Training Agreements – A Simple Guide for Businesses

We are frequently asked for Training Agreements to enable employers to deduct monies from an employees' wages, or claim monies from the employee, if the employee leaves once they have committed to, or completed the course. There is a common misconception surrounding these documents in that they are straightforward, and a simple template ‘one size fits all’ document will suffice which is not always the case. After considering the common pitfalls in these documents, which are often not ‘tribunal proof’, we have compiled a list of 7 key points which should be considered prior to issuing a training agreement to an employee.

• 1. The agreement should not be included within the contract of employment, as a bland or vague clause. Each piece of training should be accompanied by its own specific training agreement.
• 2. The employer needs to state the cost of the course so that it is clear how much the course costs, and the name or details of the specific course. The parties should have informed consent prior to signing the agreement and transparency is key in these agreements being deemed to be both fair and reasonable.
• 3. The employer needs to consider what its genuine pre-estimate losses would be. For example, if a training course cost £5,000, and the employee resigns and moves to a competitor the day after completing the course, the loss would be £5,000. However, the employer needs to consider what the loss would be if they left the organisation 3, 6, or 12 months after the completion of the course. They would have received a benefit during that time, and therefore it would simply be a penalty clause if the employee had to pay back the full sum at any time thereafter. It should be a proportion of the costs, depending on how long they remained after the completion of the course. Obviously, this is something which is very fact dependent, and should be clearly and specifically laid out how much would be needed to be repaid within each period after the training had been completed.
• 4. Consider whether or not it is a restraint of trade and stopping the employee leaving or seeking employment elsewhere. The terms have to be reasonable and fair. They need to be justified and consider the actual costs of the training.
• 5. Consider the ‘What ifs’. What happens if they fail the course or do not complete it? Try to consider all eventualities and have those conditions written into the agreement in order to avoid any argument after the event.
• 6. Ideally, have the training provider invoice you per person completing the training, rather than a lump sum, so it is clearly identifiable the costs to each person on a group booking. Also, keep the invoices and evidence of the costs, as these will be required in any tribunal hearing.
• 7. Finally, and perhaps most obvious, the agreement should be agreed and signed by both parties, in advance of the training commencing. Retain copies and give a copy to the employee so they are fully aware as to what they have signed.

Sometimes, the training provided is ‘in house’ and is more about development within the role, rather than any particular ‘CV worthy’ qualification. This will be harder to justify, as the costs to the business will be harder to articulate. The time taken in the training may be quantifiable, but one also has to consider whether its simply ‘induction training’ or something which would be a use and benefit elsewhere. Likewise, if there is a cost for training a particular group of employees at the same time, then clearly the training agreement cannot incorporate the full cost of everyone’s training, but merely the pro rata rate for that one individual, if it can be justified and articulated. Training agreements should be training course specific, with thought given to a repayment schedule should the employee’s employment terminate within a period. They should not be used as a penalty for leaving, but provide a genuine estimate as to the loss sustained by the business if their employment does terminate. Likewise training agreements should not be used to bully employees into not leaving, or be such a hindrance on them that it would restrain the trade of that employee. They should be specific, thought through and never a generic template ‘one size fits all’ document. For further advice on training agreements, or other contractual documents or HR issues, please contact Wirehouse on 033 33 215 005