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Reimbursement of training costs

Employment Law , , , ,

Can an employer deduct money for training should the employee resign within a specific period after completing the training?

Many employers provide training to new employees when they join the company. The reason for training may vary from on-the-job training to train the new employee on proprietary systems of software, to being sent on formal skill development courses. Current employee may also require new training should the business’s operational requirements request it and or a new system is being implemented.

When an employee resigns, especially soon after completing training, employers are quite justified in feeling wronged. The question becomes, may they hold the employee liable for the costs and expenses incurred for the specific training?

Firstly, it is important to keep in mind that Section 34(2) of the BCEA specifies that:

“2) A deduction in terms of subsection (1)(a) may be made to reimburse an employer for loss or damage only if–

a) the loss or damage occurred in the course of employment and was due to the fault of the employee

b) the employer has followed a fair procedure and has given the employee a reasonable opportunity to show why the deductions should not be made

c) the total amount of the debt does not exceed the actual amount of the loss or damage; and

d) the total deductions from the employee’s remuneration in terms of this subsection do not exceed one-quarter of the employee’s remuneration in money.”

If a (advisably written) agreement was established between the employer and the employee that the employee would be liable to repay the costs of the training should s/he resign within a specified period after completion of training, the employer will be able to enforce the signed written agreement. The employer will then be allowed to recover from the employee a proportionate / pro rata amount of the training costs incurred by the employer for the employees training received.

The written agreement would have to meet the following criteria:

  • That is was signed/agreed to prior to the commencement of the training.
  • That it disclosed all the terms and costs to the employee prior to the signing of the agreement.
  • That it clearly stipulates the terms under which the employee would be liable to repay such
  • That it stipulates the period for which the employee will be held liable for those costs.
  • That is stipulates how the proportionate / pro rata amount will be worked out should the employee leave/ resign before the specified period has lapsed.

If training is offered on the condition that the employee may be held liable to reimburse the costs should s/he resign for any reason or is dismissed, before training could commence, through no fault of the employer within a certain time, the employee must be given a fair opportunity to refuse the offer of training should s/he feel that the conditions are unacceptable for whatever reason.

If no agreement was signed prior to the training, it is implied that the employer is offering the training at company cost without requiring the employee to reimburse the employer. An employer has no legal entitlement after the fact to demand the repayment of training costs if the only basis is that the employee has resigned.

To succeed in a claim for reimbursement of training costs against an employee, the employer would have to show that a valid agreement was in place prior to incurring the cost of the training. The reimbursement claimed cannot exceed the actual cost of the training, that is, the total provable cost of providing the training less the portion claimed by the employer in terms of the Skills Development Act.

Employers are cautioned to carefully consider when imposing a liability for training costs on an employee should s/he resign, as this may result in the provision falling under the scope of the Conventional Penalties Act 15 of 1962, if the cost claimed is deemed to be a penalty and the penalty amount is disproportionate to the actual loss/damage suffered by the employer.

This article is being provided for informational purposes. Contact Joblaw for any enquiries and legal advice.

 

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Procedurally fair disciplinary hearings

Employment Law , , , ,

One of the most common reasons employers end up at the CCMA, and on the losing side of the table, is the procedural fairness of a disciplinary process that ended in dismissal. Even though there may be ample substantive reason to support dismissal, an employer must follow a correct and fair process prior to dismissing an employee.

Just as a procedurally fair disciplinary process can be regarded as complying with the rights of the employee, employers have rights in the workplace as well, including:

  • The right to establish a fixed standard in terms of quality and quantity
  • The right to implement rules in the workplace
  • The right to apply discipline when these rules are broken

The right to apply these rules must be backed up by a clear disciplinary code to which the employees are held accountable.  If and when the employees do not adhere to the rules as established in the code, the employer should then be able to safely apply progressive disciplinary steps as needed according to the agreed guidelines in the code.

Should progressive disciplinary steps not remedy the transgressions, or if the transgressions are serious enough on first offense, more serious sanctions (in the form of dismissal) may be needed. However, prior to any sanction or dismissal because of disciplinary action, an employer must hold a disciplinary hearing. It is essential that an employer can prove that a hearing was held prior to any dismissal.

A disciplinary hearing is intended to ensure that a fair procedure is followed and that there is a substantive reason with sufficient evidence to warrant a serious disciplinary sanction, up to and including dismissal.  It is important to remember that the Labour Relations Act recognises only three circumstances under which dismissal can be considered a fair sanction:

  • Misconduct
  • Incapacity (including poor work performance)
  • Operational requirements (retrenchments)

However, any dismissal under these circumstances will not be deemed automatically fair by the CCMA. The chairperson of the hearing must follow three distinct processes during the hearing, each process to be finalised before the next process is started:

  1. The chairperson must first establish, by examining the entire process that a fair procedure had been followed and that the accused had not been prejudiced or compromised through unfair actions by the employer.
  2. The chairperson must decide, based on the evidence presented, whether to find the employee guilty or not guilty.
  3. The chairperson must, upon finding an employee to be guilty, consider all relevant factors including:
  • the employee’s length of service
  • previous disciplinary record
  • personal circumstances
  • the circumstances surrounding the transgression
  • whether the sanction is consistent with previous cases of a similar transgression and subsequent disciplinary action
  • seriousness of the offense
  • extenuating circumstances such as self-defence, provocation, coercion, and intent

The Chairperson must allow the employee to present arguments in mitigation of the sanction and he must consider whether a lesser sanction would suffice.

