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Training costs refund scheme at odds with good employment practices under certain circumstances

19/04/2013

The Nijmegen Subdistrict Courthas recently ruled that a claim under the training costs refund scheme is at odds with good employment practices, even if this scheme is expressly laid down by the parties in the employment contract. Employers are therefore advised to subject any refund scheme of their own to legal scrutiny.

Facts

The employee worked as a planning economist for the employer for six months, from 17 April 2011. In the fixed-term employment contract it was agreed that during his time in employment the employee would take part in a training programme set up by the employer. The training programme was due to last for 24 months in total, on the assumption that the employee would be employed for at least this length of time.

In addition, the employee and employer entered into a refund agreement. This refund agreement stated that the employee would have to refund the €15,000 training costs if he left of his own volition within 24 months after the start date of the employment agreement. The earlier the employee chose to leave or refused a potential contract extension, the higher the amount he would be required to pay back. So, if the employee left voluntarily after six months, he would have to refund the employer to the tune of €11,250, whereas after a year the amount would be €7,500. The obligation to refund the full €15,000 in training costs is therefore reduced pro rata.

On 8 March 2012 the employee, having been employed on the basis of a second six-month employment contract, announced that he did not wish to extend his employment contract. The employer subsequently claimed €7,500 in training costs, which the employee did not wish to pay. The employer subsequently brought proceedings in the subdistrict court, and claimed that the employee comply with the refund agreement.

Ruling of the subdistrict court

In the proceedings the employee submitted that the refund agreement was at odds with good employment practices, and therefore, under the circumstances, was unacceptable by standards of reasonableness and fairness. The subdistrict court found, having regard to the following considerations, that the employee was justified in his plea. Firstly, the subdistrict court found it relevant that the employee had not pursued any training at an external educational establishment. The training was all done internally, and the employee also did not receive a diploma from it, which he could show to a new employer as proof of knowledge and skills gained. Another aspect that the subdistrict court considered was the fact that the employee was offered employment contracts for fixed terms of a shorter duration than the full training term. The structure of the refund scheme is also relevant. The subdistrict court could not reconcile the fact that an employee that followed the training for longer
would have to pay back less. This is in line with a previous decision of the Dutch Supreme Court in.

The subdistrict court also held that the efforts on the part of the employer to train the employee as a planning economist within the company, are part of the normal investments that a good employer should make in its employees. This is all the more cogent given the fact that the employer was paying the employee a relatively low salary.

The employer defended himself by arguing that the employee was aware of the content of the refund agreement at the start of his employment, and had expressly signed it. The subdistrict court held that this did not detract from the above, because the employee had no choice but to agree. The employer's claim was rejected.

Tips

Previous case law shows that judges often set a lot of store by the circumstances of the case, when assessing whether a training costs refund agreement is unacceptable. In this recent decision the Nijmegen Subdistrict Court confirmed a number of conditions from previous case law. In addition, new aspects were taken into account when deciding the issue of whether the training costs clause was permissible. In particular, the question of whether the employee followed external training, and is therefore able to present external parties with a certificate, plays a significant role. The employer would therefore be wise to ensure that:

  • The employee is able to present proof that he has acquired external knowledge and skills;
  • The option of training does not lead to a lower salary;
  • The contract(s) of employment is/are no shorter than the total training term;
  • The employee actually has a choice whether or not to follow the training; and
  • The training expenses are paid back in proportion to the training term. The longer the employee has been in training, the higher the amount the employee is required to refund.

If these conditions are not complied with, the employer runs the risk of the refund obligation being at odds with good employment practices and failing to be able to reclaim the training expenses from an employee who refuses to pay.

Authors

Niels-Koene-CMS-NL
Niels Koene
Advocaat
Amsterdam