In a recent employment case, an Ontario court addressed the issue of whether employees can be charged a training fee for training they receive in the course of their employment.
Help Agency Provides Training to All Employees
This case involved a “temporary help agency” (the “agency”) that employs persons for the purpose of assigning them to perform work on a temporary basis for its clients. It describes itself as “a training institution and consulting services firm”. The agency’s employees were generally hired to perform work relating to information technology services. It offers each employee more than 450 hours of training.
As part of its contractual requirements, the agency requires each employee to sign a “placement employment agreement”. Each employee had to agree to work for the agency for a period of two years. In addition, the agreement contained a provision that stated, in part:
“4.4 To the greatest extent permitted at law, immediately upon termination of employment under the provisions as specified in this Agreement or otherwise, the Employee shall pay to the Company as liquidated damages and not as a penalty the amount of the full cost of the Training Fee, regardless of the amount of time completed within the Commitment period, to compensate the Company for the cost of training and the additional damages and lost revenue it will sustain due to the Employee’s failure to complete the Commitment period.”
In essence, if an employee left the agency before the two years were up, they had to re-pay the cost of their training.
The agency valued the training at “more than $30,000” (calculated at a rate of $75.00 per hour of training).
Former Employees Challenge Agency’s Training Fee
Four former employees filed claims alleging that the agency had asked them to pay training “fees” in violation of s. 74.8(1) the Employment Standards Act (the “ESA”).
Section 74.8(1) reads, in part:
74.8 (1) A temporary help agency is prohibited from doing any of the following:
1. Charging a fee to an assignment employee in connection with him or her becoming an assignment employee of the agency.
2. Charging a fee to an assignment employee in connection with the agency assigning or attempting to assign him or her to perform work on a temporary basis for clients or potential clients of the agency.
3. Charging a fee to an assignment employee of the agency in connection with assisting or instructing him or her on preparing resumes or preparing for job interviews. […]
The two Employment Standards Officers (“ESOs”) originally assigned to the employees’ cases refused to issue compliance orders.
The employees therefore made application for review of the ESOs’ refusals to the Labour Relations Board (the “Board”).
Parties Make Their Arguments
The employees submitted that the agency’s demand that they pay $30,000 for ending their employment before the expiry of their two-year commitment period violated s. 74.8(1) of the ESA.
In response, the agency claimed that it had not contravened s. 74.8(1) of the ESA because it did not charge a “fee”. It insisted that the monies it sought from the former employees were in respect of “damages” it had suffered as a result of the employees breaching their contracts of employment, and related to the costs of training incurred by the agency and other damages arising out of the breaches. It further asserted without those damages, the agency would not have the opportunity to recover its training costs when employees breached their commitment.
Board Rules That Agency Cannot Demand Training Fee
After reviewing the relevant legal principles and case law, the court ultimately found that the agency was in contravention of the ESA by charging training fees to employees who left their employment prior to the two-year commitment. It concluded:
“[The agency] is charging a fee to assignment employees in connection with them becoming assignment employees, and charging a fee to assignment employees in connection with them being assigned to perform work for clients of [the agency]. It does not matter that the fee is “not sought or payable” upon the occurrence of these events. The Agreements have the effect of charging the fee in connection with those events.
The Board therefore finds that the provisions of [the agency]’s Trainee Employment Agreement and Placement Employment Agreement that establish the fee and provide for its repayment violate paragraphs 1 and 2 of subsection 74.8(1) of the ESA. Those provisions are void pursuant to subsection 74.9 of the Act.”
In the result, the Board therefore ordered the agency to remove from its employment agreements the provisions establishing and compelling payment of the prohibited fee.
Many employees are not aware of their rights in the workplace and the protections that are available to them under the law. They are worried about the consequences of standing up for themselves or fighting for what they deserve. However, it is important to know that if you are experiencing an ongoing problem at work, if you have been bullied, discriminated against, or if you have been terminated, there is someone on your side.
At Bader Law, our Mississauga employment lawyers have considerable experience representing non-unionized employees in workplace disputes. We know that such disputes can be very stressful and can get emotional quickly. We seek to simplify the law so that you understand your options and make informed decisions. We leverage our extensive experience advising employers to provide insightful guidance to employees who are facing challenging circumstances at work. We work hard to protect you.
At Bader Law, our knowledgeable employment lawyers can counsel you on your rights, advise you on your options, and help you create a plan for moving forward. We represent employees in Mississauga and areas west of Toronto. Contact us online or at (289) 652-9092 to learn how we can help.