Is It Fair to Ask an Employee to Repay Training Costs After Resignation?

Dear All, I need a suggestion on the below case. We are an export company. We have a Sales & Business Development - Senior Executive, who has completed 1.5 years in the company. Now he has resigned because of a salary issue. He is drawing 31,000/month, which is hindering his personal life as he is looking to get married, and many proposals are being rejected because of his low salary. He has found a new job in his father's company now.

Training Investment and Employee Resignation

However, the management had taken him on a trip to Indonesia to train him on customer interaction and other skills. Also, when he joined, the company did not have this position. The management created this position only after several requests from him for the job. The management thinks that they have invested in him for the training and hence want to claim the flight and hotel charges from him.

Employee's Perspective on Training Expenses

The employee believes that the Indonesia trip was on the instructions of the Managing Director but not at his request. Therefore, he does not consider himself liable for the expenses.

Is it right to claim training expenses from an employee?

Dear Varsha,

Please let us know if the employee had signed any bond or legal contract with the organization before being sent for training with a clause for the recovery of the amount spent on his training. If there is no legal document accepted by the employee in place, then you cannot recover the training amount from the employee.

Training Expenses and Employee Obligations

Training expenses are recovered in Full and Final (F&F) settlements subject to certain conditions. The terms and conditions for recovering expenses towards any training (domestic or international) must be conveyed in advance to the employee. Such clauses need to be mentioned in the appointment letter. Even before the commencement of such training, the employee should be made aware of the terms. The acceptance of those terms must be taken in writing from the employee. If your employee was not informed of the terms, then he is within his rights to deny paying them.

The employee had made certain requests, and the management accepted them. The management creating a position for him on his request has no bearing on the current situation. The company has definitely invested in him. However, every employee has a right to seek growth opportunities. Hence, a company needs to formulate a policy wherein they have a return on investment of the training, and at the same time, they do not hinder employee growth or bind him to the company.

For example, for training costing 30,000/-, one cannot expect the employee to stay for years. Therefore, the amount spent on training, the minimum period the employee needs to stay, and the recovery criteria need to be formulated accordingly. But the key here is communication from the employer and acceptance by the employee in advance.

General Recovery Clauses

The general recovery clauses are: for example, in the case of training, if an employee exits within a year, then recovery will be done pro rata. That is, if an employee leaves within 8 months after training, then only 4 months' expenses should be recovered. Some companies recover 50% or even the entire amount. It varies from company to company. Similar recovery is also done if the company buys the notice period of the employee. Here also, it is mentioned that the employee needs to complete a minimum tenure of one year in the company, else the entire amount is recovered.