Excessive training fees and employee repayment clauses


The workplace has changed dramatically in recent decades, and employees need to be more highly trained than ever before to keep up with the demands of their jobs. In addition to this, companies often highlight the skills and qualifications of their employees to show that they can offer a superior service. As a result, a wide range of training providers has emerged, offering courses to meet this demand. However, some training providers have been accused of charging excessive fees for their courses, and there is a growing consensus that this issue merits government investigation.

Many employees are unable to afford to pay the high fees charged for training courses, so they often agree to have their employers pay for the course and then reimburse them at a later stage. This can be done through salary installments or by requiring employees to repay the full amount if they leave the company within a short period of time, which is typically two years.

However, there are concerns that the provision of course fees by employers can be used to trap employees in their jobs, as they fear the financial burden of having to repay the fees if they leave. This raises the question of whether such repayment clauses constitute an unreasonable restraint of trade.

Two notable employers, Capita and FDM, did in fact face legal action from employees over this issue, as highlighted in a Guardian article on 1 June 2018.

It is, therefore, important for employers to have a contractual right to recover any training costs they have paid for if employees leave the company within a certain period of time. This is to protect the investment they have made in training their employees. In the absence of these clauses, the employer cannot recover the payments if employees leave and go to work for other employers, possibly taking the benefit of their training with them.

However, repayment clauses must not be drafted in such a way that they amount to penalty clauses. If they do, the clauses will be void. To avoid a situation of this nature, the clauses should provide for a minimum contract and a sliding scale of repayments depending on how long the employees stay with the company after the fees are paid or their courses end. A typical sliding scale might stipulate that 75% of the fees must be repaid if employees leave six months after receiving training, 50% after one year, 25% after eighteen months, and nothing after two years. This is a pragmatic approach that is based on the assumption that the longer the employees remain employed, the greater the benefit the employer will derive from their enhanced skills.

However, even this is not the end of the matter. Consideration must still be given to whether the sums recoverable are out of all proportion to the legitimate interests of the employer. Receiving the right guidance is essential in this complex area of the law. If you are an employer considering including a repayment clause in your employment contracts or an employee who is concerned about the implications of such a clause, it is important to seek legal advice. Feel free to contact our solicitors for assistance.

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