Introduction to this document

Letter seeking recovery of training costs

Where an employee is leaving your employment having signed a valid training costs agreement, use our letter to advise them what external training costs they’re now required to repay.

Agreement on training costs

Our Training Costs Agreement is for use where you’ve agreed to fund an employee’s external training course and it provides for them to repay the whole or a proportion of the training costs in the event they leave your employment either during the course or within a specified period of it ending. It’s important though that this agreement is signed by the employee before the training starts; you can’t ask them to sign it after the course has ended. Our agreement operates on a sliding scale, so that the longer the employee remains employed after the course has ended, the less training costs they’ll be required to repay on leaving. The sliding scale and its time periods can vary according to the length and cost of the training course, but our agreement envisages either a twelve-month or a two-year tie in, with the amount owed reducing by 1/12th or 1/24th (as appropriate) for each calendar month after the end of the course during which the employee remains employed.

Requirement to repay

Where the employee then resigns or is dismissed whilst the agreement is still in its validity period, in most cases you’ll want to invoke the terms of it to require them to repay some or all of the training costs. Our Letter Seeking Recovery of Training Costs summarises the provisions of the agreement and provides two options. The first applies where the employee owes the full amount of the costs because the training course is still ongoing. The second covers where they owe only a proportion of the costs, according to your sliding scale, because the training course has already ended. In both cases, we’ve set out how much the employee owes and in the latter case explained how the amount has been calculated. You can use our letter either where the employee has resigned or been dismissed, but in the case of a dismissal do check what your agreement says as you may have limited repayment just to particular types of dismissals, e.g. conduct-related dismissals but excluding, say, redundancy dismissals.

Deduction from wages

Our letter then states that a deduction will be made from the employee’s final salary payment to cover what they owe. If you’ve reserved the right in a signed agreement to deduct the training costs from the employee’s wages, that’s a lawful wage deduction. That said, if the training course was a mandatory requirement of employment, the deduction is likely to be classed as a pay reduction for national minimum wage (NMW) purposes, meaning they must still be left with the NMW after the deduction has been taken into account. If the employee’s final salary payment isn’t sufficient to meet what they owe, our letter also states that they’ll be required to repay you the outstanding balance within a month of their employment termination date and, in this case, you’ll let them know what amount they still owe, and how they need to pay it.