Training bonds are very common across aviation – especially for engineers, air traffic specialists and pilots. As with any contract, they are enforceable but it does depend on the wording.
A bond agreement is a contract between two parties whereby in return for receiving something of value, the engineer or pilot etc agrees to stay with the company for a specified time so that the employer has the benefit of the investment that they have made.
Training bonds are popular with employers because they minimise the risk when providing training to employees. Training bonds ensure that the employee agrees to work for the employer for a minimum time period.
If they fail to do so, they will be held responsible for some, or all, of the cost of training them. It is principally a deterrent and is quite effective.
The best employers do not insist on training bonds for employees but many do. In some cases, they are akin to penal servitude with a number of bonding agreements running back to back.
Where employers do use bonds, Prospect believes that they should last no more than 24 months, with the cost reducing by 1/24 each month from the date the bond is signed.
In addition, bonding should not apply to long-serving employees, eg those with more than five years’ service.
The worst types of bonds are those that include hotel, salary and expenses costs. Members should resist signing bonds that include costs over and above those of the actual training.
Pilots and engineers
Pilots often have to undertake training, and subsequent additional training, when a new aircraft is introduced.
Prospect believes that this is simply continuation training so a second aircraft type should not be subject to a bond.
This is equally applicable for engineers where a new aircraft type is introduced.
A bond is a contract
A properly drafted training bond is enforceable. Legally, a bond is a contract and is therefore regulated under contract law.
To be a contract, an arrangement must involve an offer, acceptance of that offer and a ‘consideration.’ A consideration is basically the exchange (eg wages in return for work or, in this case, funded training in return for the bond).
Most of the key points about training bonds stem from these roots in contract law.
In effect, a bond is a clause in the employment contract that provides for payment of agreed damages on termination – sometimes called a liquidated damages clause.
Such clauses must release a payment which is a genuine pre-estimate of the loss likely to flow from the breach of contract (the termination).
They cannot amount to a penalty clause. If a clause is found to be a penalty clause, it will be unenforceable.
The terms describing the operation of the bond must be ‘reasonable’. This is a legal concept that informs a lot of UK law – and what is reasonable in one set of circumstances might not be in another!
- The total amount of the bond should not be more than the cost of the training.
- Bonds should be time-limited: it would be unreasonable to tie an employee to the employer in perpetuity or way beyond the time it takes for the employer to realise a return from its investment in the training.
- The value of the training bond will generally decrease pro rata throughout the time period. This reflects the fact that the employer benefits from the training and is thus realising a return on its expenditure.
- The bond should not be enforceable if the employment is terminated for any reason other than the employee’s resignation or their dismissal on grounds of conduct or capability. In particular, it should not be enforceable if the employer becomes bankrupt or insolvent (apart from anything else, there is no future loss sustained by the employer in those circumstances).
The law does not always support employees, so this article should be read in conjunction with Prospect’s legal advice on training bonds. Members will need to log in to download it from our library – https://library.prospect.org.uk/download/2017/00813