A training bond is a binding contract between an employer and an employee where the employer undertakes to pay for the cost of the employee’s training. The employee on the other hand commits to remain in employment for a specified minimum period or refund the cost of the training upon resignation. The rationale is that if an employee’s training has been sponsored by the employer then they should work for an agreed duration so that the employer derives the benefits of its investment in the employee.
Training Bonds are recognised as legally binding agreements in Kenya and the Courts have repeatedly upheld them. The Government of Kenya, through the Public Service Commission, has developed a policy that guides public bodies on how to engage employees on bond terms.
The County Government of Tharaka Nithi recently sued one of its former employees before the Employment and Labour Relations Court for violating the terms of a training bond. Judgment in the case of Tharaka Nithi County Government v Waweru (Cause E019 of 2023) [2024] KEELRC 1096 (KLR) was delivered on 15th May 2024 by Justice Onesmus Makau sitting in Meru.
The brief facts are that by a Training Bond signed on 16th August 2018, Dr. Waweru agreed to work for the County Government for four years after completing her course in Master of Medicine in Anaesthesia from the University of Nairobi. According to the County Government, the Bond had a default clause to the effect that should she default to serve the Bond period of four years, she would pay on demand, the sum of Kshs.8,572,000.00. She completed her course and served for nine months and resigned on 9th October 2023. The County Government rejected the resignation but the Doctor left employment anyway.
In her response, Dr. Waweru admitted to that employment relationship and also the said resignation. She contended that, she was forced to resign by the sickness of her parent where her undivided attention was required. She maintained that her resignation was justified and that the suit was not necessary before the sureties were contacted.
She also admitted signing the Bond of Kshs.857,200.00 and wondered how the said sum had morphed to Kshs.8,572,000. She denied that her masters course cost Kshs.8,572,000.00 and contended that she paid her tuition fees. She also stated that the suit was premature since the procedure for recovery of the bond money was not exhausted. She also argued that the Bond was illegal and therefore the suit was frivolous and ought to be dismissed with costs.
The first point of contention was over the amount owed. According to the witness who appeared on behalf of the County Government, the employee was given a scholarship and signed a bond which in default she was to refund the bond money totaling to Kshs.10,382,880. Since she only worked for only 8 months and resigned, she was liable to pay Kshs.8,752,000. He informed the Court that after the Employee’s Bond in 2018, the County Secretary issued Revised Bond Terms to deter doctors from leaving the County hospitals after training. He contended that training doctors is very expensive using taxpayers’ money. On cross-examination, he contended that the sum claimed was based on the respondent’s gross salary as at the time she left for studies being Kshs.216,320 per month. However, he admitted that the employee signed a bond for Kshs.857,200. He further admitted to the Court that the circular by the County Secretary was issued after the employee had gone for her studies. On whether the circular was issued to her, his response was that the circular was released and displayed in all Level 4 hospitals but he was not able to confirm whether the employee signed the new bond.
The Court in determining the amount that was owed was guided by the Bond document. The Court held that “It is a fact that the parties herein signed a Training Bond for the sum of Kshs.857,200 in which the claimant paid the said sum for respondent’s course in Master of Medicine for a period of 4 years.” Therefore the claim for 8,572,000 did not have a basis in law. The Court’s final orders on that matter were as follows: “The claimant prayed for Kshs.8,572,000 being the salary for the respondent for the unserved bonded period based on gross monthly salary of Kshs.216,320. However, going by paragraph 2 of the training bond, the amount stated was Kshs.857,200.00 and it was to be repaid by working for the claimant for four years after studies. The claimant served for nine months. Hence the sum payable is equal to 39/48 months X 857,200= Kshs.696,475.00.”
The other point of contention was whether the case was premature. The employee argued that the suit was not ripe because the employer ought to have contacted the sureties after she failed to pay the bond money. In her view, the suit was an abuse of court process. She maintained that she was willing to pay the bond money, Kshs,642,900 in instalments if the employer had exhausted the avenue of pursuing her sureties.
To determine this question, the court was once again guided by the Bond document. The Court found that page 2 of the bond was clear that:
“We (bondee, 1st surety and 2nd surety) jointly and severally bind ourselves, our heirs… to pay into Government of Tharaka Nithi… on demand sum of Kenya shillings Eight Hundred and Fifty-Seven Thousand Two Hundred only (Kshs.857,200) on account of bondee defaulting to serve the bonded period of 4 years.”
When the term jointly and severally is used in an agreement, it means that the parties make an agreement to share all rights and responsibilities equally, and if any party is unable to share in a responsibility, the others become responsible for that partner’s share. Further, this term means that the owed party can pursue one or all of them to settle the debt. The Court therefore found that the suit was not premature as the paragraph indicated that the bondee and the two sureties were liable jointly and severally. That gave the employer an option to pursue either the employee or the sureties or both. “Consequently, I find and hold that the suit is neither premature nor an abuse of court process.”
In the end, the Court found the employee liable to pay the sum of Kshs. 649,200 plus costs of the suit.
Conclusion
Employers derive an obvious benefit when their employees are upskilled as it enables them to provide better services for the employer’s benefit. Meeting the cost of training an employee is a huge financial undertaking that the employer should expect to reap the rewards of that investment. Employers should have a policy that clearly guides their employee training program. The Training Bond should be drafted in terms that are unambiguous.
In this present case, the County Government was able to secure success in the dispute because of the clarity of the terms of the agreement. However, they also reviewed the bond terms and failed to follow the proper procedure in informing the employee. In any case, to change the terms of an existing agreement unilaterally was likely to run into legal challenges. Employers are advised to always obtain sound legal advice when making policy decisions to avoid breaking the law.
The bond entered into should also meet the reasonableness test. The County indicated that the reason for review was to avoid training and losing doctors as the Hospital required their services and the cost of training them was a huge burden to the taxpayer. To change the bond amount from Kshs. 857,200 to Kshs. 8,752,000 requires justification as that is a considerable change. This is why a good policy acts as a good guide for the employer as it creates a structure that can be used to govern the issuance and realization of the bond terms and benefits.
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