't agreed to them
  • that the VAT element shouldn't be recovered from the employee
  • that more than one person attended so the cost was not accurate
  • that the training was fee to the employer
  • that the training was in their own time
  • that the deduction meant they didn't get the Minimum wage
  • that the employee hadn't left they had been dismissed
  • that the employee had never signed their contract

Most of these issues could have been avoided by a discussion prior to the employee leaving.

Let’s look at a recent case from Employment Tribunal arising from an employer deducting training costs from an employees pay without consultation.

THE FACTS

The Manager of a salon, Ms A, appeared at Tribunal along with 6 witnesses including existing and former employees.

On appointment she had signed a form agreeing to repay training costs if she left (for any reason).

After a few months she texted the owner indicating she was going to be off for a period of time with work related stress.

The employer didn't appear very supportive and replied effectively saying they were treating the text as her resignation with immediate effect.

Training costs for course were deducted from her final pay without any discussion or correspondence.

She made a claim against the employer including the unlawful deduction from her wages.

During the hearing it transpired that she hadn't actually been paid for attending the training.

THE FINDINGS

Legally she was entitled to one weeks notice which she hadn't received. She had been wrongfully dismissed. She didn't have 2 years service so couldn't claim unfair dismissal.

Ms A argued that the agreement (to recover training costs) was unenforceable as it was a penalty. The argument was that she had been dismissed in breach of contract and therefore the right to recovery was null and void.

The Tribunal agreed and concluded that whilst she had voluntarily signed the training agreement the dismissal without notice breached her contract and therefore the employer wasn't able to rely on the agreement about training.

The Tribunal also made specific negative comment about the Salon’s practice of not paying staff for attending training or requiring them to use their holiday.

The Minimum Wage And Recovery of Costs

One salon was subject of a minimum wage inspection. The recovery of training costs and the minimum wage became the focus of the inspection. Eventually HMRC  put their opinion in writing and confirmed that:

Employers could make deductions where the training was mandatory but shouldn't make deductions from the employees pay if it took the employee below the NMW.

Interestingly deductions could be made where the training was voluntary even if the deduction did take the employee below the NMW.

This is an interesting distinction but each employer would have to decide which training was mandatory and voluntary and make sure a record was kept about whether the employee had been given the option of attending or not.



David Wright Personnel

Phone - 01302 563 691

Mobile - 07930 358 067