Employers will in the course of employment spend money and time on the development of their employees. This development can range from new employees being assigned work buddies or the employee being enrolled on specialised courses or further tertiary education. The actual cost to the employer can be expensive.
This often places employers in a difficult situation when the employee decides to leave their employ, as the employee has acquired skills at great expense to the current employer and then leaves to ply their trade elsewhere.
The question is now: what do we do? We have spent all this money, time, and considerable effort, and on the face of it, the employee simply walks away with the skills acquired at the current company with seemingly no recourse?
In the case of the National Health Laboratory Service v Janse van Vuuren, the employer employed the employee on the basis that the employee would work for them and study. One of the terms of the contract of employment was that if the employee did not remain in employment for a period of two years after the completion of the training and qualification as a specialist, she would reimburse the plaintiff for her training costs. When the employee resigned in 2010, the employer successfully sued her to recover such costs – the employer valued the amount to be paid at R2 million. The court had to decide on the damages the employer suffered.
The employer did not sue based on contractual breach, but based on penalty, and the court had to rule on the fairness of the amount claimed. The company used the provisions of the Conventional Penalties Act 15 of 1962.
The court found that it was fair, just, and equitable that the penalty stipulation be moderated and reduced, to correspond with the actual training costs incurred by the employer. The penalty was then calculated as being R1,630,445 (R1,63m). The employer was entitled to be paid that amount as well as accumulated interest.
The critical element for employers is the importance of having the training stipulated in a contract with the employee and preferably for the employer to include a fair repayment term.
It is also important to recognise that the actual training cost is not only the direct cost of the course itself and could include:
- long study leave
- specialised mentoring and coaching and / or management support
- research projects
Should you require any assistance with the drafting of such clauses or training agreements, please contact us on [email protected].