How to: Recover costs from a staff leaver

Many travel businesses invest substantial sums in the training and development of their staff. Whether this is sending staff on a sales technique course, or paying for them to attend a fam trip, most companies appreciate that staff with good destination knowledge and sales skills are invaluable.

Consequently, it can be a source of considerable frustration when an employee who has recently attended an expensive training course or educational decides to leave before the employer gets any return on their training investment.

This is particularly galling if the employee leaves to join a competitor, who benefits from the recently-trained employee without having to bear the associated cost. For many owners of small agencies, this can leave a big hole in a tight training budget.

It can therefore be worth considering writing a clause in employment contracts for all employees covering the consequences of leaving after attending a fam or training course.


Keep the clause proportionate

The most common method of attempting to recover training costs is to insert a clause into the employee’s contract of employment, stating that the consultant has to repay the costs that the agency has incurred as a result of training them if they leave the company within a certain period of time.

However, in legal terms, a clause like this could be regarded as a penalty clause and therefore be unenforceable – hence the need for care in drafting the wording.

Whether a clause is a penalty clause or not will depend on whether the amount of money stipulated is realistic in relation to the amount of money the agency spent on training the consultant before they left. For example, if the amount of money the consultant is asked to pay back is more than the cost of the training in the first place, the clause would be a penalty clause and unenforceable.

Where the agency has derived some benefit from the training undertaken by the consultant then the amounts which may be recovered from the consultant should be reduced to reflect that benefit.

So, for example, if the consultant went on a Caribbean educational, but on return sold thousands of pounds worth of holidays in Barbados, it might not be reasonable to expect the consultant to pay all the money back. Proportionality is an important factor in the enforceability of repayment of training costs clauses.


State where repayment doesn’t apply

It is also a good idea to set out in the clause the circumstances where the repayment obligation will not apply.

Most employers don’t require repayment for training costs from the employee where the employee leaves because they are made redundant or sacked for poor performance. However, they do require repayment where the employee is dismissed summarily, such as when sacked for gross misconduct or when the employee resigns.

Some employers take the sensible step of requiring the employee to confirm the repayment clause (that is set out in the employment contract) prior to the employee being allowed to do the training. There is then little room to dispute the intention of the either the employee or the employer.


Explain how you would recover the money

It is important that the relevant clause in the employment contract includes the necessary contractual authority to allow the agency to deduct the sum from the consultant’s wages.

So long as the consultant has given their prior written consent to the deduction (ie signed their contract of employment) and the clause about recovery of training costs stipulates that the sum will be deducted from the consultant’s wages, then the agency will have a right to deduct the sum from the consultant’s wages.

So, training costs can be recoverable in certain circumstances. And to maximise the chances of recovery, all travel businesses would be well advised to ensure that their employment contracts provide them with the relevant rights.


Useful links – from April 6, many employees will have a new right to request time to train. Next year, the right will be extended to all employees.

The courses don’t have to lead to a qualification, but must be relevant to the job. It means employers are legally required to consider requests and respond within a certain time. Read about the Time to Train legislation on this site. – keep up to date with the latest government legislation affecting small businesses on this website.

Mark Minns is specialist employment lawyer with MPM Legal LLP. Minns advises employers of various sizes, and deals with the full range of employment law issues.

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