Training agreement

What it means

A training agreement is a written agreement under the Labour Code in which the employer undertakes to enable an employee to gain or raise a qualification and to pay the associated costs, and the employee undertakes to stay with the employer for a set period, at most five years, or to repay the costs.

The agreement must state the qualification to be gained, the period the employee commits to stay, the types of costs the employee will repay on leaving early and their maximum amount. Without written form and these particulars it is invalid.

If the employee ends the employment before the agreed period expires, they repay a proportionate part of the costs. This does not apply if the employment ends for reasons on the employer’s side, such as redundancy, or if the employee terminates immediately because wages were not paid.

How it works in practice

We recommend a training agreement for more expensive programmes: professional certifications, part-time degree studies, higher-category driving licences or courses abroad. It is not used for routine training needed to do the job, such as health and safety, which the employer must provide anyway.

Training costs related to the company’s business are deductible for the employer and not taxable income for the employee. If the employee repays part of the costs on leaving, it is income for the employer. Repayment can be made by deduction from pay if the parties agree, through a wage deduction agreement.

When the employee leaves, we calculate the proportionate part by time served and the agreement and prepare the settlement. The agreement is best kept in the personnel file together with evidence of the actual costs, because the employee can be required to repay only costs demonstrably incurred.

What to watch out for

The most common mistake is a vague agreement, for example without a maximum amount or the type of qualification. A court may declare it invalid, and the employer recovers nothing. A template agreement should be tailored to the specific course.

A training agreement should not be a tool for keeping an employee at any cost. If the company holds on to someone only through debt, their motivation drops and they leave as soon as the period ends. It works best as a fair sharing of the investment, together with development and good conditions that reduce turnover.