In answer to this question it may be best to refer to a recent decision from the Labour Court. An employee signed an employment contract which contained
two potentially contentious clauses :-
- If her employment terminated, she had to serve a 2 month notice period; and
- If she failed to work for her employer for a period of at least one year from commencement of employment, she would have to pay back “training
costs” incurred during the initial 3 month probation period of her employment.
The employee in question was actually the HR manager of the employer. She resigned from her employment. She left immediately at her own instance without
working in the 2 month notice period stipulated in her employment contract.
The employer clearly got the needle and brought an application seeking damages against her. Apparently something similar had happened with the previous HR
manager. The employer claimed it was out of pocket in consequence of the employee failing to work in her 2 month notice period as the employer had had to
immediately employ a temp and spend money in obtaining a suitable replacement to fill the position.
When the Labour Court came to adjudicate this claim, the Presiding Judge questioned whether the employer had suffered a genuine loss. It should be noted
that the matter came before the Labour Court without the employee being present. It was therefore dealt with on an unopposed basis.
Fortunately the Presiding Judge took the time and care to carefully look over the matter before him. He made the point that the Labour Court cannot simply
award damages to an employer when an employee has failed to sit out a notice period. These damages have to be accurately assessed. The employer has to show
on a rand and cents basis exactly how much money it has lost.
It is not good enough for an employer to simply claim that it has had to spend money on temporary employees or otherwise. Proof of actual expenditure
incurred as a direct consequence of an employee’s failure to serve notice must be set out in detail.
This is perhaps an obvious point but it is an area surprisingly neglected in practice. Employers must take the trouble of ascertaining exactly what their
damages are. If a temporary employee had to be obtained, all of the details for that temporary employee should be set out. For example, the placement
agency used, the invoices from the placement agency to the employer, the employer’s proof of payment to the agency, and so on.
None of that was done in this case. Accordingly the claim for damages was dismissed. An unfortunate result bearing in mind that the employee was clearly in
breach of her employment contract.
The employer then faced a further difficulty regarding its second claim for training costs. Here the employer believed it was entitled to payment of R45
900 for certain in-house training. Again the Judge had a problem with this. He pointed out that the initial 3 month period of employment was a probationary
period. There was no evidence from the employer of it having had to spend actual money on the employee’s training in this timeframe. No training companies
were paid by the employer, the employee had not been sent on any external training courses, the employer had not paid for any studies embarked upon by the
employee or otherwise.
As such, this claim was clearly a penalty as envisaged in the Conventional Penalties Act. The Court dealt with this in some detail and concluded that a
penalty of this nature was iniquitous and glaringly excessive in light of the fact that the employer really had not spent any money on training.
The claim for these training costs was dismissed.
The lesson to be learned here is that employers are perfectly entitled to claim back training costs from employees. However these have to actually be
“training costs”. In other words, an employer must be able to prove exactly how much it has spent in rands and cents on training an employee. Commonly
monies paid to training venues, to conference organisers for the attendance of conferences, payments to tertiary education institutions, payments for
flights overseas for training and the like would need to be set out in detail to make a claim for training costs effective.
For any employers who retain clauses in employment contracts stipulating that they are entitled to claim back “training costs” from employees when they
leave in circumstances where such costs have actually not been incurred will now be difficult to enforce. The appropriate amendments should be made in
accordance with this decision.