'If it ends up being a legal issue, you've made a mistake'
Over 3,000 eligible employees in Canada signed up to participate in Amazon’s Career Choice in 2023, a program that provides workers up to 95 per cent of tuition and reimburses fees for book costs, according to the company.
Programs such as these mark a shift towards increased continuous learning by adults, in part due to more job mobility and the desire for some to pursue more than one career.
Employer investment in training and development also increases employee motivation and retention, said Nita Chhinzer, associate professor in Human Resource Management and Business Consulting at the University of Guelph.
“Individuals are saying they want to learn more skills, and they're feeling rewarded for learning more skills. The employees are saying, ‘We don't know how to train you, but we can send you to an expert who can,’ and the universities are saying, ‘Let us fill this gap,’” she said.
However, this trifecta can create concern among employers, who have been hesitant to offer these training options for fear they would train an employee, only for them to move to a new employer for more pay, and the employer would lose value on the investment.
This is where rules and regulations, strong management and strong HR policies come in, Chhinzer said.
“Employers need to look at these programs and ask themselves: ‘How do we set this up in order to not lose the talent we have helped to develop?’”
Clear guidelines for tuition reimbursement
Setting clear guidelines and aligning educational opportunities with employees' career trajectories to ensure training is transferable to an their current or desired job is the first step in establishing a tuition reimbursement program, she said.
Meanwhile, setting expectations for minimum performance ensures that employees are motivated to excel in their learning endeavours; for example, tying reimbursement to specific goals or assessments, such as achieving an 80% grade, can incentivize active participation, Chhinzer said.
Retention agreements can also be put in place to ensure that employees remain with the company for a specified period after completing their education. This not only safeguards the employer's investment but also fosters loyalty among employees.
However, Chhinzer warns against overlooking the importance of effective performance management in identifying and nurturing talent within the organization.
"Firstly, there must be an alignment between where the employer is sending the employee based on what matches their career trajectory. This goes hand in hand with outlining that costs will be covered if the employee achieves a minimum performance goal and implementing a retention condition," she said.
Tuition reimbursement about more than expenses
Michael Penner, lawyer at Kent Employment law, also highlights the need for employers to delineate clear contractual terms based on their objectives. Whether it's retaining talent or attracting new hires, the structure of the reimbursement program should align with these goals.
However, tuition reimbursement should be more than a monetary transaction and should bring value to both the employer and the employee.
"It's not so much about just covering expenses but ensuring there's reciprocity and a clear understanding of expectations. An employer could easily say, ‘Bring us your rent check and we'll cover a month's rent for you,’ but that doesn’t give the employer the value of a more competent employee; you want to make sure you get the dividend of that," Penner said.
Employers should also consider the broader implications and potential outcomes, including scenarios where employees do not complete their programs. He also stresses the importance of defining what expenses will be covered, how they will be verified, and any performance-based criteria.
"If an employee flunks out, it's not just a financial issue; it's about setting clear parameters and contingencies upfront to avoid legal entanglements down the line,” Penner said.
Options for tuition reimbursement
One option is a blanket tuition reimbursement, where everyone has access to the same amount of money for education. The alternative approach is focusing on providing education opportunities for strong performers as an incentive to motivate, reward and recognize them, while encouraging them to stay with the organization.
With this approach, those who qualify may have access to more money to invest in educational programs, Chhinzer said.
However, this alternative approach does present challenges, as it widens the gap between the strongest and middle performers, she said.
“An approach centred on high performers also implies that we have very effective and accurate performance management programs in place, but if our performance appraisal program is broken, then we truly might not have an accurate understanding of who are the strongest and the weak performers.”
Chhinzer recommends investing in personalized development opportunities, so organizations not only enhance employees' skills but also foster a culture of collaboration and innovation.
“When we offer cookie cutter programs, the transference of learning is low. When we offer personalized programs, the transparency of learning is high,” she said.
Legal considerations for employers
When it comes to tuition reimbursement programs, Penner emphasizes the need for employer efforts to be focused on the program’s contractual agreement. This should provide clarity when it comes to what expenses are covered, what is needed to verify those expenses, when the entitlement crystallizes and if there is a contingency where an employee may need to reimburse the stipend.
The agreement should also outline if an employee will not only have disbursements paid for but whether they are receiving a portion of their salary while attending the program, as is sometimes common, Penner said.
“If you're clawing back on pay checks, typically there's legislation involved that only allows you to claw back a certain percentage, and if it ends up being a legal issue, you've made a mistake.”
In terms of exposure, if the benefit is offered to all employees, it is likely that if an employee is terminated without cause, they will claim that as part of their earnings. If employers don’t want that to be considered part of an employee’s earnings, they must put in place contractual language to delineate it as a situational compensation rather than earnings, Penner said.
“Tuition reimbursement is a generous offer from an employer, and the best way to safeguard the exploitation of that benefit is to make the terms of it very clear. Any contingencies should be very clear at the outset, so in the event things do go sideways, you've already pre-defined what the consequence is and how the enforcement will work,” he said.
The importance of strong management
Chhinzer stresses that the success of these programs hinges on effective management. She emphasizes the need for managers to possess the necessary competencies to support their teams effectively.
"Managers are often just promoted because they've been there the longest or because they perform well, but that doesn't make them good managers,” she said.
Sending managers for specialized training tailored to the organization's needs can yield effective results, as tailored approaches are sensitive to different environments. For example, unionized environments may have different conditions and constraints than non-unionized environments, while large and small companies may differ from one another also, Chhinzer said.
“What we've seen is a bigger push towards having individualized programs where trainers or executive developers to come on site, complete a proper diagnostic, get to know what the problems are, and then tackle problems that are workplace specific,” she said.
“Employers are saying they want a personalized education system for their organization that's aware of their limits because that's the highest in transferability.”
