Wednesday, October 16, 2019
Any modern society benefits from an educated workforce. Apart from learning on the job, many employees will look for educational opportunities in their spare time to improve their skills and the value they give their employers.
As a consequence, it’s now pretty common for employers to fund educational courses – ranging from diplomas to degrees – taken by their employees. Many service firms, for example, will pay for employees to obtain additional professional qualifications.
Most of the time, this benefits both parties – the employee increases their skillset and the employer benefits from a more valuable resource. Everybody wins, in other words.
But what happens where the employee decides to resign either during the training/education course, or shortly afterwards – is there any recourse for the employer in those circumstances?
An employer in this situation may well feel aggrieved – not only has a valued employee decided to work for a different organisation, but the employer may well be out of pocket to the tune of thousands of euro. The employer has invested in improving the employee’s skillset – and somebody else is going to benefit from those improvements. Is there anything an employer can do in this situation?
Unlike many of the aspects of the employer–employee relationship, substantive employment law has very little to say here. For example, there is no statutory authority governing the situation in which an employer voluntarily decides to assist an employee in increasing their qualifications and marketability.
Instead, this is a matter for the contractual relationship between the parties. If the contract of employment (or any variation of the contract of employment) is silent on the point, the employee will be in quite a good position to argue that they are not under any obligation to account to their former employer for the costs spent on the qualification/courts.
They don’t have to reimburse the fees, in other words. In that situation, the employee can depart for their new employer and there’s very little the old employer can do except decide to be more careful in future.
Naturally, prudent employers will safeguard themselves against this. Professional service contracts, for example, will frequently stipulate that if an employee leaves, they’re obliged to account for any qualification (or related) fees spent by the employer. If the contract doesn’t deal with this (which is often the case if the employee only decides to take up a qualification later in the relationship), a prudent employer will still look to have the terms of the agreement recorded in writing. This can be done simply – the employer agrees to pay for the course, but the employee agrees to repay the fees in certain circumstances.
However, this agreement needs to be prepared carefully. As always, the courts and tribunals will be cognisant of a perceived imbalance of power in the employer–employee relationship. What this means in practice is that if the terms of a contract are either opaque or deliberately drafted in a manner to confuse the employee, the courts are less likely to construe the document in a manner that favours the employer.
Putting it another way, if you are going to impose a sanction on an employee (such as providing that they must reimburse the costs of training or development courses if they leave employment) you will need to do so clearly and legibly.
Clauses like this are quite common. They will typically provide that if the employee accepts the employer’s offer to pay for a training /educational course, the employee must remain in employment for a fixed period of time after the course ends or they have to repay fees.
For example, if an employer pays for an MBA, that employer may provide that the employee must stay in employment for at least two years after the course concludes. A well-drafted agreement will then go on to provide that if the employee leaves during this period, they must reimburse the course costs to the employer (or a proportion of those costs).
If this agreement is drafted properly, there is a good chance that it will be enforceable. Prudent employers may go on to provide that they are entitled to automatically deduct the cost of the course from any monies outstanding to the employee upon termination. If an employer hasn’t done this, and the employee refuses to reimburse, the employer’s only option is to commence litigation in the courts – a journey that many employers may be reluctant to embark on.
If done properly, there is no reason why an arrangement like this isn’t fair and equitable on both sides – the employee gets to increase their skills and the employer gets the benefit of the employee’s increased skills for at least a period of time. If, after that period of time, the employee decides to move on, at least both parties have been treated fairly.
For further information on the above, please contact Patrick Walshe.