Sunday, April 20, 2008

Training Bond Considerations

To make them sign or not, that is the question... and how.

Training is an important business investment and like all investments companies expect considerable returns. These returns are sometimes measured in terms of successful implementation of the new skills that actually reflect on business results in terms of quality and productivity. Many companies measure returns in terms of the amount of time that the employee is able to utilize the new skill at work, hence companies require employees to enter into an agreement for the employees to return the investment through service tenure.


There are mixed feelings about this issue of having employees sign training bonds or training agreements. There are employees who understand that the companies deserve to recover their training investments and willingly sign and honor the agreements and there are those who feel that they are being forced to stay in the company even if better opportunities come along and are deprived of these opportunities. I even saw a number of web based fora questioning the legality of training agreements. I'm not a lawyer so I won't dabble into the legality issues of training bonds, I'll just cover what I consider as the moral aspects of it and the administrative responsibilities of HRD to ensure fairness of implementation. If you have a legal opinion on this topic, please share with me and my readers by commenting below.

Before I continue, I want to make myself clear that I support the REASONABLE implementation of training bonds or training agreements simply because I agree that companies must secure the recovery of their training investments. When they send people to training and the employees acquire important skills, they naturally increase their market value. They become attractive to other companies who did not invest a single bit on their skills development but are willing to pay a higher price for their services. Without the training bond the companies who invested in their training may easily lose their money to other companies competing for the employees' new found skills and that I believe is not fair. I also believe that this should be communicated thoroughly with employees to help them understand the rationale behind training bonds because I suspect that many employees do not appreciate training bonds and see them as evil contracts forced into them by an equally evil management.

What is a reasonable implementation of training bonds policy to me?

It starts with designing a reasonable policy and supporting it with thorough communication that include employee orientation, inclusion of the policy in the employees' career path and discussing it thoroughly with concerned employees BEFORE they are sent to training. What is unfair? padding and declaring unrealistic penalties for breaching the agreement, Sending people to training and then making them sign the agreement afterward without thoroughly communicating the need for signing a training bond prior to the training.

To prorate or not to prorate, that is another question.

Some companies allow prorating of the penalties. This means that if the employee resigns from the company halfway into the agreement, they get to pay half of the training cost. I personally believe that this is fair and kind. Other companies make the employees pay the whole amount and they have their reason (at least some of them). They argue that when they lose a trained employee prematurely, they are most likely to pay the full amount for the training of the replacement employee, hence a prorated penalty will not return their investment. I'd like to hear your thoughts about this.

Should you bind employees for every training you provide?

My answer to that is you shouldn't but that's just me. In one of the companies I managed we had our employees sign training bond for expensive training and training that takes reasonable time to fully implement. Many companies see training cost as an important consideration for binding employees. PHP5,000.00 and below, no bond, 6,000 to 9,000 = 3 months, 10,000 to 14,000 = 6 months, and so on and so forth. These amounts are not cast in stone. You decide.

What should be covered by the training bond?

If you are sending them abroad for training, you should include a guarantee that they will complete the training and return to work immediately after the training. You should include a nondisclosure clause. You should describe the cost, make sure that this is thoroughly communicated. What happens if you terminate the employee for just cause, do you make them pay for their training or not? How do you want to be paid? You might also want to consider expectations in terms of skills application. Many companies use template document for training bonds, this is ok if you have uniform expectations of employees output after the training. If you are sending an employee to a Project Management Training, would you not want to make sure that the employee is able to implement the newly found project management skill at work by reviewing and improving your existing project management methodologies?

How do you get to keep your employees beyond the length of the training bond?

If your company sucks or if the employment market outside is so attractive, I can already imagine your employees lining up at the starting gate like race horses eagerly waiting for it to open so they can dash out of your company. You need to give them more reasons to stay than to go. They need to see your company as "THE company" for them. More training? why not? Compensation that match their market value? Not a bad idea. Better benefits, continually improving organizational culture, great working relationship, opportunities for career growth, there are so many to consider. Ask Maslow and Hershberg. It is difficult to leave a good company that takes care of your career and enables you to develop friendship and good working relationship. Think along that line when you strategize for employee retention. If you need help, you know how to contact me.

38 comments:

gege said...

One of the companies I worked for sent a lot of their employees for training here and abroad, but training bonds were never an issue; not even considered. I think that's because the company realized that the training and the competency acquired by the learner will also benefit the company directly. The employee will do his/her job well, will be more productive, and will be an asset to the company in the short and long terms. And from what I've seen, the lack of a training bond has never been an opportunity for abuse by the employees.

