The Higher Labour Court (Landesarbeitsgericht, LAG) Rheinland-Pfalz decided on 3 March 2015 (docket no. 8 Sa 561/14) that a repayment clause for costs of continuing training in an employment contract is void if it only provides for an annual reduction of the repayment obligation.

In this case, the employee was obliged to participate in a continuing training programme for the duration of ten months to become a testing engineer. The total costs for the training amounted to approximately EUR 35,500.00 and were borne by the employer. The employee received remuneration of EUR 1,800.00 per month during the continuing training. Monthly remuneration of EUR 3,200.00 for the six months following the training was agreed. It was agreed that the remuneration would be increased to EUR 3,500.00 after six months and to EUR 3,700.00 after 18 months. The repayment clause stated that the employee had to repay the costs for the training if he left the operation within three years after commencing work as a testing engineer. The employee terminated the contract shortly after the training. The employer demanded repayment of the costs for the training.

The LAG held that the employee does not have to repay any of the costs of the training. The repayment clause was a pre-formulated provision used for a wide range of individual employment contracts. Such pre-formulated provisions are void if they provide for an inappropriate disadvantage for the contractual partner. According to the LAG this was the case here as the costs for the continuing training exceeded the gross monthly income many times over and the clause provided only for an annual reduction of the repayment obligation during a commitment period of three years. The employer does not have an equitable interest in being repaid the same amount at the beginning and at the end of a year. While there was a Federal Labour Court (Bundesarbeitsgericht, BAG) decision dated 23 April 1986 (docket no. 5 AZR 159/85) in which the BAG accepted a repayment clause with only an annual, not monthly, reduction of the repayment obligation with reference to freedom of contract, such a clause is void if it is contained in a standard provision.

We therefore recommend that the contract provides that the amount which needs to be repaid by the employee is reduced on a monthly basis. Furthermore, it is necessary to specify the circumstances under which a resigning employee will incur the obligation to reimburse the employer for the cost of the continuing training. For example, the employee may avoid the payment obligation if he/she is not ultimately responsible for the termination.