1/23/24, 11:32 AM Employment Law on Training Bond - Chia, Lee & Associates

Chia, Lee & Associates

A D V O C AT E S & S O L I C T O R S

Employment Law on Training

Bond

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1/23/24, 11:32 AM Employment Law on Training Bond - Chia, Lee & Associates

Overview
I
t is quite common that in some industries that the employer will provide for their employee with “work-related training” so that the latter would be
qualified to perform the duties or functions that they are hired for.
In consideration of the contribution to their training costs, the employees are required to give an undertaking that, if they leave the employment
within, for example, 3 years, they would repay their training costs or a portion thereof.
This is often referred to as an “employment bond” or “training bond”, and is commonly seen in airlines industries which provide such work related
trainings to their pilots.

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1/23/24, 11:32 AM Employment Law on Training Bond - Chia, Lee & Associates

Such agreement may be contained in the employment agreement, therefore, employees must be aware of its legal implications before signing it.
At times, it could also be a stand-alone agreement in respect of education and training costs and expenses incurred by the employer in favour of an
employee.

The Law

1.Terms & Conditions

Like any other contracts or employments, training bonds must exist on clear and unambiguous terms.
The employer needs to exercise caution when drafting such an agreement. Such terms that the employee is liable to repay all or a proportion of
the training costs if the employment terminated must be expressly stated.
Other considerations include
whether there will be a grant for leave of absence when the employee is attending the training course,
be it paid or unpaid, and
what are the trigger events that would give rise to the obligation to repay certain expenses incurred on the employee’s behalf by the
employer.

If intended, it is also essential that the terms of the repayment provision state that repayment can be by way of deduction from the employee’s
salary or wages.

2.Compensation
If properly drafted, such agreement gives the employer an enforceable monetary compensation or claim for liquidated ascertained damages, if
it pays for training and the employee then leaves the employment before the employer has had any (or any adequate) advantage from the
training.

3.Judicial Consideration
It has always been the judicial consideration that whenever the employer is taking steps to enforce the repayment clause in the employments
bond or training bond, it must not claim for excessively high and unconscionable penalty in order to deter or punish the employees for
prematurely leaving the employment.
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1/23/24, 11:32 AM Employment Law on Training Bond - Chia, Lee & Associates

Our view is that such exorbitant claims can never apply where the contract does not impose an obligation to perform the act, but simply provides that,
if one party does not perform an act, he will pay the other party a specified sum.

Conclusion:-
In summary, a signed Training Bond by the employer and the employee connotes a free consent of parties competent to contract, for a lawful
consideration and with a lawful object, and is signed voluntarily without fraud, misrepresentation, coercion, duress or undue influence, thus
enforceable in court of law.

About the Author:

This article was written by Chia Swee Yik Partner of this Firm, who endeavors to provide practical advice on employment law (https://chialee.com.my/our-
practices/) .
Feel free to contact (https://chialee.com.my/contact-us-law-firm/) us using the form below if you have any queries.

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