Employers who fund qualifications reasonably want protection if the person leaves shortly after completing them. The mechanisms exist and they have conditions — and a clause drafted too aggressively is unenforceable, which means it protects nothing.
The repayment clause
A training cost recovery clause requires the employee to repay some or all of the training cost if they leave within a defined period.
For it to hold up:
- Agreed in writing, before the training, as part of the employment agreement or a separate signed document.
- Genuinely reflecting cost incurred by the employer, not a penalty. A clause requiring repayment of more than was spent looks punitive.
- Reducing over time. A clause requiring full repayment at any point within two years is harder to defend than one reducing on a sliding scale — the employer has received some benefit from the period worked.
- Reasonable in duration. The period should relate to the value of the training, not to how long you would like to keep someone.
- Clear about what triggers it. Resignation is straightforward. Repayment on redundancy or on dismissal by the employer is considerably harder to justify.
Deducting from wages is a separate question
This is where employers most often get it wrong. Having a repayment obligation does not give you the right to take it out of a final pay.
Any deduction from wages requires specific written consent. A general clause in the employment agreement authorising deductions is not sufficient for an arbitrary deduction, and consent can be withdrawn by the employee.
Deductions must also be reasonable, and must not take pay below the minimum wage for the period.
The practical position: you may have a debt claim, and you may not have a right to self-help. Deducting without valid consent creates a wage arrears problem on top of whatever else is happening.
What the agreement should cover
- What training is being funded, specifically, and what it costs.
- What the employer pays — course fees, materials, travel, and whether time attending is paid.
- The repayment schedule, reducing over the period.
- What triggers repayment, and what does not.
- How repayment is made, and separately whether the employee consents to deduction — which should be an explicit, separate consent.
- What happens if the employee fails or withdraws from the course.
- Who holds the qualification. It belongs to the person, which is the point.
Restraints of trade are a different tool
Some employers reach for a restraint instead. Restraints are unenforceable unless reasonable and protecting a legitimate proprietary interest, and the burden sits on the employer.
Crucially, an employee’s skill and general industry knowledge belongs to the employee. A restraint aimed at preventing someone using training you funded will not be enforced — that is not a protectable interest.
Restraints protect confidential information, customer connection and workforce stability. They do not protect training investment.
The better protection is not contractual
Businesses that retain the people they train generally do it through the same things that retain anyone: progression that exists, decent management, realistic workload and being treated well.
A repayment clause discourages a departure in the short window it covers. It does nothing about year three, and it can sour a relationship at exactly the point the investment is starting to pay back.
The pragmatic view: use a moderate clause to deter an immediate departure, and rely on the working relationship for everything after that.
The training system changed in 2026
From 1 January 2026 an independent, industry-led model for work-based learning took effect, with providers managing apprenticeship and traineeship programmes under guidance from Industry Skills Boards.
If your training agreements reference the previous arrangements by name, they need updating.
The wider picture
New entrants to workplace-based training fell 16 percent in 2025 to 16,780. In a market where fewer people are being trained, the businesses that train have an advantage — and the ones that make training feel like a trap will find it harder to recruit into.
Employment New Zealand publishes free guidance on deductions, wage records and employment agreements, and Education Counts publishes training data under an open licence.
Figures: Education Counts workplace-based learner data, 2025. General information only, not legal advice.
