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Employer Successfully Recovers Training Costs from Employee

Published 01 Jun 2014

Athenry Electrical Limited v Wolmarans

Mr Wolmarans’ employment commenced employment as an Electrical and Control System Engineer on 5 December 2006. Following a promotion to “Manager Electrical Engineering”, Mr Wolmarans’ employment became subject to a new employment agreement dated 12 July 2008.

In early 2011, Mr Wolmarans requested to undertake further training to refresh his qualifications. In March 2011 Mr Wolmarans commenced his study towards the diploma. One of the reasons he selected the particular Diploma course was because it involved webinar learning, which he could undertake outside working hours.

The cost was $8,144.15, this was a sum paid in five instalments between 18 April 2011 and 7 March 2012. Though, in early 2012 Mr Wolmarans asked for a pay raise. AEL was in the process of reviewing its employment policies and processes. After seeking advice AEL decided to introduce a company-wide training policy.

The policy stated:

If for any reason the Employee decides to terminate the employment relationship or the decision is made by the Employer to terminate the employment relationship for disciplinary reasons only within a given period of completing a training course, the Employee will be required to reimburse the Company for training costs as set out below:

 a. Within 12 months full reimbursement of training costs.

 b. Within 2 years 60% of training costs.

In July 2012, AEL developed a new salary package featuring an increase in his base salary from $83,500 to $90,000 Per Annum, with additional components of company vehicle, cell phone, laptop, ipad and training. The value of the package was estimated to be around $135,000 PA. The new package was dependent on Mr Wolmarans signing the policy. AEL discussed the policy with Mr Wolmarans, explaining that it is being introduced because AEL is investing heavily into the training and it serves a way of ensuring the company receives a return on investment. The policy was intended to apply to current and future training, so the policy covers the Diploma course Mr Wolmarans was undertaking at the time.

Initially, Mr Wolmarans expressed disagreement with the policy however; he signed it after Mr Harris of AEL informed him that reimbursement would only be sought if Mr Wolmarans left AEL within the limitation period.

On 22 February 2013 Mr Wolmarans resigned from his employment with AEL. Prior to his departure he was reminded of the terms of the policy. He was offered to pay in instalments. Mr Wolmarans did not pay. AEL made claim for the outstanding amount. Mr Wolmarans claimed that the policy cannot be applied retrospectively.  As Mr Wolmarans had already started the Diploma at the time the policy was introduced.

The Employment Relations Authority (ERA) determined that Mr Wolmarans confirmed that he understood and agreed to the terms and conditions of employment on 22 July 2008.  The terms and conditions of employment provided that the company “may vary, cancel, or introduce rules, policies and procedures to meet changes in the business but no such change may vary this agreement”.

The ERA recognised that the increase in Mr Wolmarans pay in 2011 was conditional on him signing the training policy. In determining that the policy was binding the ERA stated that “Mr Wolmarans signed the Policy after being given a reasonable period of time in which to consider it, make amendments and either sign or not sign it”.

The ERA further determined that it applied to the Diploma course, as Mr Wolmarans accepted that he knew that the policy applied to the Diploma course when it was introduced. In citing an English High Court case, the ERA held that there is nothing to prevent a contract from having retrospective effect, provided it meets the legal requirements for a valid contract. The ERA ordered Mr Wolmarans to pay AEL the sum of $8,144.15 to reimburse it for the costs incurred by it in respect of the Diploma course undertaken by him.

For more information on how to introduce and implement training policies, please contact us on 0800 15 8000.