Payback clause

Name of the instrument - Local language: Clause de dédit-formation
Name of the instrument - English translation: Payback clause
Country: France
Type of instrument: Payback clause
Type of entry: Single instrument

Short description: Employers and employees can agree on a payback clause. The courts have defined several principles to be respected in the context of the implementation of the payback clause. For example, training expenditures incurred by the company should exceed legal obligations (imposed by law or collective agreement) to fund vocational training. The retention period should not be excessive. The duration may be variable, typically 2 to 5 years, and must be related to the duration of the training and expenditures incurred by the employer. The payback clause only applies in case of resignation of the employee; it cannot be implemented if the employment contract has been terminated at the employer's initiative (even in cases of dismissal for serious misconduct).
Short description of the related instruments: nap

Level of operation: National
Name of a part of the country: nap
Name of the region (for regional instruments): nap
Name of the sector (for sectoral instruments): nap
Relevance: Key scheme
Legal basis: No law determines the arrangements for implementing the payback clause, but courts had the opportunity on numerous occasions to rule on its conditions of validity. The Court of Cassation had the occasion to address the question of their validity in a judgement dated 17 July 1991, which determined that they were legal but within certain limits only.
Operation/Management: The courts have defined several principles to be respected in the context of the implementation of the payback clause:
- training expenditures incurred by the company should exceed it's obligations to fund vocational training (imposed by law or collective agreement). Training expenditures which the company seeks reimbursement of must not enter the framework of it's legal or contractual obligation to finance training, nor have been supported (or reimbursed) by an OPCA, nor have been covered by a public grant.
- a written agreement (or amendment to the employment contract) must be signed prior to the training. The clause must specify the dates, nature, duration and actual cost of the training funded by the company, and the specific terms of reimbursement by the employee. A gradual reduction of the reimbursement depending on the commitment period may be provided (e.g. EUR 6 000 if the employee resigns before 1 year, EUR 4 000 if he resigns before 2 years, EUR 2 000 if he resigns before 3 years).
- the commitment period should not be excessive. The duration may be variable (typically 2 to 5 years) and must be related to the duration of the training and expenditures incurred by the employer. The judges verify that the duration is not "manifestly excessive" or disproportionate to the costs incurred by the company. The clause must not deprive the employee of his right to resign.
- the payback clause only applies in case of resignation of the employee. It cannot be implemented if the employment contract has been terminated at the employer's initiative (even in cases of dismissal for serious misconduct)
- the amounts reimbursed by the employee under the payback clause must be allocated by the company to actions in it's training plan.
Eligible group(s): Employers, employees
Group(s) with preferential treatment: None
Education and training eligible: Any - but payback clauses are mainly used for costly and longer training.
Source of financing and collection mechanism: Employer, employee
Financing formula and allocation mechanisms: The amount to be reimbursed must correspond to actual costs incurred by the employer and should be clearly mentioned in the signed document by the employee and should not be "manifestly excessive".
Volumes of funding: na
Beneficiaries/take up: na
Monitoring/evaluation reports available: na
Most relevant webpage - in English: na
Most relevant webpage - local language: http://www.opcalia.com/telecharger/fiches/fiches-focus/la-clause-de-ded…
Sources: http://www.opcalia.com/telecharger/fiches/fiches-focus/la-clause-de-ded…