Employer Repayment Agreement
We are often asked to design this type of agreement for employers and advise us on their feasibility. As usual, the answer to the question is whether the agreement is applicable, whether it depends on the circumstances and how well the agreement was drawn up. The applicability of an agreement to reimburse training costs can be really called into question on two legal bases: firstly, because they constitute a penalty clause and, secondly, because they hinder trade. I will look at each of these data one after the other. In order to cover the event that the worker`s final salary is not sufficient to recover the full amount of the outstanding loan, the loan agreement should include an obligation for the worker to make a separate payment to the organisation within a specified period after the termination of the employment contract or to repay the outstanding amount according to a schedule agreed with the employer. The loan agreement should specify that the organization may take legal action to recover the outstanding amount if the loan is not repaid in accordance with the agreement and, where applicable, an agreed repayment plan. In some cases, employers try to cover the costs of “on-the-job” training, making it much more difficult for them to quantify the cost. It has been reported that some large companies, such as Capita and FDM, bring in some employees through training programmes that cost very little, but require companies to have people who leave their jobs at the end of the courses repay much larger sums, supposedly up to £18,500. At first sight, it would be a penalty clause and a restriction on trade and would therefore be illegal and unenforceable. We understand that a legal challenge to this type of clause is being initiated. Therefore, in order to guarantee the repayment of a loan when the employment relationship ends for any reason, the employer should include in the employment contracts a clause stipulating that it is entitled to make deductions from the worker`s wages for various purposes, including the repayment of an outstanding loan. This case reminds employers that while reimbursement agreements may be legal, employers cannot withhold paychecks to fulfill these obligations and that workers must always be paid at least minimum wage for all hours worked.
Employers should regularly review their pay slip practices to ensure that there are no excessive deductions from employees` wages and that final payment practices comply with applicable legislation. Employers should also train their pay slip administrators on appropriate pay slip practices. Section 13 of the Employment Rights Act 1996 makes it illegal for an employer to make deductions from a worker`s wages unless the worker has given his prior written consent or there is a provision to that effect in the contract of employment. The law provides that in the event of a particular event, for example. B of an offence or departure of a worker, a Contracting Party must pay a specified amount, may be applied only if the amount to be paid by the Party is a true forecast of the loss of the other Party. With regard to the impact of this doctrine on an agreement to reimburse training costs, the employer is required to show that the amount it charges the worker to reimburse is a true forecast of his loss. A well-trained workforce is in the interest of all — employers, workers and for the good of the economy as a whole. Employers have long invested considerable sums in training their employees, but since the cost of training is increasing and employees tend to change jobs more often than in the past, many employers are reluctant to invest significant amounts of money in employee training, which then move forward and can allow a competitor to benefit from the skills, that the employee has acquired….