It is well known by employers that promoting employee professional training is profitable to their business, by increasing competencies of course, but also to motivate employees. It represents an investment in the future of the business.

The purpose of reimbursement of training costs is precisely to provide an employer compensation for the loss of the beneficial impact of training for which it would have paid when an employee who received the training leaves the company prior to the employer being able to profit from that investment.

More concretely, the reimbursement of training costs corresponds to the provisions of an employment contract, or any other supplemental agreement, which provides that an employee commits to reimbursing a portion of the training costs if he/she ceases to keep his/her competencies in the service of the employer who paid for his/her training, particularly by resigning, for a given period after the training.

Such a clause is optional in an employment contract, but if the contract does not contain one, it is always possible to agree on one at a later date by amendment, to be signed in two (2) originals prior to the training in question.

In any case, if the employer wishes to take recourse in a training cost reimbursement clause, the drafting of such a clause should comply with the existing legislation in the matter.

Thus, reimbursement can only take place when an employee resigns, with the exception of resignation for the employer’s serious misconduct and when the employer dismisses the employee for serious misconduct (Article L. 542-15, Labor Code).

In contrast, the dismissal of an employee with prior notice cannot result in a reimbursement obligation, something which has recently been upheld by the Court of Appeal (see Court of Appeal 28 May 2020, Docket No. CAL-2019-00232).

In the context of termination by mutual agreement, the parties may agree on reimbursement, as applicable.

While the legal provisions specifically concern professional training such as that defined in Articles L. 542-1 et seq. of the Labor Code, case law recognizes the broader the option of having any sort of training be subject to reimbursement.

However, this is limited by Article L. 312-8 (7), para. 1 of the Labor Code which specifies that training related to workplace health and safety resulting from legal obligations may not be subject to a professional training reimbursement clause.

Moreover, citing the French Court of Cassation, the Court of Appeal outlined that a professional training reimbursement clause is lawful in particular “if the amount of the reimbursement is proportional to the training expenses incurred and if it does not have the effect of depriving the employee of the ability to resign.” (see Court of Appeal 28 February 2013, Docket No. 37092).

Another element to take into consideration is the quantitative framework defined in Article L. 542-16 of the Labor Code, which provides for reimbursement limited to the expenses incurred during the financial year in progress and the three preceding financial years, at a degressive rate and wiith abatements.

Thus, reimbursement may not exceed one hundred percent for the current and preceding financial years; sixty percent for the financial year two years prior and thirty percent for the financial year three years prior. For each financial year, the amount to be reimbursed is reduced by an abatement of EUR 1. 240. Certain execution modalities for this article are set by the Grand-Ducal Regulation of 22 January 2009 on, among other things, the execution of Article L. 542-16 of the Labor Code, as amended, which would apply should the parties not expressly agree to the governing modalities.

Furthermore, as indicated in Article L. 542-15 of the Labor Code, an employer should take care to comply with any potential obligations under an applicable collective labor agreement, given that the agreement for the building sector touches in several instances on the issue of reimbursement for training by an employee (see Appendix II, Art. I, Art. III d) et g) of the building sector collective labor agreement).

In summary, a professional training reimbursement clause is not to be freely drafted but rather must comply with the legal and regulatory framework, and an employer would have an interest in clearly and unambiguously evaluating and setting the financial conditions for training prior to proposing it to employees.

By Mario DI STEFANO, Managing Partner – Avocat à la Cour.