Let`s take a look at an example of a training agreement in action. If a company were to spend £1,000 on a training course but the employee resigns the day after the course ends, it would be fair and appropriate to ask the employee to repay the £1,000 as part of a training agreement. Of course, providing a staggered reimbursement fee is not enough to motivate an employee to stay. High-potential employees are attracted to companies that have a strong career development program, challenging tasks, and effective performance reviews. They feed on feedback and are constantly looking for new challenges. To help you do this, read our performance reviews and training and development kits. A training contract is a written agreement between an employer and his employee that sets out the terms of each training for which the company pays them. It determines the cost of the training, who provides the training and who is primarily responsible for it. Ask the employee to sign a training reimbursement agreement. The agreement allows you to support your employee`s educational goal without jeopardizing the company`s financial situation.
Some programs, such as an MBA, can be very expensive. At the very least, you want to be able to recover some or all of the costs in case the employee leaves the company halfway through or after completing the course. But especially for employers, it can also be used to determine when an employee might be responsible for reimbursing these training costs and how that reimbursement would work. In particular, it can define whether these costs become reimbursable if an employee leaves the company shortly after completing the training. Here too, it is first and foremost important to find the right wording of the training agreement. The training agreement template we provided above will do the job in most cases, but sometimes you`ll need more specialized support. If you need help creating a training contract, contact us to learn more about our recruitment consulting firm. Before sending their team for training, many companies ask their employees to sign a training agreement that requires them to repay any investment in their education if they leave before a certain time.
However, in some situations, small businesses also need to protect the investments they make in their employees. L&D doesn`t always cost the world much, but some courses or professional qualifications can be very expensive – if an employee leaves your company shortly after completing training that your company has paid for, it could seriously leave you out. If you`re running a small business, it`s important to help your team grow and develop, but you also need to make sure that every investment you make in your team is protected. This is where a training agreement can help. In this article, we will show you exactly how to use a training contract and provide you with a free training contract template written by professionals. Not only might your company not benefit from the training it paid for in the short term, but it could also end up paying for the same training again if it hires a replacement. Consider the sunk costs inherent in every hiring process, and you can see how that could potentially put a small business in a really difficult position. In a training reimbursement agreement, all parties involved agree in writing to the full approved budget for the course and the name of the approved course. To encourage employees to stay in the company, reimbursement fees are usually on a sliding scale. The reimbursement fee therefore decreases the longer an employee stays in the company after completing the course. There are placeholders in the agreement that require important information to be entered, including the name of the person overseeing the refunds, the minimum grade required to continue paying the course fee, and the duration of the course. Have you been approached by a high-potential employee to fund an educational program that exceeds the training budget? Would the knowledge gained benefit current and future business projects? What are you doing? If you are looking for a training agreement template to use in your small business, simply click on this link.
This template was designed by our professional and qualified CIPD HR consultants who specialize in HR support for small businesses and startups. Properly concluded, training agreements are a completely legal and appropriate way for companies to protect themselves financially. However, if you decide to create one, there are a few things you should pay attention to. Some training agreements operate on a kind of sliding scale where the longer the employee stays in the company, the less he has to repay if he decides to continue. In other companies, the training agreement is a bit black and white, with a certain threshold that dictates when the employee is no longer responsible for reimbursements. If a training agreement has the practical effect of “catching” an employee in their current role, it may be unenforceable. If the cost of the course is relatively low, the training agreement could come from the employee`s final salary. If it`s more expensive, employers could introduce a more structured payment plan. However, if the training contract is properly drafted, it can reasonably be expected that the employer will receive a certain proportion of the £2,000 return.
This is where a training reimbursement agreement comes into play – it`s a way for companies to ensure they don`t suffer any financial loss when paying for the development of their employees. The purpose of training agreements is to protect companies from losses when they invest in their team. This is not intended to be a tactic to prevent people from stopping. For this reason, the amount of money that the training contract is intended to recover must be a reasonable estimate of the money the company has lost. But if that employee stayed two years after completing the course and took advantage of that training every day, then £2,000 is not a reasonable estimate of how much money the company really lost. In that case, it wouldn`t make sense to use a training agreement to try to get the entire £2,000 back – and most likely not to pass legally. You may have an ambitious employee with exceptional talent who asks you to fund all or part of an expensive educational program such as an MBA or graduate certificate. It`s great and you may want to support it, but somehow you also need to protect the interests of your business.
The introduction of such an agreement ensures that the employee agrees to stay in your company for a predetermined period of time after the completion of the training and must reimburse part of the training costs if he leaves earlier. This model is used to determine the terms of operational payment of training fees. It also describes the minimum expected length of time the employee must remain in the company before part of the training costs are covered and protects the company`s investment in the employee`s training. The second thing to consider when using training agreements is the idea of “restricting trade”. As mentioned earlier, training contracts are designed to protect companies from losing their investments – but the law does not allow an employer to use them to inappropriately prevent someone from changing jobs. In addition, a focus on learning and development can help increase employee engagement and retention. Employees you`ve invested heavily in could leave your competitor and work for them once they`ve earned the degree or certification you paid for. If you work in a small business, it is absolutely essential to give your team the opportunity to grow.
Let`s not forget that the success of your business depends on the people who run it. If there is a chance to help them improve in their work, then it makes sense to take it. .