Up to scratch?

A lot of employers look to safeguard themselves against incompetent or poorly performing employees by including a 90-day trial period in their employment agreements.  A 90-day trial period allows the employer to give a new employee ‘a go’.  If the employee turns out to be a bit of a dud, the employer can terminate their employment within the 90 day period without going through any of the usual processes.

There are strict formal requirements for a 90 day trial period that must be complied with – including that the employment agreement which contains the term has to be signed before the employee begins work.

Want to retain?

Sometimes, an employer is going to want to look beyond the first few months of an employee’s employment – particularly where they have invested a lot of time and resources into bringing the employee up to spec.  There is nothing worse for an employer than training up an apprentice and kitting them out with all the necessary equipment, only to have the apprentice leave the day they qualify.

An employer can look to protect themselves by entering a Deed of Acknowledgment of Debt with new apprentices.  The Deed can record the level of investment that the employer is making in the apprentice, and agree on the basis by which that investment may be repaid or forgiven as a debt.

For example: Terry takes on a new apprentice, Phil.  Terry agrees to foot the bill for Phil’s apprenticeship training, along with equipment and a second-hand vehicle.  Terry doesn’t want Phil to pick up and leave as soon as he gets his Licenced Plumber Qualification – or if Phil does, Terry doesn’t want to be left out of pocket.

In this example, Terry and Phil can agree to enter a Deed of Acknowledgment of Debt whereby Phil acknowledges that he is in debt to Terry the entire cost of his course fees for his apprenticeship training.  Terry could bond Phil for a period of, say, four years by agreeing to forgive the debt on a pro-rata basis over four years after Phil is qualified as a Licensed Plumber.

If Phil doesn’t pass his course, he will repay Terry the full debt.  If Phil passes his course, but doesn’t stay on with Terry for four years, he will repay the balance of the debt owing.  It is important that Terry gives himself powers to recoup any costs incurred recovering the debt if need be.  The equipment and the vehicle will remain Terry’s – but for the avoidance of any doubt, this should be clearly set-out in Phil’s employment agreement.

There are formal requirements for a valid Deed – including both parties’ signatures being independently witnessed.   It also pays to take legal advice on the terms of the Deed to ensure that you have sufficiently protected your interests and not accidentally agreed to something you didn’t intend!