Federal Labor Court decision on the repayment of continuing education costs

02.05.2011

[] When courts, in compliance with section 307(1) of the German Civil Code, review the content of a clause that provides that an employee must repay continuing education expenses paid for by an employer, if the employee voluntarily leaves his employment before completing the continuing education, they will normally uphold such clause (Federal Labor Court decision of 19 January 2011, 3 AZR 621/08).

Facts

The defendant had been a bank employee working for a savings bank association since 2002. In 2006 he commenced a course offered by the Bavarian Savings Bank Association (Bayerischer Sparkassen-und Giroverband), leading to the qualification of savings bank business graduate. In order to do this he had arranged with his employer that it would bear the costs of the course and the costs of his taking the exam. In addition, they had agreed that the defendant would be released from work so that he could attend the course, but would continue to receive his salary.
The party's agreement also contained a clause stating that the defendant would be obliged to reimburse his employer for the course and exam fees as well as the salary received during his leave of absence from work, if he left the employer of his own free will before concluding the continuing education course. The agreement reached between the parties amounted to a standard provision and thus was to be treated in the same way as standard terms and conditions of business.

The defendant completed two of a total of three approximately five-week training blocks during an eight-month period. Before beginning the last remaining training block, the defendant gave notice and accordingly did not take part in the last training block. The employer then demanded repayment of the continuing education costs.

 

Decision

The Federal Labor Court, as the court of last resort, allowed the employer's claim. It held that it was necessary to review the content of the repayment clause pursuant to section 307(1) of the German Civil Code, but that the clause should be upheld because it did not unreasonably disadvantage the employee. The Court explained that its finding would be the same even if the further continuing education was not ongoing, but instead completed in separate blocks, spread over a period of time, so that the employee would be „committed" for a longer period. Furthermore, the Court found that there was no reason to assume a disadvantage within the meaning of section 307(1) of the German Civil Code, where the timetable for the individual training blocks follows the rules of the continuing education body. In this case, the employer has no room to influence when training blocks will be held in a way which suits its own interests and thus has no influence over how long an employee „commits" himself. The court intentionally left open the question of whether the reasonableness of the length of the breaks between the training blocks – insofar as they were known at the time when the repayment agreement was concluded – would themselves be subject to review under section 307 of the German Civil Code.

Comment

The Federal Labor Court's decision is in keeping with the previous case law on the topic of repayment of continuing education costs. The main criterion for a court's decision will normally be whether the agreed repayment duty represents an unreasonable disadvantage to the employee because it makes giving notice difficult.

Where the parties have agreed that the employee only has to repay the costs if he leaves voluntarily before finishing the continuing education, the only time this can be seen as an unreasonable disadvantage is when the breaks between individual training blocks are unusually long or the employer was able to influence their scheduling. Since the courts are prohibited from reading down a clause in order to give it validity, it is always important to make sure that the prerequisites for a repayment obligation are formulated precisely. Otherwise there is a risk that the clause as a whole will be invalid, and that the employer will be saddled with the continuing education costs of an employee who quits soon after he starts a course.

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