Overview
Investing in WSET training and development of employees is a critical aspect of workforce growth in the drinks business or F&B business. This clause provides for the repayment of training costs incurred by the employer if the employee leaves the organization within a specified period. It is intended for inclusion in employment contracts, particularly where no separate policy on training cost repayment exists.
If introducing this clause to an existing employee’s contract, ensure compliance with existing terms regarding contract amendments or follow company procedures. Employment contracts are legally binding and require mutual consent for modifications.
Legal Considerations
Avoiding Penalty Clauses
This clause specifies repayment obligations if the employee leaves employment after the company incurs costs for training. For the clause to be enforceable, it must not impose penalties disproportionate to the employer's legitimate interests. Provisions that are reasonable, proportionate, and aligned with industry norms are less likely to be challenged as penalties.
Restraint of Trade
A repayment clause could indirectly discourage employees from leaving, which may raise concerns about restraint of trade. Although not extensively tested in court, ensuring proportionality remains essential.
Sliding Scale Repayments
The clause employs a sliding scale for repayment, reducing the amount owed as the employee's tenure increases. This reflects the employer’s growing benefit from the employee’s training. Employers should avoid excessively long repayment periods, which could risk indirect discrimination based on factors like age, gender, or disability, as these groups might face challenges maintaining continuous employment.
Circumstances Exempt from Repayment
The clause outlines situations where repayment will not be required. Employers can expand these conditions, but caution is needed as broadening the circumstances could raise legal uncertainties regarding fairness and enforceability.
Deductions from Wages
The clause authorizes deductions from final wages to recover training costs. Employers should ensure employees sign a deduction consent form or include a general deduction clause in the contract to prevent claims of unlawful wage deductions.
Tax Considerations
Costs of employer-paid, work-related training are generally tax-free for employees. Employers providing training-related loans should consult tax advisors to understand applicable rules.
Each case depends on its circumstances, including the termination context and amounts recoverable. Legal advice should be sought before implementing or enforcing such clauses.
Training Costs Repayment Clause Sample
1.1 The Company may fund your attendance at training courses. If your employment ends after the Company incurs training-related costs, you agree to repay those costs as outlined below:
1.2 Repayment obligations, unless exempted under Clause 1.3, are as follows:
(a) If you leave before attending the training but the Company has incurred costs, you will repay [100]% of the costs or the unrecoverable portion.
(b) If you leave during the training or within [XX months] of completing it, you will repay [100]% of the costs.
(c) If you leave after [XX months but within XX months] of completing the training, you will repay [50]% of the costs.
(d) If you leave after [XX months but within XX months] of completing the training, you will repay [25]% of the costs.
Repayments are not required beyond the specified timeframe.
1.3 Repayment is not required under the following circumstances:
(a) The Company terminates your employment, except in cases of:
(i) Summary dismissal.
(ii) Voluntary redundancy initiated by you.
(b) You terminate employment due to a fundamental breach by the Company.
1.4 You consent to deductions from final wages or outstanding payments to recover amounts owed under this clause.
1.5 If the Company waives repayment obligations, you are responsible for any taxes arising and agree to indemnify the Company for such liabilities.
Practical Application
Incorporate these details into the employee’s training record:
Employer and employee names.
Course title, dates, and associated costs (e.g., fees, travel, materials).
Expected outcomes for the employee, client groups, and the organization.
Engage employees throughout their learning journey to maximize the training's value. Plan for knowledge transfer and set repayment terms proportionate to the investment and benefits received.
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