Training and developing staff is a necessary cost of doing business. These expenses vary based on your company size and industry requirements. This article explains how you can recoup training costs from employees using a structured, legal approach.
Making Payroll Deductions Under the Fair Work Act
Taking money from an employee’s pay is called a deduction. Employers have very limited rights to do this. Under the Fair Work Act, you can only deduct money if:
- The employee provides written agreement for a benefit principally for them.
- A law, court order, or the Fair Work Commission allows it.
- An employee’s award permits the deduction.
- A registered agreement allows it and the employee agrees.
Common benefits include salary sacrifice or extra superannuation payments. However, we do not suggest deductions as the primary way of recouping training costs. Always check your employment contracts and seek legal advice first.
Using Training Agreements to Protect Your Investment
Employers often feel frustrated when an employee resigns shortly after expensive training. Recouping training costs in this scenario is difficult without a prior agreement.
We suggest adding a clause to your employment contracts. This clause should require employees to sign a specific training agreement before attending paid courses. The agreement must state that the employee will repay a portion of the costs if they resign within a set timeframe.
A sliding scale is the most effective method for recouping training costs:
- Resignation within 3 months: The employee repays 100%.
- Resignation within 6 months: The employee repays 50%.
- Resignation within 9 months: The employee repays 25%.
You can always ask employees to pay for their own training upfront. However, if your contract or award is silent on the matter, the employee has no legal obligation to reimburse you.
If this all seems too hard if you are unclear on the steps, or afraid that you would make a mistake, give us a call on 1800 577 515 or email at info@assurancehr.com.au. Alternatively you can book a video chat with Adrian Clark.
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