Facts and background of the decision
With the decision of the Federal Labour Court (BAG) of March 13, 2024 (Case No.: 10 AZR 121/24), a fundamental principle of employment law comes into focus which is of considerable importance for numerous companies and employees: the prerequisites and modalities surrounding repayment clauses for training costs. At its core, the proceedings revolved around the admissibility of a contractual provision by which an employee was to be obligated to proportionally reimburse the training costs financed by her employer if the employment relationship ended before the expiry of a specified binding period.
The case concerned the contesting of a repayment claim against an employee who, after completing a training measure and subsequently resigning within the agreed binding period, was called upon to pay. The particular aspect was how this binding was structured in the specific case and whether the contractual clause in question withstood judicial content control.
Core of the decision: Requirements for effective repayment clauses
Binding period and amount of repayment
The Labour Court and subsequently the Higher Labour Court had to consider whether the imposed repayment clause met the principles of good faith (§ 242 BGB) as well as the law on general terms and conditions (§ 307 BGB). It is decisive that repayment clauses for training costs are generally recognized as valid, provided they are drafted transparently and reasonably. The binding period, i.e. the time frame in which repayment can be claimed, must be proportionate to the costs assumed and the interests of both contracting parties.
In its judgment, the BAG clarified that a repayment clause is generally only valid if it imposes a repayment obligation on the employee in the event of early termination, and is sufficiently clear and recognizable for the employee. A clause is particularly unreasonable if it does not make sufficient distinctions according to the reasons for termination or if the binding period considerably exceeds the average period of employment in the company.
Transparency requirement and differentiation by reasons for termination
A central aspect of the decision was the question of whether and to what extent clauses that do not distinguish between employer- and employee-initiated terminations can withstand scrutiny. The BAG emphasizes the necessity that only resignations by the employee or terminations for which the employee is at fault should lead to a repayment obligation. In the case of terminations by the employer, for example due to illness or business reasons, or for other reasons not attributable to the employee, a repayment claim should generally not be asserted.
Relevance for practice and contract drafting
Room for maneuver in contract drafting for companies
For companies, this results in the necessity to formulate repayment clauses with great care and to take the respective circumstances into account. Particularly relevant remains the question of how long employees are required to commit to the employment relationship in return for the costs assumed, without being unduly disadvantaged. When drafting contracts, differentiated provisions that appropriately distribute reasons for termination and repayment burdens should be considered.
Furthermore, it must be ensured that all claims and repayment modalities are set out in the contract with sufficient precision and clarity to prevent future disputes.
Implications for existing and future employment contracts
Especially in light of the current case law, reviewing existing agreements is gaining in relevance. Companies and employees alike are required to review ongoing contracts as well as future provisions with regard to transparency, appropriateness, and differentiation. Various types of training costs – from short courses to extensive qualification measures – may require a differentiated approach with respect to binding periods and repayment modalities.
Classification in the context of current developments in employment law
Ongoing proceedings and legal development
The proceedings in question make it clear that employment law jurisprudence regarding repayment clauses for training costs is evolving and, with increasing differentiation, is adapting more and more to the realities of modern employment relationships. The courts remain fundamentally open to the interests of both employers and employees, but require both sides to ensure clarity, transparency, and appropriateness when handling financial investments in professional development and training.
Outlook
The decision is part of an ongoing discourse on the permissible structuring of repayment agreements and is likely to create greater legal certainty for both other proceedings and future practice.
Source reference
The article is based on the published decision of the Federal Labour Court (Case No.: 10 AZR 121/24) as well as the guiding principles and reasoning, as available on the homepage of the Federal Labour Court: Decision in original wording. This is a summary taking into account the current state of proceedings; subsequent developments or legal assessments are reserved.
For companies and employees who encounter uncertainties regarding the design or review of repayment clauses in connection with training costs, an individual legal assessment can be helpful. Should you have further questions about the topics discussed, the Rechtsanwälte from MTR Legal will be happy to assist you.
