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Training tie-in contracts: unfair and unworkable?

Jack Robson, CASSL co-chair and a trainee chartered accountant in London, asks whether training clawback contracts help firms retain newly-qualified staff.

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June 2019

As the newly elected co-chair of CASSL, the Chartered Accountants Students Society of London, I would like to kick off the year with a pretty hot topic among trainee chartered accountants: training contract clawbacks.

Almost all larger firms now have some form of a tie-in clause for new trainees, where they must stay for a certain period of time after qualification or face financial penalties.

I am of course a trainee auditor and so naturally have a slight bias on the topic, but space does not allow a full discussion here, so the below is just my opinion but hopefully food for thought.

1. Are training clawback contracts fair?

The general pay scale for a trainee accountant is small but with constant pay increases over the three-year training period and a large increase upon qualifying.

The day-to-day role of a trainee auditor in their final year of study and a newly qualified auditor are very similar with both likely to be leading on-site audit teams. Why, then, is there such a large pay gap between the two? Presumably most employers would say this is due to the costs associated with, for instance, employing a trainee and exams.

So why, then, do firms try to recover these training costs when a newly qualified accountant leaves? Surely this has already been taken into account with the lower salary over the training period.

2. Do training clawback contracts work?

Common sense would say that the idea of trying to force an employee to stay who doesn’t want to can only result in a lose-lose situation; an employee with reduced motivation, likely producing lower quality work and less efficiently. No one wants to work with, manage or be managed by someone who doesn’t want to be there.

If an employee wants to leave a firm for one reason or another, then introducing financial penalties if they do seems bizarre.

The problems of retention within audit are a much more in-depth and deep-rooted problem that can’t be fixed in such a crude and simple way.

Maybe it is time to try a bit more carrot and little less stick.

Jack Robson is co-chair of CASSL. The views expressed in this article are his own.

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