Repayment clauses: Caution when used in continuing education and training agreements

Contractual agreements according to which an employee is required to participate in the costs of an advanced training financed by the employer in case the employee resigns from his employment contract within a certain period are generally admissible. However, it is not admissible to link the repayment obligation to the employee's termination within the agreed commitment period due to the employee's voluntary resignation. Rather, a distinction must be made according to the reasons for the premature termination.

Facts

In 2019, the defendant employee successfully completed a continuing education course to become a “Specialist Wound Therapist ICW” at the expense of her employer, a rehabilitation clinic. The continuing education contract agreed for this purpose provided, among other things, for a commitment period of six months after the end of the advanced training course as well as a repayment clause.

The employer demanded a pro rata refund from the employee of the “Specialist Wound Therapist ICW” advanced training course’s costs when the employee gave notice of termination for health reasons shortly before the end of the advanced training course and thus before the end of the agreed commitment period. The employee was of the opinion that the continuing education contract’s corresponding clause was invalid. The clause contained an unreasonable disadvantage because it obliged the employee for repayment even if she was permanently no longer able to fulfill her contractual duties through no fault of her own and therefore terminated the employment relationship on personal grounds. This circumstance was not provided for in the underlying provision.

After the lower courts had already dismissed the employer’s case, the Federal Labor Court now also upheld the employee's claim. The repayment clause “leads to an unreasonable disadvantage within the meaning of Art. 307 (1) sentence 1 BGB (German Civil Code) and is therefore invalid”.

The reasoning of the court

One of the reasons given was that it was not permissible to link the repayment obligation to the employee's termination due to the employee's voluntary resignation within the agreed commitment period. Rather, a distinction had to be made according to the reason for an early termination.

If the employee, through no fault of his own (e.g., illness), is permanently no longer able to perform the work owed under the contract, the exchange of services provided for in the employment contract is no longer possible. Thus, irrespective of the employee’s termination, the employer cannot use the employee’s qualifications until the end of the commitment period. There is generally no reasonable interest in the continuation of an employment relationship which can no longer be fulfilled and is thus “meaningless”. The fact that the investment in an employee’s continuing education will not amortize due to the employee’s permanent inability to perform through no fault of his own is to be attributed to the entrepreneurial risk.

In particular, however, one could not demand from the employee to continue to commit himself to the employment relationship in order to avert a repayment obligation. After the end of the continued remuneration period, the employee would be obligated to remain in the employment relationship without any consideration on the part of the employer. This could also cause financial difficulties for the employee.

Furthermore, it must be taken into account that the restriction of the employee's freedom to choose a job, which is guaranteed by Article 12 GG (German Basic Law), is not compensated for by the training advantage in the event of the employee’s inability to perform.

Finally, it is stated that no unreasonable requirements are placed on employers as users of repayment clauses, since it was no problem to exempt these cases from the repayment obligation.

Practical advice

Continuing education is becoming increasingly important. Therefore, employers are actively supporting their employees also in continuing education outside the company. At the same time, employers want to retain employees for as long as possible. In practice, however, particular caution is required when drafting and concluding continuing education and training agreements with repayment clauses. The (model) agreements used often do not meet the requirements of case law. In case of doubt, employers have to bear the costs, even if the employee leaves the company prematurely.

In addition to the commitment period, which must not be too long in relation to the continuing education’s duration, one must in particular distinguish between the reasons triggering the repayment obligation (caused by the employer or by the employee).

These requirements have been further tightened by the present decision. We therefore recommend that existing training agreements be checked to ensure they are up to date.