Payback clause

Definition and description

Payback clause is a legal instrument that allows employers to bind employees for a certain period of time in compensation for the employer’s investment in employees’ training. In fact, employees are free to move to another company but if they terminate the employment relationship within the agreed retention period they can be requested to reimburse (a share of) the cost of training.

Payback clauses should increase employers’ investment in training as their risk of paying for employee training, yet not profiting from it, is decreased. In turn, employees are expected to profit from employers’ increased readiness to pay for training, in particular when learning outcomes also have market value beyond the current employer.

Within the freedom of economic parties to conclude contracts, payback clauses are principally possible as part of or in addition to any employment contract as long as principles of fairness and appropriateness as stated in civil law are not violated. However, given the imbalance of power between employer and employees, the possible range for payback clauses is typically limited by formal regulations of various kinds, including labour codes, rulings by relevant courts (in particular, labour courts) or binding collective agreements at sectoral or regional level (NB: most of the labour codes allow amendments of regulations at sectoral level through collective agreements or at company level, provided the conditions are more favourable for employees than those established in national statutes).

Limitations put in relation to the use of the payback clauses may concern the following issues (Cedefop 2012):

  • Minimum amount: payback clauses might only be valid, when training costs exceed a certain minimum amount. Alternatively, another threshold might be used (e.g. the duration of training).
  • Depreciation over time: typically, the amount to be paid back decreases over the agreed (retention) period. The depreciation is equal to similar approaches for investment goods, assuming that skills acquired lose value over time. Moreover, employers are expected to profit from their investment over time.
  • Maximum contractual retention period: payback clauses are not valid for any period longer than a set number of years. In addition, it is often specified that the period must not be inappropriately long regarding the duration/costs of the training.
  • Valid reasons for asking for a refund: payback clauses are to be applied only when employees leave voluntarily or are dismissed for misbehaviour. However, there are cases where the non-completion of training is also a possible reason.
  • Eligibility: payback clauses are usually applicable to all employees, although employees on fixed-term contracts are often not covered by payback clauses. Usually labour codes allow the use of payback clauses for general (transferable) training. For firm-specific training that is directly related to current or future work tasks within the company, the employer usually bears 100% of the cost of training and no reimbursement is enforceable if the employee leaves the company (shortly) after training (a mixed form, where reimbursement of training costs can be requested for both general and firm-specific training, exists in the Netherlands).

Key features and statistics

Payback clauses - key features
ID Country Name of the instrument - Local language Name of the instrument - English translation Sub-type of instrument Level of operation Valid period in months (lower bound) Valid period in months (higher bound) Depreciation Non-completion as a reason Thresholds which make employees not liable for payback clause (e.g. the length of training)
12 AT Ausbildungskostenrückersatz Training costs refund Within set limits National 60 96 Yes Yes No
33 BG възстановяване на разходи за обучение Payback clause No explicit limitations National 36 72 No Yes No
57 DE Rückzahlungsverpflichtung Payback commitment Within set limits National 6 60 Yes Yes No
72 EE Koolituskulude hüvitamise kokkulepe Agreement on compensation for training expenses Within set limits National 36 36 No No Yes
91 FR Clause de dédit-formation Payback clause Within set limits National Depends on the agreement Depends on the agreement No No Yes
108 HU Visszafizetési kötelem Payback clause Within set limits National Not available Not available Yes Yes No
138 LT Mokymo išlaidų atlyginimas Payback clause Within set limits National Not available 24 No Yes Yes
146 LU Remboursement par le salarié des frais de formation Payback clause Within set limits National Depends on the agreement Depends on the agreement No   Yes
168 NL Scholingsbeding Payback clause Within set limits National Depends on the agreement Depends on the agreement Yes No No
177 PL Klauzula lojalnościowa Payback clause Within set limits National Not available Not available Yes Yes Yes
189 RO Recuperarea cheltuielilor de formare Payback clause No explicit limitations National Minimum 60 days of education and training Depends on the agreement No Yes No
201 SI DDV klavzule Payback clause Within set limits National Depends on the agreement. Depends on the agreement. Other No No
206 SK kvalifikačné dohody - úhrada nákladov Qualification agreement - payback clause Within set limits National Not available 60 No No Yes
236 BE Scholingsbeding (NL) / Clause d'écolage (FR) Payback clause Within set limits National 36 36 Yes No Yes
239 IE Payback clause Payback clause No explicit limitations National Defined in the contract between employer and employee. Defined in the contract between employer and employee. No Yes No
244 UK Payback clause Payback clause No explicit limitations National Not available Not available No No No
246 PT Pacto de permanźncia Payback clause Within set limits National Not available 36 No No Yes
247 LV apmācību izdevumu atlīdzināšana darba attiecībās Payback clause No explicit limitations National 24 24 No No No
248 CZ Kvalifikační dohoda - uhrazení nákladů Payback clause Within set limits National Not available Not available Yes Yes No
263 ES Pacto de permanencia Permanence pact No explicit limitations National Not available 24 Other No No
264 HR Klauzula o povratu Payback Clause No explicit limitations National Not available Not available Other Yes No
347 CY Payback clause Payback clause No explicit limitations National Not available Not available Other No Yes
357 IT Clausola di rimborso Payback clause No explicit limitations National Not available Not available Other No No
358 DK Payback clause Payback clause No explicit limitations National Not applicable (use of payback clauses are not limited by law) Not applicable (use of payback clauses are not limited by law) No No No
359 EL Payback clause Payback clause No explicit limitations National Not applicable (use of payback clauses are not limited by law) Not applicable (use of payback clauses are not limited by law) No No No
360 MT Payback clause Payback clause No explicit limitations National Not applicable (use of payback clauses are not limited by law) Not applicable (use of payback clauses are not limited by law) No No No
361 FI Payback clause Payback clause No explicit limitations National Not available Not available No No No
362 SE Payback clause Payback clause No explicit limitations National Not applicable (use of payback clauses are not limited by law) Not applicable (use of payback clauses are not limited by law) No No No