Repayment obligation in advanced training agreements

Judgment of the Federal Labour Court of 1 March 2022 in Case No. 9 AZR 260/21

Highly trained employees are essential for any company. It is in an employer’s interest to support the professional development of their employees. At the same time, employers want to ensure that they will benefit from any training employees receive. Accordingly, advanced training agreements often contain repayment obligations. But it is not so easy to ensure that such clauses are effective, as a recent judgment of the Federal Labour Court (Bundesarbeitsgericht, BAG) again shows.

Facts of the case

An employee worked as a geriatric nurse at a clinic. She concluded a professional development agreement with her employer. Pursuant to the agreement, the company would pay the costs of the training. In return, the agreement contained a repayment clause, requiring the employee to repay the costs of the training if the employment relationship was terminated within a commitment period of six months and the employer was not responsible for the grounds for termination. The employee terminated the employment relationship within the commitment period and was then asked by the employer to repay the costs of the training. The Labour Court (Arbeitsgericht) and the Regional Labour Court (Landesarbeitsgericht) both rejected the employer’s demand for repayment.

The judgment

The BAG confirmed these decisions. In the view of the BAG, the repayment clause was ineffectively formulated in the preformulated standard contract because it unreasonably disadvantaged the employee. The repayment clause in the advance training agreement applies where the employee terminates the agreement for any reason for which the employer is not responsible. The case of an unforeseen, permanent inability of the employee to perform her duties, such as in the case of a serious illness, is not covered. If the employee terminates the employment relationship before the end of the commitment period because she is involuntarily and permanently unable to perform her duties, the employer cannot have any further interest in maintaining the “meaningless” employment relationship until the end of the commitment period as it cannot use the employee’s acquired qualifications anyway. The fact that the investment in professional development does not pay off for the employer due to the involuntary, permanent inability of the employee to perform their duties is a normal business risk. In addition, the employee’s occupational freedom under Art. 12 (1) first sentence of the Basic Law (Grundgesetz) is restricted as she must continue to work from the company until the end of the commitment period, possibly even after the expiry of the term of continued remuneration, to avoid the repayment obligation. The restriction placed on occupational freedom by the repayment clause is not compensated by an appropriate financial advantage.

Consequences for practice

The judgment confirms the jurisprudence of the BAG that the involuntary inability of an employee to perform their duties may not be covered by a repayment obligation. The wording should therefore explicitly exempt such cases from any repayment obligation.

Practical tip

Particular care needs to be taken when drafting any repayment clauses in advanced training agreements. The case law establishes various, in part very specific requirements for this. A repayment clause should still be included as it can cover cases in which the employment relationship is terminated due to a fault of the employee.

Regina Dietel