Standard Disciplinary Procedures

  1. The employer must issue a written notice of the disciplinary hearing to the employee in a form and language s/he can reasonably understand with the date of the notice, the date, time and place of the hearing, as well as the charge/s against the employee.
  2. The notice must include a clear and detailed description of the charges against the employee to be considered at the hearing, including the date, time, and the details and description of the transgression/s.
  3. The notice must be issued to the employee in time to allow reasonable time to prepare for the hearing. This time must, at minimum, follow the company disciplinary code. More time should be allowed in the case of more complex charges. Moreover, an employee is entitled to sufficient information and documents as requested to prepare for the hearing.
  4. The employee has a right to present a defence against the charges including presenting evidence and witnesses. The employer has a right to examine and question the evidence presented by the employee and witnesses, and the employee has the right to examine and question the evidence and witnesses presented by the employer.
  5. The employee is entitled to be represented by a fellow employee or a trade union representative. The employee must inform the employer of such representation prior to the hearing. Employers must take note that the LRA definition of a trade union representative is a shop steward and not an external trade union representative. Should the employee request outside representation the employee must submit a formal application detailing the reasons why outside representation is being requested. If required, the employee is also entitled to the use of an interpreter.
  6. The employee has a right to fair judgement. As such a disciplinary hearing should be heard by an objective and impartial chairperson.

After the conclusion of the disciplinary hearing, and upon receiving the decision made by the chairperson, the employer must communicate in writing to the employee the decision and, should the decision be that the employee is found guilty of the charges, the subsequent sanction imposed and the reasons for the sanction. The employee must also be reminded that s/he has a right to refer the matter to the CCMA (or relevant council) within 30 days.

This article is being provided for informational purposes. Contact Joblaw with any disciplinary process enquiries and legal advice.

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Importance of having disciplinary warnings on file

Employment Law , , , ,

It is an unfortunate reality that even the most diligent and fair employer or business-owner will at some point be required to apply disciplinary action or issue warnings in situations in the best interest of the company and the employee.

Disciplinary procedures and warnings, when appropriately used and managed, is not intended to punish a wrong but to correct wrong actions.

Warnings can range from a verbal warning to a final written warning depending on the circumstances under which it occurred or the severity of the misconduct or offence in need of correction. The severity of a warning can progressively be increased if the employee keeps repeating the offences or continues to commit offences against the established disciplinary code despite previous attempts to rectify the situation. Warnings issued should always follow the company’s established Disciplinary Code and it must be on record that the employee being sanctioned has seen, read and understood the disciplinary code. Employers are encouraged to discuss the company’s Disciplinary Code with Employees on a yearly basis.

Item 7 (b) of Schedule 8 to the Labour Relations Act provides:

If a rule or standard was contravened, whether or not:

(i)           The rule was a valid or reasonable rule or standard

(ii)           The employee was aware, or could reasonably be expected to have been aware, of the rule or standard;

(iii)         The rule or standard has been consistently applied by the employer

The drafting and dissemination of the company disciplinary code, as well as record that all employees have been informed of the disciplinary code is the first step in a vital record keeping process to fairly and lawfully apply disciplinary actions which may lead to warnings. The lack of such a paper trial may invalidate any defence against an unfair business practise/dismissal claim at the CCMA from the start.

A written warning must, at minimum, contain the following,

  • the identity of the employer and the employee
  • details of the offence: nature of, date of and time of offence
  • the terms of the warning and the period of validity
  • a clear statement of the corrective actions required by the sanctioned employee
  • a clear statement of the consequences for the sanctioned employee should he/she fail to fulfil the requirements as stated above or repeated offenses within the warning period
  • verifiable proof (in the form of the employee’s signature or witnesses) that the warning was delivered and received by the employee.

A warning should only be issued after a fair disciplinary process, and this process must be started immediately after the employer finds out about the transgression, conducted and completed as soon as possible to enable the employer to issue a warning (if warranted) with the most specific, concise information possible. This will help to avoid any future problems that may lead to a challenge at work or at the CCMA.

It is vital to any business and employer to keep accurate, detailed record of every disciplinary action and warning, including verbal warnings, documenting the charges and actions taken. To not do so imposes a huge risk to the employer should any disciplinary action be challenged at the CCMA, which could lead to monetary awards or reinstatement of a sanctioned employee.

In case law, refer to Gcwensha v CCMA & others, where the employee had been dismissed for gross negligence. Diligent recordkeeping by the employer evidenced that the employee had several previous warnings for incompetence, negligence and inefficiency. Gcwensha was on a current warning when he was dismissed. The court found that the employee had a ” deplorable record” of transgressions and misconduct, which the employer was entitled to take into consideration when deciding on the appropriate sanction to be taken for the current transgression. The employer was able to defend this action and avoid reinstatement of the employee because of the verifiable history of warnings he had on file.

The opposite was true in NUMSA v John Thompson Africa (Pty) Ltd [1997] 7 BLLR 932 (CCMA). It was the lack of proper record keeping that lead to the employer being ordered to reinstate the employee who was dismissed on charges of ‘wilful damage to and deliberate misuse of company property, using abusive language, and being under the influence of an intoxicating substance.’ The employee appealed the dismissal according to the employer’s established procedures, but at the appeal hearing there were no records of the proceedings or evidence tabled at the disciplinary hearings to make available to the chairperson to consider. It could not be proven that the employment relationship had irretrievably broken down due to the employee’s behaviour and it was ordered that the employee be reinstated.

Schedule 8 (Code of Good Practice – Dismissal) requires that employers must keep records of all disciplinary action taken against employees, the reason for it, and the outcome of that disciplinary action. An employer that does not do this, goes to the CCMA with little ammunition – and his case becomes quite indefensible.

 

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