Be Aware – July 2024

Can a resigning worker be obliged to pay back training costs?

For some functions, the costs of the training necessary to be able take up the function can be considerable. Employers therefore sometimes negotiate that the worker should pay back part of the training costs when resigning within a certain period. The Employment Tribunal of Liège rendered on 27 May 2024 a judgement clarifying the rules on these agreements concerning the reimbursement of training costs.

The case concerned a pilot, recruited in 2019 with a license for flying Boeing 737-planes. In 2021, the pilot and his employer agreed he would undergo training for flying Boeing 747-planes. This training costed around EUR35.000, hence the airline and the pilot agreed on a training clause stating that the costs of the training should partially be reimbursed if the pilot would resign within 3 years. At the end of 2022, the pilot resigned and joined a competing airline, but nevertheless refused to honour the agreed upon reimbursement.

The first argument invoked by the pilot is that article 22bis of the Act of 3 July 1978 on Employment Contracts stipulates a training clause is not possible for the costs of a training which is a statutory requirement for the function the worker was recruited for. Although a pilot license is a statutory requirement, the Employment Tribunal pointed out that the pilot did on a voluntary basis decide to attend the training for a second type of plane and that he could also have merely continued flying the type of plane for which he was recruited. The exception for the statutory requirement was according to the Employment Tribunal thus not applicable.

The second argument invoked by the pilot is that a training clause is only valid if it concerns a training allowing to acquire new expertise that also has value outside the company. The new employer of the pilot was in fact an airline company which did not operate any Boeing 747 planes, hence the pilot argued the training did not have any value for him at his new employer. The Employment Tribunal rejected this argument, since it held the pilot could in the future join a third employer where he could fly this type of plane.

The third argument invoked by the pilot is that the agreement on the reimbursement of the training costs did not specify the reasons for the training clause. The Employment Tribunal did in relation to this argument point out that while the 1978 Act on Employment Contracts requires the training clause must be in writing and must include a number of mentions (a description of the training, its cost, the part to be reimbursed by the worker, and the duration of the clause), the reason why the parties negotiated a training clause is not one of the mandatory mentions.

The training clause can apply during a maximum of three years. It should stipulate a gradual reduction of the amount to be paid when the worker resigns, which can at most equal 80% during the first period, 50% during the second period, and 20% during the last period. As the pilot resigned during the second year, he was ordered to pay back 50% of the training cost.

The clause is in any event not applicable if the employer terminates the employment contract, except in case of a dismissal due to serious misconduct.

The 1978 Act on Employment Contracts finally stipulates that the training clause is not possible if the worker has a fixed term contract, if the training is shorter than 80 hours and if the cost of the training is lower than twice the minimum average wage (which currently stands at EUR2.070 gross per month).

 

Social security contributions on a termination indemnity converted into a training budget

If an employer terminates an employment contract by payment of an indemnity in lieu of notice, this does in the short-term result in extra revenues for the social security administration. An indemnity in lieu is indeed subject to an employee social security contribution of 13,07 % and an employer social security contribution of approximately 27% (for white-collar workers). The legislator has already several times attempted to convert the termination cost into measures that could help the terminated worker, notably a budget for professional training.

The Act of 26 December 2013 “introducing the unified regime for blue-collar and white-collar workers concerning the notice period and the first day of sick leave” stipulated that by 2019 the joint committees should have signed a collective bargaining agreement whereby if the indemnity in lieu of notice equalled at least 30 weeks, one third of the indemnity in lieu of notice was converted into a budget for trainings or extra outplacement assistance, rather than being merely paid out. No such collective bargaining agreements were ever signed, hence this part of the Act of 26 December 2013 never entered into force.

The Act of 3 October 2022 introduced a similar system, but at a more limited scope. Article 39ter of the Act of 3 July 1978 on Employment Contracts, does since 1 January 2023 stipulate that if the notice period or the indemnity in lieu of notice equals at least 30 weeks, one third of the notice period or the indemnity in lieu of notice is taken into account for measures aimed at improving the chances of the worker on the job market. The main difference between the new system under the Act of 3 October 2022 and the system included in the Act of 26 December 2013, is nevertheless that the conversion only relates to the employer social security contributions. The net indemnity in lieu of notice remains unaffected by the conversion. Hence, the worker continues to receive the full indemnity in lieu of notice.

The system is only applicable in case the employer terminates the employment contract and the notice period or the indemnity in lieu of notice equals at least 30 weeks. While the initial plan was that the budget for trainings would equal the employer social security contributions on one third of the notice period or the indemnity in lieu of notice, the government announced the budget would now be the lump sum amount of EUR1.800. This amount is indexed on an annual basis.

Nothing changes for the employer, who should continue to pay the same social security contributions on either the remuneration during the notice period or on the indemnity in lieu of notice. The contributions are still paid to the National Office for Social Security.

The dismissed worker can obtain the reimbursement of trainings or extra outplacement assistance from the National Office for Employment up to this maximum amount of EUR1.800. This right should be used within three quarters following the effective termination of the employment contract. It concerns a reimbursement, hence the dismissed worker should first pay the training or outplacement assistance personally.

A Royal Decree of 12 June 2024 stipulates the National Office for Social Security will transfer part of the social security contributions it receives to the National Office for Employment in order to finance the trainings or extra outplacement assistance.

The new system will enter into force on 1 April 2025.