Of course, there were other factors at play that ensured that the employees stay long in the company -- good pay, career advancement, great working environment, etc.

I believe that when the employee starts wanting to seriously leave the company, it's a good time to let that employee go. A training bond can guarantee that employee staying till the expiration of the contract, but not his productivity, loyalty, enthusiasm, and his contribution to the company's progress. When forced to stay, the employee might just turn to deadweight, a liability instead of an asset, occupying prime office realty and using up company resources. The company might end up investing more money on unproductive personnel.

Ed Ebreo said...

You are right Gege, the training bond only guarantees the employee's stay and not the performance. If you want your employees to be fully engaged beyond the terms of the contract you need to do more than bind them as I said in the last paragraph of my post.

Your comment also highlighted an important point that I think needs to be considered before having the employee undergo an expensive training and that is the employee's career plan. In one company that I serve, career paths and requirements are thoroughly communicated from both ends so that employees know what to expect and what is expected of them when they attend the company's expensive training programs. Employees who want to go all the way in attending the training programs sign and serve their contracts while those who have other plans leave. No hurt feelings.

While it would be great to have employees attend expensive training and see them stay because they love the company, there are other considerations that will make the employee leave the company despite the employee's love for the company which will leave the company in the losing end. For example. An employee who gets an expensive training and certification on a particular IT related application can easily increase his market value by double, sometimes even more. The temptations are out there. That's why some companies see the need to protect their investment by having employees sign training bonds.

Nirav said...

What do you think if company accepts the resignation and also ask for the full repayment of the bond even though if you have almost serve the period.

Ed Ebreo said...

It's all about the contract Nirav and what it says.

Anonymous said...

what if the company ask you to pay your trainings even you do not signed any contracts... tnx for the replies.... i really need your help.. iam from philippines.

Ed Ebreo said...

@anonymous, if you are sure you did not sign any contract or have never given authorization to your employer to deduct from your salary any amount as payment for the training you undertook, then you have the option not to pay for the training.

Nathaniel @ project manager training said...

I agree that training is really important. For it is training where you can apply all what you have learned.


Thanks for this great information. Keep it up!

Anonymous said...

Hi Sir!

Ask ko lng po I signed a bond in a company then nag awol po ako. Pag naf file po ba cla ng case may habol po ba do i need to pay for the training bond?

Actually pina sign nila ako ulet pero di nila nakuha ang copy. so i am not sure if nakita nila old copy. What if po i dont pay for the bond? anu po consequences? Thank you po

Ed Ebreo said...

I'm not a lawyer but what I know with any litigation, the one with the best argument and evidence wins it. If they decide to sue you their success will depend how well they are able to convince the court of your accountability.

Outside the court, a training bond is not just a legal obligation but an agreement between professionals. Not honoring your commitment is unprofessional. You shouldn't have taken it and signed it if you didn't want it.

Anonymous said...

mr.inquisitive: when will the bond start? is it when the training starts or the very time I signed the contract? Note: it is not stated on the contract. Thanks in advance.

Ed Ebreo said...

It should be in the contract.

Anonymous said...

what if i'am not satisfied with the training they provided? should i stay or just run out of the company without notice? what will happen sir?

Anonymous said...

This is resourceful content. Thanks!
I am working at sun cellular company, signed and agreed the bond but i am no longer happy working there but i have no choice but to continue staying til ill reach the end time of my bond... I hope that the new management (Manny Pangilinan) will void/remove the bond... I hope Mr. Pangilinan will hear this.

Rhojzs said...

Sir Ed,

Do you have a table format for Training Bond Period?

Thanks in advance.

Ross Calapano

Anonymous said...

Sir Ed,

I am currently under a 2-year training bond.But I am now resigning from my current employer. I am willing to pay the bond however, before I do so, I want to have a copy of the training receipt first. (The receipt was not shown to us prior the training). What happens next if they won't be able to show the training receipt. Can this be a ground for contract termination?

Thanks.

Ed Ebreo said...

It depends on what is stipulated in the contract. I suggest that you consult a lawyer as I can"t give you a definite answer. Although, I doubt that it can be a ground for contract termination.

Anonymous said...

Same feelings with the one working here at sun cellular. I am a licensed engineer and currently hired at Digitel. Has two years bond and they showed us a career path progression. The question there is that there is no training after all. They just assigned us to departments and just learn by ourselves. My manager sucked big time he. He thinks he is so good. Good thing I have good colleagues to ask some info.
To make matters worse, starting salary for those who have no bonds have way higher salaries (almost 50 % greater). I'm just so frustrated the way things are going right now.

