EMPLOYEE’S TRAINING BOND AND ITS ENFORCEABILITY UNDER THE NIGERIAN LABOUR LAW

INTRODUCTION

We cannot over emphasize the importance of continuous training for employees to ensure effective delivery and improved performance at work. Professional service providers must not only continue seeking constant training for effective delivery and better performance but also to avoid being outdated, as the rapid changes in industry standards and technologies require them to stay current and competitive. Constant upskilling is as vital as schooling, as it improves one’s skills and helps one becomes a leader and expert in one’s field.

The goal of every employer is for their employees to deliver excellent results in their respective specialties and also perform to their satisfaction. At the point of employment, the prospective employee may lack the full skill to perform the task up to the expected level and deliver results, and may require additional professional training. Such professional training may require huge capital that the prospective employee might lack. At this point, the employer faces a dilemma and may have no choice but to provide the funds necessary for the employee to undergo training.

The employer may have no option to recoup its investment in the employee but ensuring that both parties sign an agreement mandating the employee to remain in its job for a specified number of months or years before leaving. Such an agreement is typically referred to as an ’employee training bond.’ It is a common practice in both developed and developing countries, including Nigeria.

Like any other contract or agreement, it is susceptible to breach, and one party, particularly the employee, may not meet their obligations. Such breaches may be as a result of the employees getting another lucrative employment at another rival employer and so many other instances.

It is against this backdrop that this article intends to examine the essential validity of an enforceable employee training bond in Nigeria through the lenses of judicial decisions in decided cases. In addition, the article will urge employers who intend to train their employees to ensure that their training bond agreements possess certain features or criteria to make them enforceable in the event of a breach by their employees.

MEANING AND NATURE OF AN EMPLOYEE TRAINING BOND

A training bond is generally understood as an agreement where an employer, having sponsored the training of an employee, seeks to ensure that the employee works for a predetermined period so the employer can benefit from the investment. It serves as a form of security for the costs incurred in enhancing the employee’s professional or technical competence.

It is generally accepted that a training bond is an arrangement in which an employer, after sponsoring the training of an employee, aims to assure that the employee works for a certain period of time so that the employer can benefit from the investment. The fees that are incurred in order to improve the employee’s professional or technical competence are protected by this policy, which serves as a type of security.

As stated in the case of Overland Airways Limited v. Captain Raymond Jam [2015] 62 NLLR (Pt.219) 525, the National Industrial Court of Nigeria defined described a training bond as a means by which an employer compels an employee, whose training has been sponsored, to remain in employment for an agreed duration.

It is currently common practice in Nigeria for employment contracts to include terms where the employer agrees to finance the training of an employee. This is a common practice in Nigeria. In exchange, the employee is obligated to continue working for the business for a predetermined amount of time or, alternatively, to pay back the cost of training in the event that they leave their position prematurely. To ensure that employees are better suited for their roles and that companies may profit from the investment made in upskilling their workforce, this technique is used. The rationale behind this strategy is to ensure that employees are better equipped.

In order to safeguard this investment, it is common practice for employers and employees to have a training bond agreement in place. The terms of this agreement may be written down in a separate document that is connected to the original employment contract, or they may be integrated directly into the primary employment contract. Prior to the execution of such agreements, both parties are required to have a thorough understanding of their nature and the legal ramifications that they may have.

In Overland Airways Limited v. Oladeji Afolayan & Anor (NICN/LA/19/2011), where the National Industrial of Nigeria Court aptly captured the essence of training bond when it held thus:
“…a training bond seeks to compel a current employee whose training has been sponsored by the employer to work for an agreed duration so that the employer could derive the benefits of its investment on the employee. The case of A.G. FEDERATION V AWOJOODU (supra) relied upon is quite apposite on this point. Also, in line with the constitutional mandate of this Court to recognise and apply international best practices, I will like to state that the practice of executing training bond is practiced in different jurisdictions. See the cases of EDWARD MILES V. JETCENTRE LIMITED T/A THE PRIVATE JET COMPANY (supra) and NORHERN THUNDERBIRD AIR INC. V. VAN HAREN, (supra) cited by learned counsel for the Claimant are quite instructive. On the strength of the authorities that I have just referred to, I have come to the irresistible conclusion that Exhibits B & C are valid and enforceable as between the Claimant and the 1st Defendant.”

In its most basic form, a training bond is an agreement in which the employer makes a commitment to funding the employee’s training, and the employee, in turn, undertakes to use the skills that they have acquired for the advantage of the business for a predetermined amount of time.

ESSENTIAL ELEMENTS OF A VALID TRAINING BOND AGREEMENT UNDER NIGERIAN LAW

For a training bond agreement to be enforceable in Nigeria, it must satisfy the basic requirements of a valid contract: offer, acceptance, consideration, intention to create legal relations, and the capacity of the parties.

In addition to these basic elements of contract, the National Industrial Court of Nigeria has developed further criteria for assessing the validity of training bond agreements in employment disputes. These may include:

1. Clarity of Terms
   
   It is essential that the bond agreement is drafted with clear and precise language. The document must explicitly specify the duration for which the bond will be in effect, providing both parties with a definite time frame. In addition, the nature and scope of the training to be provided should be thoroughly detailed, including the type of skills, certifications, or knowledge the employee is expected to gain. The agreement must also outline the obligations and responsibilities of both the employer and the employee, such as the employee’s commitment to remain with the organization for the specified period and the employer’s duty to deliver the stated training. Clear articulation of these terms helps prevent misunderstandings and potential disputes.
   
2. Reasonability
   
   The terms of the bond should be fair and balanced, avoiding any provisions that could be considered overly harsh or punitive toward the employee. In particular, the bond period should be reasonable, reflecting only the time necessary for the employer to recover the investment made in the employee’s training. Similarly, any financial penalties or consequences imposed for breach of the agreement must not be excessive or disproportionate. The intent should be to protect the employer’s legitimate business interests without imposing undue hardship on the employee. In Suit No. NICN/ LA/599/2018-Overland Airways Limited v. Shehu Sekula & 2Ors, His Lordship, Honourable Justice I.G. Nweneka aptly  stated the ingredients of reasonability of an enforceable employee training bond as follows: “Reasonability is determined by taking into account the bond period, the restrictiveness of the covenant and the amount required to be paid in the event of breach” See also the decision in Suit No. NICN/LA/141/2011- Overland Airways Limited v. Captain Joseph Gamra (unreported) judgment delivered on 7th January 2016.
   
3. Proportionality
   
   Any requirement for the employee to repay costs or face penalties in the event of early resignation must be directly related to the actual expenses incurred by the employer for the training provided. The repayment amount or penalty should be calculated in a manner that takes into account the portion of the bond period that the employee has already served; thus, any obligation to pay should decrease as more time is served under the bond. This ensures that the consequences for early departure are fair and not punitive, reflecting only the unrecovered portion of the training investment.
   
4. Voluntariness
   
   For a bond agreement to be legally and ethically valid, it must be entered into freely by the employee, without any form of compulsion, coercion, or undue influence from the employer. Employees should be given adequate time to review the terms of the agreement and seek independent advice if they wish. The process should be transparent, and the employee’s consent must be obtained willingly. Voluntary acceptance of the bond is crucial to ensure that the agreement is enforceable and respects the rights and autonomy of the employee. employer seeking to protect their investment in employee training to ensure that a valid and properly drafted employee training bond is in place.