Repayment of training expenses

Demanding reimbursement of expenses when an employee leaves after a short period of employment

Question: Can an employer demand the repayment of expenses incurred in training an employee if the employee is terminated within a year of being hired?

Answer: Whether or not an employer can demand the repayment of training expenses will vary depending on the legislation in each province. However, any legislation that allows an employer to demand repayment of expenses, such as those incurred in training, requires a written agreement between the employee and employer.

In Ontario the Employment Standards Act, 2000, deals specifically with the deduction of wages by allowing an employer to demand repayment of certain expenses if the employee has provided written authorization to do so and such authorization refers to a specific amount or formula from which the amount may be calculated.

In Renaud v. Graham, an employee was hired by a real estate firm. Due to the nature of his job, the employee required six months training before he would be licensed to practice real estate. His contract contained a specific formula for the calculation of the partial return of the employer’s cost of training should the employee voluntarily terminate his employment and work as a realtor for another broker within one year of termination. After receiving training and working for a short period, the employee terminated his employment with the firm and began working with another real-estate business shortly thereafter. As a result, he owed the employer costs for his training as set out in the agreement.

Despite numerous arguments for why the specific terms should not be enforced, the court found the employment agreement met the requirements of the act. The agreement was clear, did not restrain trade, was agreed to without coercion, and set out an appropriate formula to determine the amount due.

Based on the court’s findings in Renaud, it is important employers ensure the agreement meets all the requirements provided for by the specific employment/labour standards legislation, the agreement does not contravene other legislation (such as restraining trade) and the employee fully understands the agreement and is not coerced into signing it.

Some provinces, as well as the Canada Labour Code, have similar provisions in their labour and employment legislation. Therefore, provided employers comply with the specific requirements in their province, it is likely they could also demand repayment of training expenses where an employee quits within a year of commencing employment.

However, this is not true in all provinces. British Columbia’s Employment Standards Act provides that an employer may not require an employee to pay any of the employer’s business costs except as permitted by regulations. Therefore, it is important an employer refers to the specific legislation in its province before attempting to enforce such an agreement.

For more information, see:

Renaud v. Graham, 2007 CarswellOnt 1173 (Ont. S.C.J.).

Brian Kenny is a partner with MacPherson Leslie and Tyerman LLP in Regina. He can be reached at (306) 347-8421 or [email protected]

Latest stories