Can my employer seek reimbursement for training expenses?

If an employer spends their time and energy training a new employee, they may require that an employee stays with them for at least a certain time frame so as to recoup their costs of training.

To enforce their intention, employers tend to include provisions that require employees to reimburse either the costs of training or a set sum of money if they resign within a few years of joining. Such clauses may be written in any shape or form, but will be on the following lines,

“The company has to expend considerable time in affording training to you... In consideration of the company affording this training to you, you covenant that if you were to resign from your employment within three years of your date of joining, you shall reimburse $5000 to the company as reimbursement...”

Is such a provision in an employment contract, enforceable? Possibly.

The Supreme Court of British Columbia (“Supreme Court) was faced with a similar situation in Canaccord Capital Corporation v. Leonard M. Clough (access here). In this case, the employer sought recovery of $16,666.65 from their employee, who had resigned from his employment sooner than the required 39 months term. The employee contended that the said provision was void for being in restraint of trade, was uncertain, was a penalty, and that he signed it in duress, among other grounds.

The Supreme Court upheld the provision and allowed the employer to recover $7500 as reasonable costs expended by the employer in training the employee. It was held that neither was the provision void for being in restraint of trade nor was the agreement uncertain. It further held that the provision was not a penalty as it was a genuine attempt to estimate the employer’s losses.

In spite of the foregoing, the Supreme Court’s observations may have an impact on one’s case, depending on how a provision is drafted. For example, the Supreme Court held that if a specified sum is a penalty and not a genuine estimate of the loss, then the clause may be set aside. Similarly, if a provision is uncertain or ambiguous, or if the employee signed it under a threat or duress, it may be possible to prevent the employer from claiming a reimbursement.

It is important to note that the foregoing decision was followed by the Civil Resolution Tribunal of British Columbia in Crius Financial Services Corporation v. Cheng Hao Yang (access here). An employer was successfully able to claim a reimbursement of $2500 in training expenses for the employee who resigned within three months of joining, whereas the contract required the employee to stay for at least two years.

If you need any help in assessing the enforceability of a similar clause in your employment contract or need assistance in drafting employment contracts for your employees please contact us at 604-993-0994.