Can you charge an employee for on-the-job training?

Training a new employee is part of the induction process to help them get up to speed with their new role.  Training staff incurs a cost and the issue is whether there are any factors that shift the charge of this training onto the employee.

Many of you would have read the recent news article of an employee who was working on a holiday visa.  Her employer asked her to cover the cost of on-the-job waitress training, a total of $888.00.  After working for five weeks, she resigned and was told that instead of receiving her final holiday pay, the company was going to retain it to pay for her training.  The training cost was more than what she was owed, but as a result of ‘good work’ they would forgo the whole cost.  If she did not accept this request, the only option would be for the parties to attend mediation and split the costs of doing so.

The employer explained that this approach was within the norm because before he commits to hiring a new staff member, he stresses to them the importance of committing to a minimum of six-months.  In his workplace, the total on-the-job training cost can be on-charged to the employee if they leave their job for another similar position.  In these circumstances, his business will be ‘entitled’ to deduct the training fees.  He affirmed that he believes his practices are not only legal, but extremely reasonable and fair.

The position at law is a little different to the employer’s view.

The Wages Protection Act 1983 (Act) clearly sets out this would be a direct breach if the employer were to charge for this training.  On-the-job training is akin to an unlawful premium for employment.  It is illegal for an employee to pay the fee in a lump sum or a regular amount via a deduction to the employee’s wages.

What permits an employer to deduct from their employee’s pay?

  • They are required by law (for example – PAYE tax, student loan repayment, child support);
  • Agreed to by the employee (written consent given freely, without pressure);
  • Overpayments (in limited circumstances); and
  • A court directs that a deduction be made.

The primary purpose of the Act sets out the way wages must be paid, and prevents unlawful deductions from wages.

A general deduction clause in an employment agreement is not sufficient to make a specific deduction from an employee’s wages.  For example, company property that is not returned when an employment ends does not allow the employer to automatically deduct from the employee’s final pay.  An employer must always consult with an employee before making a deduction.

We note that there are occasions when an employer can ‘bond’ an employee if the employer has paid for a specific course or qualification.  We suggest employers seek advice before invoking such an arrangement.

Workplace Law Team

If you have any queries in respect of the above, or any other workplace law issues, please contact a member of Lane Neave’s Workplace Law Team:

Employment: Andrew Shaw, Fiona McMillan, Kathryn McKinney, Siobhan Rastrick, Hannah Martin, Holly Struckman, Anna Needham, Alex Beal, Giuliana Petronelli, Ana Fruean
Immigration:
Mark Williams, Rachael Mason, Nicky Robertson, Hetish Lochan, Daniel Kruger, Julia Strickett, Rita Worner, Lavinia Shanks, Winnie Chen, Ken Huang, Sally Stone, Mary Zhou, Sarah Kirkwwood, Isaac HuangLingbo Yu
ACC:
Andrew Shaw
Health and Safety:
Andrew ShawFiona McMillan

Contact

Andrew Shaw
Partner, Lane Neave

t +64 3 353 8014
m +64 29 244 9001
e andrew.shaw@laneneave.co.nz

Fiona McMillan
Partner, Lane Neave

t +64 9 300 6264
m +64 27 351 2000
e fiona.mcmillan@laneneave.co.nz

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