In your contracts, there is probably a paragraph giving you the facility to recover costs if an employee leaves within a set period of time after completing some training. The paragraph must be reasonable and non-discriminatory. For example, you couldn’t require staff to remain for 10 years after a one-day course.
It’s a good idea for the employee to sign an agreement ahead of each training event to reinforce the contract and advise them of the cost of that particular course. You could include travel costs and accommodation but not wages received during training.
It’s a good idea to have a specific paragraph giving you the right to recover the costs from their final salary. When you receive their notice, remind the employee of their commitments and ideally reach an agreement as to how and when you will recover the money.
Avoid the situation where the employee is unaware that their pay is being reduced until they get their final pay and realise a significant chunk has been withheld. The employee may then dash off to get legal advice.
Over the past 12 months, I have seen these deductions being challenged on a range of grounds such as:
• they were an unlawful deduction of pay
• the employee hadn’t agreed to them
• the VAT element shouldn’t have been recovered
• more than one person attended so the cost was not accurate
• the training was free to the employer
• the training was in the employee’s own time
• the deduction meant they didn’t get minimum wage
• the employee hadn’t left, they had been dismissed
• the employee had never signed their contract.
Most of these issues could have been avoided with a discussion prior to the employee leaving.
A recent employment tribunal case arose after an employer deducted training costs without consultation. On appointment, the employee had signed a form agreeing to repay training costs if she left for any reason. After a few months, she texted the owner to say she’d be off for a period of time with work-related stress. The employer replied effectively saying they were treating the text as her resignation with immediate effect.
Training costs for the course were deducted from her final pay without any discussion. She made a claim against the employer. During the hearing, it transpired she hadn’t actually been paid for attending the training. Legally, the employee was entitled to one week’s notice, which she hadn’t received, meaning she’d been wrongfully dismissed. She didn’t have two years’ service so couldn’t claim unfair dismissal.
The tribunal concluded that while she had voluntarily signed the agreement, the dismissal without notice breached her contract, meaning the employer wasn’t able to rely on the agreement about training costs. The tribunal also made specific negative comment about the salon’s practice of not paying staff for attending training or requiring them to use holiday.
The minimum wage issue
HMRC has confirmed that employers can make deductions from pay if training was mandatory rather than voluntary, unless they take the employee below national minimum wage. In these cases, employers would have to decide which training was mandatory and which voluntary, and keep a record of whether the employee was given the option to decline.
David Wright is a consultant in all aspects of employment practice and law. He is the main employment law consultant for Habia and provides a personalised support service for UK salons.
Tel: 01302 563691 davidwrightpersonnel.co.uk