Count the cost
Loss of investment when a therapist leaves can hit a salon hard. David Wright explores the options for recouping training costs
As salon owners are all too aware, staff turnover levels in our industry are higher than many other
sectors. One reason is that the workforce is primarily young and female. A high percentage do not return after maternity leave and their skills and experience are lost to the industry. The costs of staff turnover can be high, in particular the lost investment in training.
Costs of staff turnover include: lost investment in the employee in terms of internal and external training but also the investment of your time; the inevitable loss of regular clients; the cost and time of recruiting and training the replacement and the lead-in time for the replacement to become established.
Recovering Training costs
There is no doubt that employers can recover some external training costs if an employee leaves within a predetermined period of time after completing training.
I recommend including a specific clause regarding the recovery of training costs in your contracts.
Spell out that training costs include course fees, travel costs and accommodation costs. The wording needs to be absolutely clear to leave nothing open to interpretation. For example, the clock starts to tick when the training is completed, not started.
You should also include a provision allowing you to deduct the costs from an employee’s final salary. If you just deduct money without a clause in your contract, the employee can successfully claim at a tribunal that you have made an unlawful deduction from their pay.
If there is a balance outstanding and you cannot reach an agreement for the employee to refund it, (even in instalments) then the most cost-effective route for you is the small claims court.
Remind therapists about their obligations. An employee might have been in post for five years and could well have forgotten what was written in their contract, or not even read it. I therefore recommend you get staff to sign a document each time they attend a training event. The document can refer to the contract then detail the event and the costs involved. This eliminates any doubt that the employee was in some way unaware of the rules.
Costs aren’t as black and white when training is done in-house. A salon owner may claim she spent 10 hours of her time training an employee in a particular skill. Often when employees challenge the obligation to repay in-house training costs their solicitor asks the employer to show receipts demonstrating the cost of the training to them. This isn’t possible if the only cost was your time. If you employ someone specifically to train new staff these costs may be easier to recover.
The law doesn’t specify the period of time an employee must remain in their post after training so as not to be liable for the costs. I have seen up to two years successfully enforced. Some salons have a sliding scale. For example, they may require staff to stay for 12 months after completing training but stipulate that 100% of the costs are refundable if they leave within the first four months, 75% for within the next four months and 50% for the last four months.
However, beware that including a clause in your contract doesn’t make it enforceable. For example, I have seen clauses suggesting training costs are repayable “regardless of how the employee leaves”. It would be difficult to successfully argue an employee who had been dismissed in their probation period would be liable to refund the training costs, seeing as they hadn’t left on a voluntary basis.
The best practice is to have a clearly worded contract and training agreement and build an expectation among staff that you will recover training costs if they leave. You might have to be flexible and accept instalments. A legal challenge can be expensive and time consuming and each case stands on its merits.
Interestingly, in 2014 I have seen a new route to challenge deductions from the final salary. Employees have argued not that the deduction is unlawful but taking it from their final salary means they have been paid less than the national minimum wage. This is inventive but we await the first publicised case reaching an employment tribunal.