Anonymous said...

Hi Sir Ed,

I'm into this situation also and nagsign ako ng contract for 2 years. Actually sa case ko, wala kasi nangyari na actual training instead nagwork din ako sa location as support. Im not happy na with my work dahil affected na family ko dahil sa pageextend ko sa office just to finish reports. Normally 2-4 hours extension (without pay although stated on the J.O/benefits that there will be OT pay). What will happen if i will resign. Medyo worried for ako sa magiging consequences pero Im willing to take the risk for the sake of my family.Please advice

Ed Ebreo said...

I am not a lawyer so I don't think there's a legal basis to what I'm going to say here. This is merely an opinion. If none of the promised training took place and the employer is negligent of its commitment under contract, then it is good reason to cite that the contract should be nullified. Maybe you can site this in your resignation letter. Better yet, consult a lawyer.

Anonymous said...

Hello!
I just want HR Opinion regarding my training bond. I am a Senior Trainer in a big company and because of the demands of my job, I am being sent to outside trainings. I was placed under bond since the company said that "they want to get ROI from the training fee which they paid for me." What is your opinion of Trainers being placed on training bond? Does this constitute REASONABLE?

Anonymous said...

Hi,

I signed a 2-year bond with a company (whose name I will not mention). I became a target of a workplace bullying in this company which is why I want to get out of the company without completing the 3 years. I am under antidepressant medications due to the trauma and MDD. I really want to get out but I am concerned that I have to pay the bond. If I use this excuse to get out of the company, do I still have to pay for the bond? Thank you.

Anonymous said...

Hi Sir, I decided to DISCONTINUE training and yet the company I was working for demands that I should pay the whole training bond, in my defense, I haven't finished the training nor went halfway of it, what do you think I should do? because of negotiating by prorating the amount

Anonymous said...

*because I'm planning to negotiate by prorating the amount

Edwin Ebreo said...

Hi, Folks! Sorry for the late reply. I've been very busy these past few days. Let me answer some of these questions wholesale.

A Training Bond is a legal contract. If you want to get out of it without paying the penalty, you need either of the following: The permission of the other party i.e., your employer or find something in the contract or the manner by which you were made to sign questionable and use it as a pass to get out of the contract. For the second reason, I think you might need a lawyer to help you review the contract.

Anonymous said...

sir just want to ask if i am still entitled for the training bond ganito po kasi sir project employee po ako for 6 months nung na hired ako, natapos ko po yung contract then nag decide sila na i-renew contract ko but this time probationary na po, nakalagay po sa contract na may training bond na po ako even at that time nag se-serve nako sa company at hindi nako nag train since nagawa naman na po ito nung project employee pa ako.. i decided after 2 months nangpagkaka probationary ko po nag resign ako, sabi po titignan nila kung may makukuha parin ako kasi nga daw po may training bond ako.. possible po ba na ma-waive yung training bond ko para makuha ko parin yung buo kong sahod na nirender ko? thanks sir!

Edwin Ebreo said...

I'm not sure. What does your training bond document say?

mmj said...

i work with a cummins company and i was sent for a week training also i was made to sign a bond far higher than my 14years retirement benefit,i got another job in a sister company now they want me to pay back the bond obligation after one year has passed i have been working after the training.is it justifiable.

Edwin Ebreo said...

If you signed the training bond contract on your own free will and was not coerced or put under duress to sign it, then yes, it is justified. There really is only one way not to be bound by training agreements and that is to not sign any of them. Not accepting the training bond condition has its implications on your career in the company but at least you have freedom to leave anytime you want.

Anonymous said...

Hi, i just to state my case about training bond. The bond was given to me to be signed just days before I enter the company, they did not mention it during my interviews (there are 3).The thing is I already submitted my resignation letter to my recent company so I don't have a choice.The bond did not stated when it will start, I'm here for 2 months now and I want to go because I'm not happy with what I'm doing and it is not practical for me to stay here. Also, I still haven't attended any trainings that may cost me the 80,000 bond. What should I do?Can I file for a resignation?Thank you!

Edwin Ebreo said...
This comment has been removed by the author.
Edwin Ebreo said...

I suggest that you file your resignation and express your sentiment about the training. Review your contract as well for potential issues. If they insist on making you pay, sue them.

Anonymous said...

Hi Sir!

Good day!

