Compensation agreement for training expenses

Obligations of the employer

The employer is obliged to provide the employee with training to develop their professional knowledge and skills based on the interests of the employer’s enterprise, and bear the training expenses and pay average wages during the training (clause 5 of subsection 2 of § 28 of the Employment Contracts Act). Therefore, the costs associated with training are generally borne by the employer.

As participating in training organised by the employer constitutes performance of duties by the employee, the time spent on training is included in their working time. The time of training must fit within the limits of working and rest time, which means that the employee does not have to undergo professional training on their day off and the employer cannot request it.  If training has resulted in overtime work, the employer must compensate for it.

Agreement on compensation for training expenses

The employer and employee may agree that if the employer incurs additional training expenses that exceed reasonable expenses, the employee must work for the employer for the agreed time (the binding period) in order to compensate for these expenses.

Training can generally be divided into two groups: training directly in the interest of the employer and training primarily in the interest of the employee. The agreement on compensation for training expenses can be concluded to compensate for such training expenses that are not part of the employer’s training obligation specified in clause 5 of subsection 2 of § 28 of the Employment Contracts Act, and in which case the employer’s training expenses exceed reasonable expenses. Therefore, entering into the agreement is justified in the case of training that the employer is not obliged to provide and whose expenses exceed the usual training expenses.

Training primarily based on the interests of the employer is, for example, the initial training of a new customer service employee and, if necessary, additional training on customer communication, sales skills, etc. Training obligations arising from the law, such as the requirement established for healthcare workers to undergo 60 hours of professional training per year or for truck drivers to undergo in-service training every five years, are also training for the purposes of clause 5 of subsection 2 of § 28 of the Employment Contracts Act, and such training must be compensated for by the employer.

For example, the agreement on compensation for training expenses is justified when the employer pays all the expenses of the employee’s degree study, i.e. the employee essentially obtains a new field of study, certificate or scientific degree for tuition, at the expense of the employer.

Therefore, it is necessary to assess the content of each training session and whether it is primarily in the interest of the employer or the employee.

Binding period

The binding period is a period during which the employee must work for the employer in order to compensate for training expenses. The binding period can be a maximum of three years. When entering into an agreement on compensation for training expenses, the binding period must be based on the cost of the training, i.e. the binding period must be related to the employer’s expenses. The higher the training expenses, the longer the binding period and vice versa. Clauses 2–4 of subsection 2 of § 34 of the Employment Contracts Act mean that an agreement with a three-year binding period can only be concluded if the training expenses incurred exceed the usual training obligation enough to be proportionate to the employee’s right to free self-realisation. Therefore, it cannot be assumed or considered usual that an agreement on compensation for training expenses is subject to a three-year binding period.

The law does not prohibit the cancellation of the employment contract during the binding period, but in that case, the employee is usually required to compensate for the expenses. The employee must compensate the employer for additional expenses in proportion to the time left until the end of the binding period, if:

1. the employee cancels the employment contract before the end of the binding period, such as on the basis of subsection 1 of § 85 of the Employment Contracts Act (ordinary cancellation of employment contract after the probationary period), subsection 1 of § 86 (ordinary cancellation of employment contract during the probationary period) or subsection 3 of § 91 (extraordinary cancellation of employment contract). If the reason for cancellation is a significant breach of the employment contract by the employer (subsection 2 of § 91 of the Employment Contracts Act), the employee does not have to compensate the employer for additional expenses in proportion to the time left until the end of the binding period;
2. the employer cancels the employment contract before the expiry of the binding period due to a significant breach of the employment contract by the employee, such as on the basis of clauses 3–8 of subsection 1 of § 88 of the Employment Contracts Act.

Upon cancellation of the employment contract by mutual agreement, it is reasonable for the parties to agree on what will become of the expenses paid under the agreement on training expenses.

Validity of the agreement on compensation for training expenses

An agreement on compensation for training expenses is valid only if:

1. it has been made in writing;
2. it specifies the substance and expenses of the training;
3. the binding period does not exceed three years; and
4. the binding period is not unreasonably long considering the training expenses.

An agreement on compensation for training expenses concluded with a minor or for the compensation expenses related to the performance of the employer’s obligation to train prescribed by law is void.