Training can often be a costly business for SMEs especially as your business grows and you try to retain your key talent. Have you ever paid for an employee’s training believing that they would remain loyal to your company only to watch them leave for another job? It’s truly gutting, and hard not to take personally. Whilst there’s precious little you can do about that particular situation now, you can take action in advance to limit your financial exposure in the future.
Actually, the process of recouping costs is relatively simple and straightforward. It involves you entering into a formal agreement with an employee before they start their training.
Follow these simple steps to ensure that you have some comfort of seeing a return on your investment:
- Discuss what benefits the requested training will have for the employee and your business. Only offer to provide funding for training when you can see a direct benefit for your company.
- Once you have agreed to pay for all (or some) of the training course agree what the terms of repayment are going to be if the employee resigns. The most effective way to do this is to decide on a staggered system of claw back whereby the amount to be repaid by the employee decreases with time until a certain period has lapsed after which no repayment is due. You can calculate your own specific rules with regards to claw back but a common approach is to stipulate a repayment of 100% of the training costs if the employee resigns within 3 months of completing training; 75% repayment after 3 – 6 months; 50% after 6 – 9 months and 25% after 9 – 12 months. After 12 months, no repayment would be due.
- Put the agreement in writing and give the employee a clear explanation of what the terms mean. You should also make sure that the employee signs the agreement to give their consent to the repayment terms. Such repayments cannot be implemented retrospectively without the employee’s consent because the repayment constitutes a deduction from pay. A deduction of this kind that is not agreed with the employee beforehand is an unlawful one.
- Remember that you can only put a formal training agreement in place for training outside of any regular in house training that you offer as a business (such as the costs associated with their induction). The cost of on-the-job training is something that you should budget into your normal expenses and is not something you will be able to recover, even if your employee leave 2 weeks after the training.
Although training can be costly to your business, work-related training courses can be an invaluable investment for both you and your employees: your employee spends their time learning new skills and widening their knowledge; your business benefits from an individual who can play a more significant role in the business, in turn contributing to increased profits, more streamlined internal processes etc.
Need help formalising your training agreements? Contact us at theHRhub on 0203 627 7048 for more information on how to support your employees training needs. Or drop us a line at firstname.lastname@example.org