We’ve had a flurry of enquiries this week from clients asking us about recovering training costs from employees when they leave; what are the legalities and how to go about it. With price and interest rate rises squeezing margins ever tighter, it’s no surprise that businesses are looking for cost savings wherever they can.
It’s also no surprise that we’re seeing more instances of this situation arising as a new generation of workers are generally more transient in their careers and move between jobs and employers a lot more readily than employees in the past. A job for life in terms of requisites for workers has been replaced more latterly by career progression opportunities and variety.
A concern for employers when discussing training for their employees is that the employees might leave soon afterwards, and so the employer does not fully benefit from the expense. Such arguments don’t really carry any weight as research strongly suggests that employees are much less likely to leave an employer who invests in them through initiatives such as training.
However, we recognise that not all employees fit that mould and that employers want some reassurances that their staff aren’t going to jump ship as soon as they’ve been given the opportunity to improve their CVs with a qualification. Or if they do, that the money they have invested can be reclaimed.
Previously, a formal training agreement would have been the route for this, but since the introduction of the Government’s Good Work Plan 2020, what monies will be recovered and how needs to be a contractual clause.
Employers should note that not all training costs are recoverable. Common ‘on the job’ training from a colleague that doesn’t incur an external cost can’t be recovered, neither can training that is required for the employee to do their job such as forklift driver training for a warehouse operative. Equally, compulsory Health & Safety training can’t be recovered. This might include working at heights for a scaffold company or manual lifting for a care worker.
Some soft skills training or training that enables delegates to gain a professional qualification that they can add to their CV and so may be useful outside an employee’s existing job, can be subject to a recovery. As mentioned, this is now contractual so a clause needs to appear in your employee’s contract of employment rather than in your staff handbook where it may have resided previously.
Your training cost recovery clauses can’t be applied retrospectively; so make sure it’s in contracts prior to training commencing. A consultation period may be relevant for existing employees as you’ll be fundamentally changing terms.
Cost recovery should be reasonable and so should on a reducing, sliding scale on the basis that some benefit of the training will be garnered by the employer over time. We usually recommend that 100% is recoverable if the employee leaves in the first three months following the training, gradually reducing to zero after 12 months have past.
You can take the costs out of your employees final pay when they leave. Be sure to show a clear calculation of any deductions which in addition to training costs might include holiday that has been taken but not accrued. Remember though that there are rules around ensuring that the employee’s pay doesn’t fall below minimum wage, so be sure to bear this in mind.
Finally, because this is now a contractual matter, you may want to make it clear at interview stage that this is a policy you enforce. It will give candidates the option to deselect themselves if they don’t want to be bound by it and won’t lead to any surprises for them on the first day. Going forward, if the training falls within the potential repayment category, ensure you are clear about this with the employee prior to the training commencing.
For further help and support with all matters relating to contacts of employment and staff handbooks, call us on 01452 331331 or email This email address is being protected from spambots. You need JavaScript enabled to view it.
