7 August, 2018
Tech Graduates Facing Large Fines for Leaving Training Schemes
Graduate training schemes are a popular choice but early-release clauses have come under fire from legal experts. For many recent technology graduates a paid period of training followed by guaranteed employment is a tempting offer, and the resulting pipeline of new talent into a business is ideal for many larger enterprises too.
The potential benefits for graduates and tech corporates alike have led to an explosion in paid graduate schemes, alongside high-level apprenticeships – known as degree apprenticeships – which rose nearly 27% to 11,600 in the last quarter of 2017.
However, certain types of graduate training schemes have recently been compared to 'tied servitude' and have attracted the ire of at least one Labour MP. The source of the issue is the use of heavy fees to discourage graduates from abandoning schemes before the two-year period is up, which in some cases can add up to £21,000 – a hefty sum for a recent graduate who may not have read the contract fine print carefully enough.
This method of clawing back training fees from graduates escaping the ‘lock-in’ period spurred Frank Field, a Labour MP and chair of the Work and Pensions Select Committee, to write to business secretary Greg Clark and ask if he would “consider a public inquiry into the extent and consequences” of the practice.
The letter follows a high-profile legal threat against a major outsourcing contractor, which was accused of employing a similar method and of providing low-quality, largely self-guided training. However, the company changed its policy recently to remove the requirement that graduates pay for training if they leave within two years.
The company told BBC Radio 4’s Money Box programme: “The repayment clauses for training used in 2015 comply with current legislation and are common practice in the industry, however they are no longer used.”
Graduates have it tough today with student loans, high rents and low minimum wage; being charged more than £20,000 for what is tantamount to non-refundable training fees is unacceptable. Graduates should look for schemes where there are long-term opportunities, they should read the small print, and not just jump in because they are being offered a job.
Graduate training schemes and job offers should be a two-way street. The graduate needs to be a fit for the organisation but equally the company culture needs to fit the trainee.
Campaigning barrister Jolyon Maugham, founder of the Good Law Project, has previously described the schemes as “indentured labour”, and plans to continue the legal battle against them. On a crowdfunding page he commented: “We intend to issue proceedings in the High Court next week to release those graduates from their bond.”
It's time for enterprises to take a close look at any comparable contract clauses in their in-house graduate training schemes and tone down or remove any egregious penalties – although retaining some level of tie-in is not unreasonable.
I believe it is right that graduate programmes have some level of financial tie-in as it can be costly for companies to train individuals only to lose them before their new skills can be utilised. However, this should not be so high that the company profits from the individuals. Technical graduates are in short supply and should be highly valued.
By Nadia McKay, Testing Services Director, Edge Testing Solutions
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