Employers' right to reimbursement of training costs: what is important to know? 

Investing in staff development is a common practice among modern employers. Courses, seminars, training or even paid studies often become part of an overall strategy to develop loyal, motivated and adaptable team members.

However, things don't always work out as the employer expects. In some cases, after taking advantage of an opportunity to develop their skills at the employer's expense, they decide to leave their job shortly after completing their training. In such situations, the question arises: does the employer have the right to demand that the employee reimburse the training costs? How can I protect myself from such cases and what costs can the employer claim in general?

Meanwhile, it is important for workers to know whether the employer's demand is justified and in line with labour law. Employers often deduct training costs from employees' wages. In such cases, questions arise not only as to the lawfulness of the employer's actions, but also as to whether the employee is obliged to reimburse the employer for the costs incurred by the employer at all.

Laura Jodeliukaitė, a lawyer at AVOCAD, talks about all these situations and the legal issues they raise .

When can an employer claim reimbursement for training or further training?

According to the lawyer, the Labour Code regulates the agreement on the reimbursement of training costs. It allows the parties to an employment contract to agree on the terms and conditions for reimbursement of the employer's training or further training costs incurred by the employee in the event of termination of the employment contract:

• at the employer's initiative for reasons attributable to the employee, or

• at the initiative of the employee without valid reasons.

Thus, if the employment contract is terminated at the initiative of the employee for important reasons (e.g. where the employee is unable to perform his/her job properly due to sickness or disability, or otherwise), or where it is terminated at the initiative of the employer for reasons not attributable to the employee (e.g. where the employee's job function becomes redundant for the employer due to a change in the organisation of work or for reasons connected with the employer's activities, or otherwise), etc, then the employer would be precluded from claiming the costs of the employee's training or qualification.

The aim is to protect the employer's investment in the employee's skills development, which also increases the employee's value on the labour market. The employer, who has a reasonable expectation that an employee in good faith will continue in the employment relationship in order to 'repay' him for the opportunity to develop his skills, is entitled to reimbursement of such costs if the employment contract is terminated through the fault of the employee or at his own initiative without good cause.

Which expenses are considered reimbursable?

AVOCAD points out that not all investments made by employers in training or skills development can be considered remunerated. Under the Labour Code, only costs that are related to the provision of knowledge or skills that go beyond the requirements of the job can be reimbursed.

"This means that an employee can only be obliged to reimburse the costs of training or further training if the training was intended to provide additional knowledge or skills that are not necessary for the immediate functions of the job," emphasises Laura Jodeliukaitė.

The agreement may also specify whether the cost of training or further training includes mission expenses (travel, accommodation, etc.).

What does case law say?

The Supreme Court of Lithuania has stated that under the Labour Code, an employer is obliged to train an employee to the extent necessary for the performance of his or her job functions. The employer is also obliged to take measures to improve the qualifications and professionalism of employees and their ability to adapt to changing business, professional or working conditions.

An employee can only be liable to reimburse the employer for costs incurred by the employer if he or she acquires additional knowledge or skills that go beyond the requirements of the job (competence) and increase his or her value on the labour market.

"For example, if the employee was already qualified to perform the duties of the job, but received training that took him or her beyond the level of knowledge required to perform his or her immediate duties, then such expenses could be considered reimbursable," she says.

An employer's obligation to train an employee to the extent necessary to perform the functions of his job does not constitute the provision of additional knowledge or skills beyond the requirements of the job. Therefore, such training costs are not to be regarded as reimbursable expenses of the employee.

For an employer to justify the reimbursement of training or further training costs incurred by an employee, it is necessary to prove:

• what knowledge is needed to carry out the functions of the job;
• the training provided to the staff member was at a higher level than that required for the performance of his/her direct duties.

This could be based on training programmes, certificates or other documents showing the knowledge acquired by the employee. If this acquired knowledge, when compared to the requirements of the employee, indicates that the employee has acquired a higher level of knowledge than that required for the performance of his/her direct functions, such expenses would be considered as reimbursable.

According to the lawyer, the courts have dealt with situations where workers have attended conferences and exhibitions. If such events were related to the employee's direct work and job functions, and the knowledge acquired was applied at work, the employer's claim for reimbursement was not justified.

Deadline for reimbursement of learning expenses

Educational expenses may be reimbursed if they were incurred during the last two years before the end of the contract, unless a longer period - up to three years - is laid down in the collective agreement.

Can an employer deduct from an employee's wages for paid training?

The law is very clear on when an employer can deduct from an employee's wages - the list is exhaustive. There is a clear prohibition against deductions on grounds other than those provided for in the law. These cases do not include the possibility for an employer to deduct from an employee's wages the cost of paid training.

This means that even if the employee has signed an agreement to reimburse the employer for training costs, the employer cannot deduct the employee's wages on the basis of this agreement alone.

However, the Labour Code allows the parties to derogate from the mandatory rules laid down in the Labour Code or other labour law provisions in the employment contract, provided that all the following conditions are met:

• the monthly salary of the worker is sufficiently high (at least two times the gross average monthly salary of the national economy, as published by the State Data Agency);
• not agreeing on legal rules that the Labour Code does not allow to be changed (e.g. maximum working time, minimum rest time, occupational safety and health, etc.);
• balancing the interests of the worker and the employer.

Thus, while it is not normally permissible to agree on deductions from an employee's wages to reimburse the employer for the employee's training costs, this possibility does exist in certain cases.

The exhaustive list of deductions from wages set out in the law is mandatory (imperative), but can be derogated from if the employer and employee agree. However, the employee's wages must not be lower than those set out above, and a balance must be struck between the interests of the employee and the employer. If these conditions are not fulfilled, the agreement could be declared unlawful if challenged by the employee.

What does it mean to balance the interests of employees and employers?

The lawyer points out that in the case law of the Supreme Court of Lithuania, the balance was considered to be ensured when:

• the employee has undertaken to reimburse the costs of the training only if the employment contract is terminated earlier than 12 months after the end of the training (under the Labour Code, a period of 24 months can be agreed for twice as long);
• the agreement stipulated that the employee would not reimburse the full amount of the expenses, but only that part of the expenses which was proportional to the period of time not worked.

"This agreement ensured the employer that the employee would work for the company for at least a year and apply the knowledge he or she had acquired, and that the employee would no longer be obliged to pay anything back after a year. Even if the employee leaves early, the amount to be repaid is calculated on a pro rata basis," says Laura Jodeliukaitė, reviewing case law.

The Labour Code also regulates a special case where an employee, on his/her own initiative, is studying for a bachelor's degree, a master's degree and/or a vocational qualification in a formal vocational training programme, and the employer pays all or at least half of the costs. In such a case, it may be agreed that the employee may terminate his/her contract of employment on his/her own initiative without good cause during the period of studies and for a period of three years thereafter only if he/she reimburses the employer for the costs incurred.

The most important thing to know is that it is possible for an employer to recover the cost of training, but this can only be done in accordance with the procedures laid down in the law and with a clear agreement.