I am often asked by employers if they can deduct the cost of training their employee when the employee is leaving. This is not an unreasonable question given that large amounts of time and money are often spent on training employees. Employers are often aggrieved that despite paying for the additional skills or qualification for their worker, they receive little benefit if the worker leaves soon after.
Although employers can recover training costs, there are a number of strict rules which must be considered before any deduction is made.
There must be a written agreement
Like any deduction from wages, there must be an agreement either by way of contract, or a training agreement making it clear that deductions can be made, and when this will apply. To avoid confusion, it is sensible to remind your worker of their training agreement and the cost of the course, preferably in writing, before the training is confirmed and paid for. Also do this on each occasion that training is requested or required.
Where did the training take place?
As a general rule, a deduction can only be made where an external cost has been incurred. In short, time given by the employer or its staff to train up a new recruit, cannot in most circumstances, be deducted as a training cost when the worker leaves.
Beware the penalty clause; you will not be able to enforce it!
Any clause which penalises the worker would be considered to be a penalty clause and is therefore unenforceable. The same applies to training clauses in which the employer would be entitled to make a deduction long after the training has been received or if the deduction is not solely for the cost of the training but for expenses or wages. This would amount to penalising the worker for leaving, rather than a recovery of a genuine loss incurred by the employer.
When did the training take place?
Like most things the longer you have it, the less it is likely to be worth. When considering the amount to be deducted, employers must consider when the training took place, and whether they could reasonably argue that they have had no value from their expenditure. Generally, training clauses allow an employer to recover their cost proportionately over a 12-month period. So for instance, if an employer paid £120 for training their worker in January, and the worker resigns leaving in June, the employer could deduct 6/12th of the cost of the course, that being £60, not the £120 spent.
What was the cost of the training?
The purpose of the deduction is to enable the employer to recover its losses, and therefore only the cost of the course. Recovery is generally restricted to the actual cost of the course, (taking into account the sliding scale of value as noted above). If an employer deducts expenses for travel and accommodation for the course, or wages paid to the employee on their days of attendance at the course, this would be regarded as an unlawful deduction and the employee could claim the payment back.
What happens if a wrongful deduction is made?
Deductions made without authority could give rise to employment tribunal claims for unlawful deductions from wages; and no, two years’ service is not required for this claim to be advanced.
Not only may sums wrongfully deducted be ordered to be repaid by the employment tribunal, but the employer will then lose the right to recover the sums they was seeking to deduct, even if the sums are properly owed to the employer. In addition, the employee may seek compensation for any financial loss they have suffered (such as bank charges) which is attributable to the unlawful deduction from wages.
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An unlawful deduction in breach of statute would entitle a worker to bring an employment tribunal claim in respect of unpaid sums. The general position regarding other deductions from your salary is the same: employers will have difficulty justifying deductions where the right is not reserved in your contract. There are some circumstances, though, where an employer can validly make deductions from wages.