Managing a Training Agreement – A Step by Step Guide
Written by Andrew Johnson, Founder and CEO HRGuide - Thu 10th Oct 2024
Introduction
It is said that the only tangible asset any business has is its people. The success of any company depends on the capability of its team members so the more training and development they receive the greater the potential for a company to grow and thrive. It can also result in increased employee engagement, satisfaction and retention. For any SME this investment is costly and there is always the risk the newly trained employee you have invested in leaves and worst of all goes 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 states the cost of the training (normally from an external training provider) and who is responsible for paying.
If the employer is covering training costs, then a training agreement will define a repayment schedule the employee will have to agree to should they leave the company soon after completing their training. Repayments are usually on a sliding scale. For example, if the employee leaves within a year of receiving the training they will have to reimburse 100% of the costs, after year 2 they might be liable for 60 % of the costs and year 3 thirty per cent of the costs and so on. 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 also ensures the employee understands how much you are investing in them and what commitment they need to make in return to the company. When drafting a training agreement there are some key things to consider. These are:
- 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.
IMPORTANT NOTE: Technical training required for an employee to do their role, for example, health and safety training and technical training would not normally be included within such an agreement as it is essential they do the training to fulfil their role and meet legal and industry body regulations. It is normally used if you are investing in an employee to develop them as a future leader or manager.
What to Avoid
When drafting your training agreement do not:
- 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. This will protect you from any claims at an Employment Tribunal.
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. Be careful how you word your contract and make sure the terms are reasonable.
Get expert advice on drafting a Training Agreement from HRGuide
A well drafted training agreement will protect the investment you make in your employees whilst still allowing you to invest in the team and realise their potential. Download our template training agreement to assist you in protecting your business.
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