As a business owner, developing your staff should be one of your main priorities. Employee training can increase productivity, skills, and performance. But, providing this training comes with a cost.
So, you should create a training reimbursement agreement to ensure that you receive a return in investment for any training costs. It's important you know what to include when you create one.
In this guide, we'll discuss what a training reimbursement agreement is, how to create one, and what to include in yours.
What is a training reimbursement agreement?
A training reimbursement agreement is a legally enforceable contract that sets out the specific terms and conditions of employee training.
It's a written agreement between both employee and employer and sets out the following details:
- How much the training costs.
- Who is providing the training to the employees
- Who is responsible for paying for the training.
- When the employee will pay for a part or all of the training.
- How much the employee will pay.
This agreement is different from a training contract, which defines any training deductions that can be taken from their final salary.
What are the benefits of employee training
There are many benefits to providing training to your staff. As an employer, it's important you understand them.
They include:
- Improving productivity and efficiency.
- Reducing turnover and increasing employee retention.
- Improving employee engagement.
- Providing your employees with new skills and knowledge.
Is it a legal requirement to reimburse training expenses?
No, it isn't a legal requirement to be reimbursed for an employee's training. However, you can only deduct money for training courses if it has been agreed to in a contract beforehand.
As an employer, you also need to understand the purpose of a reimbursement agreement.
What is the purpose of a training reimbursement agreement?
The main purpose of a training agreement is to ensure your staff complete any training. Generally speaking, it's difficult to receive training costs from an employee who has left your company - so an agreement is a way of doing so.
They help to prevent you from losing money after paying out for training courses and professional qualifications. The last thing you want is for an employee to leave straight after completing training, and for you to be out of pocket.
Having an agreement will help to protect your business interests, as well as your investment.
How do you use a training reimbursement agreement?
If you're going to use reimbursement agreements in your company, you need to know how to do it properly.
For example, you should make new hires aware of any agreements before they sign their offer letter. You must clearly explain when you'll use them, and make sure it's signed by both parties beforehand.
So as an employer, you need to know what to include in them.
What should you include in your training reimbursement agreement?
There are things that you must include in your agreement to ensure it works for both parties. Such as:
- Ensure all terms and conditions are clearly explained in writing.
- Include details of the actual cost of the training.
- Clearly explain which events will trigger the employee’s obligation to repay you. Such as resignation and gross misconduct.
Create a reimbursement plan that is dependent on how long the employee stays at your company following training completion. For example, if an employee leaves within one.
What are the risks of not having an agreement in place?
The main risks of not having a training reimbursement agreement in place with an employee are:
- You may struggle to receive the full money back for training (if any at all).
- An employee may take the qualification or training you've provided them and work for a competitor.
For small companies, losing an employee to a rival could be a major blow to the company's development.
How to manage employee training in your workplace?
There are many ways in which you can manage employee training within your business. Such as establishing the training needs of your employees. Others include:
- Using the right training methods. Such as e-learning, coaching and mentoring, and in-house.
- Creating a long-term training strategy. Make sure this aligns with your overall business strategy.
To successfully manage a training reimbursement agreement when you use one, you should create a policy.
What should you include in your employee training reimbursement policy?
You should create a training reimbursement policy that can be used when your employees choose to complete a training program.
To do so, you need to know what to include in it. Let's discuss the steps in more detail:
How to get the training program approved
You must make it clear in the document how your employees can get any training approved. This should include which senior manager will sign off on the training, the cost of the training, and how long it will take to complete.
When training becomes available
It should include details of how long the employee needs to be at the company before being able to go on training courses.
This may be the day employment starts, or within the first six months or year.
How and when employees receive reimbursement
To encourage employees to stay with your company, repayment fees for training are typically on a sliding scale. Meaning, the amount decreases the longer they stay with your company.
However, you can use another method that includes a specific date when the employee doesn't need to pay anything back. These work if the course is low cost and within your budget.
Employee training reimbursement agreement
Finally, you should include your training reimbursement agreement at the bottom of your policy.
Ensure your employee reads it carefully and signs it when employment starts. Employers should also sign the agreement.
What is an employee training agreement template?
You should create a training agreement template to use when required. The template should include the contractual agreement that will be used between both parties.
It’s important that your agreement is clear and can be easily understood by all parties. This can help to reduce the risk of any conflict in the future.
Get expert advice on employee training from Peninsula
For employers, developing employee's skills comes with a range of benefits, such as increased productivity and engagement. However, providing training comes with a cost, and it's important you receive a return on your investment.
You should create a reimbursement agreement if you require your staff to cover some of the training expenses you paid out. So, it's important you know what to include when you create one.
Peninsula offers 24/7 HR advice which is available 365 days a year. Want to find out more? Contact us on 0818 923923 and book a free consultation with one of our HR consultants.
