Some jobs require specialized training. Where an employer requires this training as a condition of employment but offers to pay the associated costs (sometimes thousands of dollars), both parties benefit: the employer is assured of hiring a qualified candidate and the employee gains new employment as well as a free skills upgrade. It’s a win-win.
However, the employer also faces some risk: What if the employment relationship is short-lived, either because of the employee’s early departure or the employer’s decision to terminate for cause? Is there any way to guarantee that a newly-trained employee will remain with the employer for a certain period of time such that the training expenses are not “wasted” from the employer’s perspective? In other words, is there a way for employers to protect themselves against this risk?
The short answer is yes.
Section 21 of the BC Employment Standards Act (the “ESA”) provides that an employer must not require an employee to pay any of the employer’s business costs. As such, if the training cost is a “business cost”, it will not be recoverable by the employer if the employment relationship ends.
However, an employer may be able to recover the amounts it spent on training if:
- The certification/accreditation obtained through the training is a requirement/condition of employment; and
- The parties entered into a contract whereby the employee agrees that if she leaves the employment or is terminated for cause within a certain period of time, she will repay the employer for the training costs (i.e. a debt).
Since section 22 of the ESA allows employees to make a written assignment of wages to meet a credit obligation, the parties can also include a clause in the contract whereby the employee authorizes the employer to deduct the entire amount of the training costs, or a portion of the training costs, from her final pay.
An example of such a clause is found in the 2016 BC Supreme Court case of Wildcat Helicopters Inc. v. Ellis where the employment contract included a “training bond” whereby the employee agreed that if he left the employer or was dismissed for cause within two years of entering into the contract, he would be responsible to pay back or have withheld from his salary the pro rata cost of the training. Based on the facts in Ellis, the Court concluded that the training costs were recoverable by the employer.
Takeaway
To ensure that both you and your employee get the maximum benefit of any work-related training expenses, include a mutual agreement in the employment contract that these costs are recoverable in the event of early termination. And be sure to speak to an employment lawyer first so that the clause is property drafted!
