Author: Lehanne Bleumink, Gold Seal HR Services Manager.
We are often asked about an employer’s rights in relation to recouping the costs of training where an employee leaves after gaining a qualification or fails to complete one.
The provision of training and the costs associated with this often prove problematic for many employers, who make investments (in both time and money) only to see employees move on after they gain the qualification. This is a risk all businesses run.
AFS Licensees have a legal obligation to ensure that employees are adequately trained and competent to provide the service covered by their Australian Financial Services (AFS) licence. Regulatory Guide 146 sets out the minimum training standards and accreditation requirements in the financial services industry. In order to comply with ASIC guidelines, a commitment to Continuing Professional Development (CPD) is required. Professional bodies and Registered Training Organisations (RTOs) in the industry provide requirements on the minimum number of CPD hours that individual insurance brokers should complete. The accepted industry standard is a minimum of 25 hours per calendar year.
Employers should be careful when deducting monies from an employee’s wages, particularly in the absence of any specific provision for permission to do so under the applicable Modern Award, or in writing by the employee. Many employers include clauses in their employment agreements and their employee policies advising employees that should the employee resign within a certain period of either undertaking, or completing studies or training, the employer will seek to recoup any training or study costs by way of deduction from the employee’s final salary.
It is important to understand that there is legislation that sits around making lawful deductions from an employee’s pay. It is unlawful to make any deductions from an employees pay for any purpose without their written authority to do so. The Fair Work Act provides that an employer may deduct an amount from an amount payable to an employee if the deduction is authorised in writing by the employee and is principally for the employee’s benefit. Therefore, if the employer wishes to pursue this action and for it to be lawful, the deduction must be authorised in writing. As such, employers should request that the employee authorises in writing prior to attending any training or commencing study.
While there is nothing stopping an employer from requesting a refund, in the absence of a contractual clause in an employment agreement, or authority in writing stating that an employee must repay the cost of training if they resign within a certain time frame, the employee has no legal obligation to make the refund. The only option in this case is to request the refund and hope the employee agrees to pay it.
Training links skills, knowledge and attributes of employees with business objectives and improves the employee’s contribution to company performance. Training is therefore a critical component of the performance management process. There’s one thing that all employers will agree on – training and development is expensive. So why do we do it?
- What if I train them and they leave?
- What if I don’t train them and they stay?
For assistance on any of your HR/IR requirements – call Gold Seal on 03 9510 5100 or email firstname.lastname@example.org