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Claiming back training costs

Napthens - June 22nd 2018

It’s not uncommon for employers to want to claim training costs they have incurred in training employees back from those employees when they leave the business. But just how much can be claimed back and how far back can this go?

This month it was reported that several outsourcing companies, including Capita and FDM Group, are facing a legal challenge from former employees in relation to the employers’ claims for repayment of training costs. When joining the businesses, the employees are obliged to work for the employers for a minimum period after completing four months of unpaid training. After successfully completing the training, they are then placed within a partner business. Should the employees then decide to leave they are required to repay their training costs.

So is this potentially reasonable and what would be best practice? The first point to consider is whether the total sum you are seeking to recoup is reasonable.  In determining whether the sum is reasonable you need to consider how much time has passed since they undertook the training, whether it was mandatory or general training and the cost you have incurred. In addition, you should consider what benefit you have obtained from the employee after they completed the training.

It is typical for an employer to attempt to seek recovery of training costs from employees for up to two years after they have left. However, it would be difficult to justify that the full cost of the training should be repaid the longer the period of time that has elapsed since the training was undertaken. Therefore, best practice would be to introduce a sliding scale, decreasing the total sum after set periods of time e.g. a 25% reduction in the total sum due every six months until nothing becomes repayable after 2 years.

Mandatory training is generally excluded and as such it would be unlikely that you would be able to reclaim the cost. Mandatory training would include an induction or where legislation has changed and you are required to educate your staff. However, there are exceptions such as where the training has been needed as a result of the actions of the employee or where the employee requests further training in addition to any training you have already provided.

Finally, should you intend to recoup your training costs when an employee leaves, you should ensure that they are aware of the intention and what their liability would be. Where you have a sliding scale this should be made available to the employee and could be included in their contract of employment. However, where the training cost is significant it would be advisable to request that they sign a separate training costs agreement prior to booking the training.