I just want to inquire about my case. Here it is, I filed my resignation last august 1 and send it through email (forgot to sign it) and gave the company a 1 month notice, but my boss told me to think about it, until aug 5, on august 5, I told them that I am not going to retract my resignation. I send them the hard copy of the letter by august 7 through a messenger. But the messenger only gave them the letter by august 12. Then my boss told me that the format was wrong, I send the correct format yesterday because I was only given the correct format yesterday too. After that, they told me that the effectivity date of the letter would be upon their approval, to be fair with the company they said. Question is, can I still end my stay here by August 30(as stated in my letter) and not follow what they are saying which is September 14? I already have a job after this which I am going to start by September 2, they told me to resign by august 15, but I said that I need to comply with the 1 month notice with my present company, I think that they may not allow me to extend my stay here anymore, then I lose my job before I took it. Any help would do, Thank you so much and Godbless you!

Anonymous said...

Hello,
Can I ask in my situation I attended only One day and Half day of may training as a Customer Service Assistant then walk away but I leave them a letter stating that I am resigning,
But in may case they didn't informing me about this training bond or there is no paper that I sign and then they texted me about the training bonds and thinking of me to pay money about this..
Is that company can sue me to the court?what are the remedy of this??
thanks!

audii mars said...

Good day!
What you've written here is very informative, but I just have a few questions to ask you. I passed a resignation letter to the previous company I worked in because I felt disappointed with the company's management and the salary I've been getting is lesser than I've expected. It's a BPO company here in the Philippines. Before giving my resignation, I checked my contract. A training bond was stated there but it wasn't stated there how many months or years I would need to work just to be done with the bond. The only thing stated there was "WHILE CONTRACT IS IN FORCE" and "DURING THE CONTRACT PERIOD", so it's not clearly stated in the contract. It was also stated in the contract that if there's a need for us to resign, we should hand in our resignation 30 days before it would take effect. So then, we handed our resignation 30 days prior. After a few days, we got a letter of response from our HR saying that they're declining our resignation because the training bond is effective until the end of our contract. We were very disappointed after this. I handed them another resignation because my intention in going back to school won't be realized if I stay longer there, and once again they declined my resignation. They gave us no other choice but to go on AWOL, because we got a job offer from one of the biggest BPO here in Philippines. Now, the problem is, we added our previous company on our resume so the company that hired us asked us to get a Certificate of Employment. So I and my friend went back to the company to request for a COE and our Team Leader monitored it for us. Now, I received a text from my TL saying that the HR won't give us the COE since we went on AWOL. I still have the 2 resignation letters that I gave them, and I also kept the letter of response they gave me. The contract is also still with me. Now my question is, can they use the training bond against me when it's not clearly stated in our contract? There are a lot of lapses in our contract; can we use that against them? And for how long should a training bond be implemented? Is it legal for a training bond to last for a year? And are the company actually allowed to decline our resignation. They even did it twice to me. It's not only me who got declined, but also other employees even if the reason is valid or not. I hope you can help me with this. I and some of my friends are now thinking of consulting our department of labor. Thank you very much for your time.

Rion said...

Hi Mr. Edwin
Hope all is well
Just wanna hear your thoughts about my friend's issue with her Superiors.
The situation is that she declined the training (with 3 years bond) that her Superiors assigned to her - because she still serving the 3-year bond from the previous training she took 2 years ago.
After declining the training, her Superiors ordered her to submit her resignation letter immediately for not taking the upcoming training, considering the fact that if she pursues that resignation she will need to pay 200k Php as penalty for breach of contract / bond etc..
I asked her not to submit the resignation as I believe something is really wrong!
Do you think it is right that declining a training would be a valid reason for her Superior to ask her resignation?
Can this be categorized as "Force Resignation"?
She's really confused at the moment Your advise on this will be highly appreciated...

Edwin Ebreo said...

Ask your friend to tell the supervisor to put the request for her to resign on writing together with the reason. Have the supervisor sign it. Use it as evidence. To complain to DOLE for constructive dismissal.

Anonymous said...

Hi Mr. Edwin,

Good day!

I just want to ask if I can resign immediately to my company? I signed a contract where it is stated that there should be 2 months notice before leaving the company. The company is just starting and is a satellite company in Singapore, they are still processing the permit to operate here in the Philippines, just to give you a background. Thank you very much!

Anonymous said...

Hi Sir Edwin,

May I know what is the reasonable amount of bond per year? What is the company wide best practice for this?

Just to share, we have a policy which states that our budget allocation per year for trainings is P15,000.00, single or accumulated. We will be bonded to our company for two years once we used up this budget. As an auditor, we have to attend many trainings for our continuous learning. However our training cost is more than 15,000 per training and I think this is not reasonable for us. since we keep on attending seminar and in return we will be bond with the company for another two years.

Can I have your recommendations regarding this?

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