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KMU-Magazin Nr. 07/08, July/August 2021 When continuing education costs should be subject to repayment

If employees are unable to apply the skills acquired through continuing education in their day-to-day work, there is a risk that they will quit. In this context, the question arises whether and, if so, which continuing education should be financed and in which cases a possible repayment obligation should be agreed.

Many companies support continuous professional development. Human resources managers in particular should always ask themselves how the new skills to be acquired can be integrated into the employee's day-to-day work and how the respective area of responsibility is to be expanded.

If, in a specific case, there is a risk that the employee will simply not be able to use the acquired knowledge in his or her job after completing the training, it is foreseeable that the employee will look for a new job that includes the skills he or she has acquired.

Consider fluctuation costs

Recent studies by the Lucerne University of Applied Sciences and Arts show that the lack of opportunity to apply what has been learned in a professional environment in particular can be a trigger for disappointment. It is therefore not surprising that the completion of continuing education is often accompanied by a change of job. The financing of further training and a repayment obligation for these costs are of increased importance.

As mentioned above, the challenge in deciding whether to provide financial support for training costs by the employer lies in ensuring that the employee's new skills can be successfully integrated into his or her everyday working life after the training. This will be a success factor in not having to deal with the question of repaying the training costs in the first place. When making a financing decision, a company should consider whether the organization of the company is sufficiently flexible to be able to absorb constant change or an expansion of the individual employee's areas of activity. If this question is answered in the negative, it is likely that the employee will leave the company.

On the other hand, this can trigger fluctuation costs. Fluctuation costs are often underestimated and, on closer analysis, usually result in a high five-figure sum. In order not to increase this threat of damage even further, we are of the opinion that in these cases, repayment of the financial injection is the logical consequence. Investments should pay off, and if this is not compensated for by the long-term commitment of the employee after completing the training, financial compensation must be provided. In addition, fundamental questions may naturally arise as to how this scenario can be prevented per se.

Why is our company not flexible enough? Can we alternatively offer our employees better training opportunities that result in added value for our company and at the same time improve the employee's job? What measures will bring us to this goal? Until then, the employee's written repayment obligation, concluded before the start of the training, remains significant and effective. But what do I have to keep in mind?

In the interest of the employee

First of all, it must be clarified that the costs incurred in connection with basic job training are considered necessary expenses and are not to be reimbursed by the employee. Corresponding repayment agreements would be null and void. This applies, for example, to training that becomes necessary when a company introduces new core software. Such cost centers must be borne by the company.

A necessary prerequisite for a repayment obligation is the fact that the continuing education provides the employee with a permanent advantage not only in his or her specific job, but also on the labor market in general. This has been assumed in the case of training to become a ward manager at a hospital. Although this training was necessary for the operation of the hospital, the training to become a ward manager improved the employee's employability in the labour market. The employee could have used this additional qualification in his or her interest when looking for a new job.

It is irrelevant whether he has done this or could have done it. In the case in question, it was a cross-border commuter who could not have usefully presented the additional qualification to a hospital in his country of residence.

Temporary repayment

Can the repayment agreement be freely agreed? No. Certain restrictions must be observed. The obligation to repay the pre-financed training costs in the event of premature termination of the employment relationship can strongly influence the employee with regard to the time of termination. This can inadmissibly violate the so-called parity of notice between the parties to the employment contract. The parity of notice ensures that the employee must observe at least the same notice periods as the employer. If the employee is thus placed in a worse position in his decision and in contrast to the employer as a result of the repayment agreement, the parity of notice is violated. This situation should continue for a limited period of time. By way of remedy and in the interest of a certain uniformity, the courts have taken the maximum duration of non-competition clauses as a basis and have set a three-year repayment period.

On the other hand, the employee will - at least in theory - use the skills he has acquired for the benefit of the company after completing his training, thus adding value. It is recommended to agree on a monthly reduction of the amount to be repaid if necessary. Longer periods (quarterly, semi-annually or annually) can give rise to discussions and should therefore be avoided.

Given these facts, the repayment obligation should be limited to a maximum of three years and the amount owed should be degressive from the end of the training. In practice, two years has emerged as an appropriate period and is widely accepted. The following should also be noted: If the company terminates the employee's employment without justifiable cause for which the employee is responsible, the court's assertion of the repayment obligation may fail. Whether the judge shares the same opinion on the justified cause will only be determined in court and is therefore associated with a litigation risk.

Common pitfalls

In the repayment agreement, it must be stated in detail which costs the continuing education has triggered and which sum is finally subject to the repayment obligation. In particular, examination and certificate fees are often forgotten or travel costs (GA or half-fare) are insufficiently considered.

If the training is not ordered by the company, the time spent on training can be excluded from working time. Due to the complexity of whether, and if so, to what extent and for what amount, it is advisable to refrain from crediting working time as part of the repayment agreement without the support of an expert and to choose simple solutions. This means: no repayment obligation regarding working time and no partial or full-time credit for the time spent on further training as working time.

It is essential to take into account whether the continuing education also takes place on Saturdays or takes place in a cantonal territory where there are cantonal holidays that differ from the place of acquisition. It is also common to find formulations that simply do not regulate an obligation to repay prior to or upon termination of the training. Make sure to consider the reasons for termination of continuing education- whether voluntarily or due to a lack of examination success - or due to termination while training is still in progress. Even if most courts have interpreted the principle of reliance to impose a repayment obligation in favor of the company, it is advisable to address this issue in the agreement.

Loan

Instead of the aforementioned repayment obligation and in (compulsory) compliance with the aforementioned rules, loan agreements are occasionally concluded with the employee to finance further training. Particularly in corporate groups, these are not granted by the formal employer but by a related company. In principle, such loan agreements are possible. However, new or unfavorable problem areas open up for the company when it comes to the concrete formulation of the contract. To consider is that the loan amount is due immediately in the event of termination of the employment contract.

Conclusion

The latest studies show a growing realization within companies that the decision to finance continuing education, and which training should be financed, must be critically examined. And a recognizable lack of opportunity to use the newly acquired skills should be the first warning signal to all as it may lead to employee turnover.

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