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What Is a Training Agreement and How Do You Use It?

As an employer, it is important to invest in employee training and development to help your team grow. Training can help your employees learn new skills, gain valuable experience and become better-qualified staff members. If you decide to offer employee training then you need to make sure you have an effective training agreement in place.

In this post, we will look at what you should include in your training agreement and how it should be used. We will also discuss the laws relating to training contracts and what to avoid when you draft your agreement.

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What Is a Training Agreement?

Ultimately, the success of your company depends on the people that work there. The more training and development they receive, the better they will be at their jobs. Aside from teaching your employees new skills, employee training can help make your company more organised, productive and efficient. It can also result in increased employee engagement and satisfaction, and higher levels of employee retention.

However, there is always a level of risk involved in training employees. For one thing, training isn’t cheap. What happens if you pay for a course then the newly-trained employee decides to leave the company? Or, even worse, if they decide to take their newly-acquired skills to a competitor?

A training agreement is a legally enforceable contract that sets out the terms and conditions of any training that you provide your employees. It establishes the cost of undertaking training, and who is responsible for paying. If the employer is covering training expenses, then a training agreement will define a repayment schedule to be used in the event an employee leaves the company soon after completing their training. Repayments are usually on a sliding scale, so the longer an employee remains at a company after training, the less they are eligible to repay. A training contract will also define whether training deductions can be made from a departing employee’s final salary.

How to Use a Training Agreement

A well-drafted training agreement protects you and your investment as an employer. It prevents you from being left out of pocket after paying for expensive courses and professional qualifications. It also provides you with an assurance that the money you spend on an employee’s training and development will be reinvested in the company. Without a training agreement, an employee might decide to leave the company and reinvest their new skills elsewhere. In this scenario not only would you lose the training investment, but you would also have to pay to train up a replacement. This could have a significant impact on your company in the long term, especially if you are a small business.

There are a few things to consider when you draft your training agreement template:

  • Draft a separate agreement for all training and development opportunities. Don’t rely on the training clause in your standard employment contract.
  • Ensure all terms and conditions are clearly defined in writing.
  • Make sure employees sign the written agreement before starting training.
  • Establish the true cost of the investment in the document (not an estimate)
  • Outline in which event repayments will be deemed necessary (resignation, gross misconduct, etc.)
  • Define a sliding scale for repayments. The amount an employee will need to pay back should reduce over time. In other words, the longer they stay with you after completing training, the lower the amount they will have to pay back.
  • If the cost of training is relatively low, you might consider deducting it from an employee’s salary. If this is the case then you need to stipulate this in the agreement.

Training Agreements and UK Law

According to UK law, full-time employees have a right to request time off for training and study at work. Employees also have the right to request time off to undertake study or training under Section 40 of the Apprenticeships, Skills, Children and Learning Act 2009, provided they can prove that training will improve their performance and their employer’s business.

Although employers are not obliged to pay for this training, many choose to do so if the business will directly benefit from training. There is no legal requirement to sign a training agreement. It is, however, a good idea to use one as it will protect you against any potential losses. Without an agreement in place you have no legal recourse to recover training costs in the event one of your employees unexpectedly leaves the company. An agreement will clearly establish the cost of training and the level of liability if they leave before the end of an agreed period. It also protects you from any potential Employment Appeal Tribunal (EAT) claims relating to unlawful wage deductions under the Employment Rights Act 1996.

training agreement

Avoid: Penalty Clause

Don’t word your repayment scheme as a penalty clause. The training agreement serves to protect your investment as an employer, not to discourage people from ever leaving your company. The terms and conditions you set need to be reasonable and accurate. Repayment scales should also be proportional to time spent at the company. For example, if you spend £1,500 on a course for an employee then they leave the company immediately, then it would be fair for you to expect full repayment. However, if the same employee leaves the company 3 years after training, then you will have very little grounds for demonstrating a financial loss.

If an employee files a claim with the EAT and they interpret your repayment provisions as a penalty clause then the terms of your agreement will not be enforceable. Employees can also file a claim for unlawful deduction from wages. Make sure you define true estimates for training costs and losses in the event of a breach of contract. Losses should correlate with your investment and expected return.

Avoid: Restraint of Trade Clause

You also need to make sure you avoid any clauses that could be construed as ‘restraint of trade’. This means unreasonably preventing an employee from changing jobs. Make sure you write a training agreement that protects your investment, not one designed to “trap” employees. Be careful how you word your contract and make sure the terms are reasonable.

The key is getting the wording right and finding the right balance. Be clear about what the consequences of leaving within a defined period after training are. Make sure your repayment schedule is fair and reflects the actual cost of training. Make it clear that employees have a responsibility to repay training costs if they leave, but that they are still free to leave. And once you have done this, create a training agreement template so that terms are clear with every training opportunity. This will protect your training investments, but most importantly, it will protect your business for years to come.

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Written by Cat Symonds; Edited by Carmina Davis

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