Training costs agreements - how enforceable?

martin2345uk

This is all slightly hypothetical as I don't actually plan to leave my company yet, but I know a couple of people who do and it got me wondering...

New starters with my company all sign a training costs agreement stating if you leave within 3 years of completion of training, you agree to pay back a proportion of the training costs they say they spent on you. Totally fair enough, makes sense they want to get something back from their investment. But I wondered how enforceable is it?

I read that if the costs are actually what they did spend on you then yes, it's enforceable, but if it starts looking more like a penalty, then it starts to become a bit more cloudy? Is that the gist of it?

They state the costs as being £16,000 but some parts of the breakdown look dubious to put it mildly, hence my question here 

Catplan

Fairly common in IT especially for certification courses, I’ve only ever seen it on the actual cost backed up by po. Last placed I worked totally above board even passed on savings as most businesses get a discount.

martin2345uk

On ours it has costs such as "£5,000 for the six week classroom training element" - now, there were 14 people on the course, so that's £70,000. They used a room in their own building, the trainer was just a member of staff, we didn't have any fancy equipment, so I can't see for the life of me how they get to £5,000 each for that part!

YBR

My company had a similar policy for our last Graduate intake. I believe it was the tuition costs of the part-time masters and other course that they went on. 
I only know this because about 2 years in the company made large-scale redundancies and they were all worried that they'd be made redundant, and then charged the training fee. As far as I know that was not the case.

Jude57

It's a contract like any other and as enforceable as either party can persuade a court it should be.

As far as breaking down the costs, remember the unseen costs like the cost of: heating and lighting the room used, including insurance, rental and business rates on that room. Then there's the provision and maintenance of equipment and other materials used for training. The cost of training the trainer, including any certification costs and on going professional development costs. The cost of the trainer being away from their 'day job' for the duration of delivering the training, especially if they fulfilled a senior role. The cost of those 14 trainees being unproductive for the duration of the classroom training.

That's just off the top of my head, I'm sure others can fill in the costs I've missed.  Any decent finance officer can justify these costs, they aren't generally just pulled out of thin air and remember, the economies of scale available to a large employer won't be available to a smaller one, nor to an individual.

Jillanddy

I disagree with Jude57.

Whilst there are no guarantees ever, it would be exceptional for a court to support repayment of a training cost incurred for internal training in things the employer needs you to know for the job that they have employed you for. So unless you got a recognised and portable qualification from the training, I think they'd find it rather hard to enforce. And even then, if they required you to do the training, I think they would be on dodgy ground. The exception to that would be if the job was understood to be a training role in which CPD was involved, where it might be deemed to be fair. But I sincerely doubt that even then a course on company premises (for which they charge you costs) from staff employed by the company would ever qualify as enforceable. And £70k for a six week course is definitely a figure plucked out of thin air!

Enforceable training costs generally refer to portable and recognised qualifications, are often externally sourced, and there are strict rules around how the employer must set up and "cost" any repayment required - it must be agreed up front and in advance, there must be a training agreement in place (a general statement in the contract will not do), and it must reduce reasonably over a period (which courts have usually interpreted as being the same length as the course - so a two year course should reduce to nil over a further 2 year period, for example).

Just because you signed something doesn't mean it's enforceable anyway.

And @YBR - if the employer forces redundancy then they would be on a hiding to nothing trying to claim back costs of a course because it was their choice. Training agreements are about the employee leaving the company through an action for which the employee is responsible - so leaving for another job or getting sacked for misconduct. No court is going to say that employers can make people redundant and then reasonably ask for training costs back. If the employer wants the benefit of the training they paid for, don't make someone redundant!

Thrugelmir

martin2345uk said:

On ours it has costs such as "£5,000 for the six week classroom training element" - now, there were 14 people on the course, so that's £70,000. They used a room in their own building, the trainer was just a member of staff, we didn't have any fancy equipment, so I can't see for the life of me how they get to £5,000 each for that part!

While you are being trained the other costs of employing you are ongoing. Plus the loss of productive output.  All 14 people are unlikely to leave so that looking at it from a perspective of the business gaining £70k is erroneous. 

£166 per day per person isn't a huge sum. What's your direct payroll cost per day once Employers NIC and Employers Pension contribution are factored in? 

TELLIT01

martin2345uk said:

On ours it has costs such as "£5,000 for the six week classroom training element" - now, there were 14 people on the course, so that's £70,000. They used a room in their own building, the trainer was just a member of staff, we didn't have any fancy equipment, so I can't see for the life of me how they get to £5,000 each for that part!

Six weeks wages for the staff member who is being trained, plus a proportion of the cost of the trainer, add the cost of production of the training material.  Costs soon add up.

Jillanddy

TELLIT01 said:

martin2345uk said:

On ours it has costs such as "£5,000 for the six week classroom training element" - now, there were 14 people on the course, so that's £70,000. They used a room in their own building, the trainer was just a member of staff, we didn't have any fancy equipment, so I can't see for the life of me how they get to £5,000 each for that part!

Six weeks wages for the staff member who is being trained, plus a proportion of the cost of the trainer, add the cost of production of the training material.  Costs soon add up.

No,  they really don't.  Not for employees. The law doesn't work like that. An employer can't just claim that they trained their own staff with their own staff in their room so the people trained owe them money. 

martin2345uk

It's a total of £16,000 in all so I won't be chancing it for sure, just interesting reading people's thoughts on here!

Jillanddy

martin2345uk said:

It's a total of £16,000 in all so I won't be chancing it for sure, just interesting reading people's thoughts on here!

That is unbelievable. I incurred less for a PhD! Did you sign up for a cost of £16k - an actual figure on a piece of paper? Because if you didn't, you do not owe it!