By Eloghene Adaka, Esq
Under employment contracts in Nigeria, it’s very common for employees to enter into service or training bonds with employers to improve an employee’s professional and technical competence and skills while under employment.
What are service training bonds?
Service training bonds involve the continuous education and training of employees by employers to improve an employee’s skills. This can be of value to an employer’s business.
It involves an undertaking by an employee to remain under the employment of an employer after the acquisition of new skills the costs of which are borne by the employer.
It can also be defined as an agreement between an employer and an employee that requires an employee to remain under the employment of an employer for a specified time in consideration of an employer paying for the acquisition of an employee’s skill or training.
With service training bonds in the course of employment, it is easy for conflict to arise especially after an employer has used their resources in training such an employee to acquire such skills, and such employee after acquiring such skills decides to terminate their contract of employment.
This brings under consideration the legality of service training bonds and how such losses can be prevented by employers.
Legality and enforceability of service training bonds
As a general rule, service training bonds as covenants in restraint of trade are unenforceable unless they are reasonable and fair and not contrary to public policy .
For a service training bond to be considered reasonable to be enforceable, the court in overland v Raymond set down the following guidelines that should be considered by an employer:
- The length of time which the employee must remain under such employment (bond period) must be reasonable from the decision of the industrial court as it relates to bond agreements, it can be seen that the courts are reluctant to enforce bonds which are above 1-3 years.
- The cost of the training must not be exaggerated to render the employee incapable of paying for it. Therefore, the court will not enforce a bond sum which is above the expenses spent by the employer.
- The amount to be paid in the event of a breach by the employee must not be exaggerated, to render the employee incapable of paying for such and the employer must consider the years such an employee has spent under his employment by the employee after the completion of his training, if any.
- The nature of the training must also be relevant to employee’s development.
In conclusion, it can, however, be seen that employment bonds can only be valid and enforceable by a court in Nigeria if they are reasonable. This, further, places a duty on an employer to ensure that the terms of such an agreement are properly analyzed to ensure such contracts can be seen as being reasonable.
An employer also has to ensure that such agreements are signed first before an employee embarks on such training and not after the training has been concluded.
This is because an agreement signed after training has already been concluded may not be enforceable because at the time the contract was signed, nothing of value was exchanged.
