Further development of case law by the German Federal Labor Court on the obligation to repay training costs

Companies are often willing to support their employees in longer-term and cost-intensive qualification and further training measures, as there is usually also a company interest in such further training. It is not uncommon for financial support for qualification and further training measures to be linked to certain conditions. In particular, companies have an interest in ensuring that the employment relationship continues for a certain period during and after the training and the employee does not immediately resign. In the event of a premature resignation, the training costs would then have to be repaid in full or on a pro rata basis.

Training contracts are usually used to contractually secure the terms of the measure and, if applicable, the repayment of accrued costs. A recent ruling by the Federal Labor Court (BAG, judgment dated April 25, 2023, 9 AZR 187/22) shows that numerous sources of potential errors lurk here.

What Had Happened?

In the present case, which was the subject of the appeal proceedings, a training contract was concluded between a firm of tax consultants and auditors and an accountant working there to support preparation for the tax consultant examination. The firm provided subsidies for the preparation and examination costs totaling more than EUR 4,000. In the following three years, the employee did not complete the tax consultant examination and ultimately resigned. The firm then demanded repayment of the contributions they had made towards the training.

The training contract concluded between the parties contained a corresponding repayment clause, according to which the subsidies paid are to be repaid if the employee does not take the examination or repeats it, or if she leaves the partnership within 24 months of taking the examination. The law firm was successful in its claim for repayment before the Labor Court and the Regional Labor Court. The 9th Senate of the Federal Labor Court, however, is of a completely different opinion and denied the claim for repayment.

As General Terms and Conditions, Individual Contractual Agreements on Training Costs Are Regularly Subject to a Review of Content

As has already been frequently decided, agreements on training costs are typically general terms and conditions. Such clauses are therefore subject to a review of content and appropriateness pursuant to §§ 307 et seq. BGB (German Civil Code).

Repayment Clause Constitutes Unreasonable Disadvantage

In the specific case, however, the agreed repayment clause did not withstand the review of content. In the opinion of the Senate, it unreasonably disadvantaged the employee and restricted her fundamental right to choose her occupation in accordance with Art. 12 I 1 of the German Basic Law. In line with the long-established and increasingly refined case law of the Federal Labor Court on repayment clauses in the event of employees terminating their employment themselves, clauses that link a repayment obligation to the (repeated) failure to pass an examination must also differentiate according to whether the reasons for the failure to pass the examination lie within the employee’s area of responsibility or outside this area of responsibility. If the employee is not responsible for the reasons for not taking the examination, no repayment obligation can arise in the opinion of the Federal Labor Court. The clause to be assessed here did not differentiate according to the reasons for not taking the examination and, against this background, was not differentiated enough in terms of content.

Categorization Also Required For The Hardship Clause

The corresponding hardship clause in the training contract did not lead to a different assessment. This specified that in the event of failure of the examination due to an objective circumstance for which the employee was not responsible (e.g. permanent illness or care of a relative), a new attempt at the examination had to be made after the reason for the impediment had ceased to exist, without, however, linking the repayment to certain conditions.

The Senate stated in this regard that the hardship clause takes into account a number of case constellations that are relevant in practice, but does not include all circumstances for which the existence of a repayment obligation would be unreasonable. In the opinion of the Senate, the hardship clause thus fell short and could not “save” the repayment clause provided for in the training agreement from the point of view of the company.

Practical Advice

From the company’s point of view, it is advisable to always keep an eye on the case law of the Federal Labor Court on training agreements. In order to establish effective repayment obligations, it is particularly important to differentiate sufficiently between the respective spheres of responsibility and risk. Errors in this area quickly lead to the complete invalidity of repayment clauses.

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