Tim Elliott
Welcome to Lawgical, the UAE’s first regular legal podcast. I’m Tim Elliott, and as ever, I’m here with Ludmila Yamalova, Managing Partner at Yamalova & Plewka here in JLT. Ludmila, good to see you.
Ludmila Yamalova
Good to see you too, Tim. Thanks for being back here.
Tim Elliott
Today, we’re looking at a topic that initially might seem a bit tricky to navigate, but it’s really significant for professionals in the UAE: the complexities surrounding training costs in UAE employment law. It’s a slightly cumbersome title, but there’s a lot to unpack here. How are these costs defined? What are the rights of employers versus employees? How do courts view attempts by employers to reclaim these costs when an employee resigns?
We’re going to explore a significant recent court case—no names, of course—but I want to start with the basics. Ludmila, what would be considered legitimate training costs in the context of UAE employment law?
Ludmila Yamalova
Legitimate training costs, as defined under UAE employment law, are essentially expenses that an employer incurs for programs aimed at enhancing or improving an employee’s skills beyond the scope of their immediate job duties.
These might include specialized courses, certificates, certifications, or training programs that impart valuable, transferable skills. The key here is that the skills are transferable and applicable beyond the current role. For these costs to be legitimate, certain criteria must be met:
- Direct Financial Outlay: The employer must have directly paid for the training, typically to an external party, and there must be documentation to prove this expense.
- Specialized and Transferable Skills: The training should provide qualifications that the employee can use outside of their current job, not just for their existing responsibilities.
- Written Agreements: There should be a clear, pre-agreed document that specifies the training costs and repayment terms, signed by both parties, especially the employee.
- Relevance to Role Development: The training should aim at professional development rather than routine job-related training.
This is the high-level framework that courts use to determine if an employee is obligated to reimburse their employer for such expenses.
Tim Elliott
So, disagreements often arise here, with employers on one side and employees on the other. What are some common misconceptions when it comes to training costs?
Ludmila Yamalova
One common misconception is that all forms of training are reimbursable if an employee resigns. This assumption leads to questions we frequently receive from our followers. For instance, employees often ask, “I’m resigning, but my employer wants me to reimburse them for training costs or plans to deduct it from my end-of-service gratuity. What should I do?”
Employers sometimes include broad clauses in contracts that attempt to classify any job-related training as reimbursable. However, UAE courts have established clear guidelines on what constitutes reimbursable training expenses. They generally evaluate whether the training goes beyond the employee’s basic job responsibilities.
For instance, routine on-the-job training—such as internal workshops or orientations—doesn’t typically qualify as a reimbursable expense unless it’s explicitly stated in the contract and backed by evidence.
Tim Elliott
Can you elaborate with an example?
Ludmila Yamalova
Sure. Let’s say I hire you to work with me as a podcaster. You’re an experienced broadcaster, but to integrate effectively into my firm, you’d need to learn about our practice, team, protocols, and tools.
This onboarding process involves various forms of training: understanding our client approach, internal communication protocols, time management systems, and more. Some of this training might require external resources, such as hiring a freelancer or purchasing courses. However, even if I incur these costs, they are not reimbursable because they’re necessary for you to perform your job for me.
In contrast, if I pay for a highly specialized course that isn’t essential to your role but enhances your skills beyond the job’s scope—for example, an advanced degree—that cost could potentially be reimbursable.
Tim Elliott
I see. Now, you mentioned a recent court case. Are you able to discuss this while keeping details confidential?
Ludmila Yamalova
Absolutely. This case is particularly relevant because it reflects many similar scenarios we’ve encountered.
The plaintiff worked for a company from 2017 on a three-year contract, which was renewed in 2020. A year into the second contract, the employee resigned. The dispute centered around a training bond of AED 180,000 (approximately USD 40,000) for alleged specialized training.
The employee argued that no specialized training occurred, nor were any costs incurred by the company. The employer, however, pointed to a signed agreement stating the employee was obligated to reimburse this amount.
The court appointed an expert to review the evidence. They found no proof of specialized training or that the company incurred costs for such training. As a result, the court ruled in favor of the employee.
Tim Elliott
What criteria did the court emphasize in determining the legitimacy of training costs?
Ludmila Yamalova
The court looked at three main criteria:
- Evidence of Payment: The employer must provide invoices, receipts, or financial records showing actual expenses incurred for the training.
- Specialized Training: The training must go beyond routine job requirements and provide skills transferable to other roles or industries.
- Written Agreement: There must be a clear, pre-agreed document outlining the reimbursement obligation, the training’s nature, and its costs.
In this case, the employer failed on all three counts.
Tim Elliott
What lessons can employees take from this?
Ludmila Yamalova
For employees:
- Review Contracts Carefully: Understand all clauses regarding training costs before signing.
- Seek Clarification: Don’t hesitate to ask for explanations about repayment terms.
- Evaluate Fairness: Assess whether the training genuinely benefits you and is reasonable.
Tim Elliott
And what about employers?
Ludmila Yamalova
Employers should:
- Document Costs Thoroughly: Keep comprehensive records of training expenses.
- Avoid Retroactive Clauses: Courts often invalidate retrospective agreements.
- Be Transparent: Clearly communicate training and repayment terms upfront.
Most importantly, employers should not use training cost clauses punitively. The law prohibits penalizing employees for resigning. Training essential for an employee to perform their role is a cost of doing business.
Tim Elliott
That’s Lawgical—training costs in UAE employment law. Thank you for listening and watching, or both if you’re with us on YouTube.
Ludmila Yamalova
Thank you, Tim.
Tim Elliott
Find us on social media—Instagram, Facebook, TikTok, LinkedIn—and visit lylawyers.com for UAE-centric legal insights. If you have a legal question, contact us through the site, and we might answer it in a future episode of Lawgical.
