The Netherlands: Should Employers Seek Reimbursement For Study Costs?

In principle, employees who undergo compulsory training within the meaning of Article 7:611a of the Dutch Civil Code do not have to repay any fees for such training; their employer bears all the costs of course fees, books, exams and the like. Yet many employers include a study costs clause in employment contracts, which states that the training is not compulsory and that employees will have to repay the costs on leaving employment. If it turns out that the training was in fact compulsory, the clause is null and void and the employer may not recover the costs from the employee.

However, even if the training was not compulsory and the study costs clause is valid, the employer's recovery claims are not necessarily successful in all instances, as is apparent from a recent judgment of the Overijssel District Court.

The issue

An administrative assistant agreed with her employer that she would take a Modern Business Administration course. They entered into a study costs agreement stating that the costs amounted to €5,758.30, that the employee would have to repay the full training costs on leaving employment, and that this was not "compulsory training" within the meaning of Article 7:611a of the Dutch Civil Code.

The employer decided not to extend the employment contract and wanted to set off the study costs (which had risen to €8,400) against the final settlement. The employee did not agree with this, arguing that the training had been compulsory or necessary for her.

After the employment relationship ended, the employer claimed the remaining amount (which had not been offset in the final settlement) of the study costs from the employee, who in turn argued that the setoff was unjustified and claimed that this amount should be paid to her.

Court: The study costs clause was legally valid

The court ruled that it had not been established that the employee had undergone compulsory training within the meaning of the law. She had completed senior secondary vocational education appropriate for her job and the new course was not necessary for her to be able to do her job, nor was the training part of an improvement program. The fact that the employer had suggested she undergo training did not mean that it was compulsory for her to do so. As a result, the parties were at liberty to agree to a study costs clause.

Who covers the study costs?

The court then assessed the study costs clause based on reasonableness and fairness and good employment practices, partly in the light of a Dutch Supreme Court judgment that had set conditions for study costs repayment schemes. Although the study costs agreement complied with those conditions on paper, the employer still could not rely on that judgment in this situation.

The following circumstances weighed heavily in this regard:

• The employer was the one that decided not to extend the employment contract, thereby influencing the creation of the repayment obligation;
• The employer had suggested the training;
• The employer had not clearly pointed out the financial risks to the employee, even though they were substantial: a possible study debt of €8,400 versus an initial salary of €840 gross per month. Merely referring to the text of the study costs agreement was insufficient in this regard;
• The study costs agreement referred to an amount of €5,758, but the employer ultimately claimed a higher amount;
• The employer had failed to show that the employee had not demonstrated sufficient commitment and that this was the reason for not completing the training within the training period;
• The employer had not given the employee an interim warning of the repayment risk when it became clear that she would not pass her exams.

In a nutshell, the court rejected the employer's claims, requiring the employer to pay the salary from which it had withheld the study costs.

Conclusion and takeaways

It follows from this judgment that, despite a valid study costs clause, employers may still be ordered to bear the full study costs in certain circumstances. This means that a valid clause on its own is insufficient. The circumstances of the case may mean that repayment by the employee is not actually reasonable.

Employers should therefore proceed carefully when offering training and inform employees unambiguously and in the interim of the financial risks, especially where there is a fixed-term employment contract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.