There is no doubt that it’s in an employer’s best interest to have a competent and motivated team. It thus makes sense that the employer plans to invest in the training of salaries employees. At the same time, the employer wants to ensure that the salaried employee who benefits from such training financed by the employer stays with the company long enough for the investment to be recouped. Keeping in mind that employment law does not allow for an obligation to continue working beyond the notice periods provided for in the Labor Code, an employer can protect its investment through a contractual clause known as a “training cost reimbursement clause,” under which the employee must reimburse all or part of those costs if he/she leaves the company before a certain period has elapsed.

The goal is simple: to protect the investment in training without turning the employment relationship into a “forced commitment”.

Even though a training cost reimbursement clause is often based on a provision in the contract (or an amendment), it falls under employment law designed to protect employees and uphold public policy: any clauses that conflict with provisions intended to protect employees or that impose additional obligations on them will be deemed null and void.

Case law also makes clear that the freedom to resign cannot be undermined by financial measures that are excessively dissuasive. Where clauses require the reimbursement of excessive amounts in the event of resignation, a court may find that such a mechanism constitutes an unreasonable restriction on this freedom and may declare it null and void if it violates the principles of the Labor Code.

To be enforceable, the clause must, in particular, be in writing and accepted by the employee in advance (before the training begins); relate to a specific training program; specify the costs incurred; and provide for a reasonable commitment period.

The training cost reimbursement clause does not apply in all situations. No reimbursement may be claimed, in particular, in the event of: (i) termination with notice; (ii) termination by mutual agreement; (iii) fault on the part of the employer; or (iv) training required by law or necessary for the position.

In practice, the clause mainly applies when an employee resigns.

In addition to purely contractual provisions, Luxembourg law provides for a legal reimbursement mechanism for continuing professional development, within a fairly well-defined framework: in particular, the training must be part of a training plan, and the employer must have submitted an application for co-financing. The training plan, for its part, follows an internal procedure (information and consultation, as appropriate).

In any case, reimbursement will be limited to 100% of the costs for the current year and the previous year; 60% for the second year prior to that, and 30% for the third year prior to that.

In summary, a “reasonable” training cost reimbursement clause in Luxembourg is generally one that aims to compensate for a reasonable and identifiable investment, under transparent terms and conditions that comply with the limits set by law.