November/December Issue 59 - Flipbook - Page 28
NEWS
RECOVERING TRAINING COSTS
Training costs are an immense
cost to any organisations.
Investing in staff in the long
term maybe beneficial for the
company but what happens
when staff are fully/part trained
and are considering leaving the
business?
More businesses are aware of
the financial consequences if
investing in an employee and thus
enforcing training agreements is
one way of recuperating the cost.
TRAINING AGREEMENT
A training agreement is between
both the employer and the
employee and its’ sole purpose
is to protect the employer
financially. Both parties must sign
the agreement to be enforceable.
Should the employee decide to
leave midway through training
or at the end of the training, the
employer is able to recover some of
the cost. Most employers operate
a sliding scale over a 12 month
period which typically starts at
100% sliding down to 0%. Should
the employee remain at work for a
longer period of time then the cost
of paying back the training fees is
substantially reduced.
The training agreement would
include a clause stating ‘the cost
of ____x_____ training will not
be borne by the Company and
is therefore subject to a sliding
scale agreement which requires
repayment by you to the Company
in the event of the termination of
your employment. The Company
reserves the right to deduct a sum
equal to the whole or part of the
cost’.
The training agreement would
heavily detail the terms of paying
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back the money, ideally through
payroll.
It is important that
the employee has signed and
agreed to this in writing; without
agreement, the deduction would
be an unlawful deduction of
wages.
NATIONAL MINIMUM WAGE
There is also the question of
the deduction falling below the
National Minimum Wage (NMW).
In the case of Commissioners
for HM Revenue and Customs
v Ant Marketing Ltd 2020, a
telemarketing company required
new staff to participate in a
mandatory training course for 3
days. The new recruits were told to
sign a training agreement so should
the employee leave the business
for whatever reason within a six
month period (resignation, act
of gross misconduct) the money
would automatically be deducted
from their final salary.
There were 2 parts to this
case, the first being the training
agreement and the second being
that the new recruits were offered
accommodation via a third party
of the organisation and rent was
deducted from their wages.
The Company was issued with an
underpayment notice from HMRC
as employee pay fell below the
NMW.
The outcome of EAT was that
the rent was not a reduction of
wages as it had no connection
to Regulation 14 of the National
Minimum Wage Regulation 2015.
However, the EAT stated the
company was wrong to deduct
pay in relation to the training
agreement as wages fell below
the NMW (Regulation 13).
It is important employers get it
right. In some circumstances
NMW rules may not apply should
the arrangement agreed fall with
the provisions of regulations 12
and 14 – see National Minimum
Wage Regulations 2015 for further
information.
If this article raises any questions
please call us on 01162 437615.
