One of the fundamental rules of labor law is the
employer’s obligation to help employees improve
their occupational skills (however, the obligation is
limited to employees engaged under employment
contracts).
Improving skills of employees can take a variety of
forms. An employee may, completely independently
but with the employer’s consent improve his or her
occupational qualifications. On the other hand, the
employee may become actively involved in the
training of its staff, either with respect to a selected
group or all members of the personnel, in terms of
the merits of training or financially. The employer’s
participation in staff training is based on the so-
called agreement for improvement of occupational
skills and may have positive impact on the income tax payable by the employer.
Pursuant to the Labor Code, the employer may grant
an additional allowance to an employee who is
improving his or her occupational skills (in addition
to pay), including without limitation to cover tuition
fees, cost of travel to the place of instruction,
handbooks and accommodation. These issues are
regulated in an agreement that lays down the mutual
rights and obligations of the parties. Under such
agreement the employer may impose on the
employee an obligation to remain with the employer
over a specific period of time after completion of
instruction. If the employee leaves the company
prior to the expiry of the stipulated period, he or she
may be required to reimburse the employer for the
costs of training. Financing the employee’s tuition
may be also made conditional upon the employee
achieving specific progress in the course of
instruction.
Further,
contractual
provisions
notwithstanding, Article 103[5] of the Labor Code
specifies situations when the employee is required to
reimburse the employer for the training costs
incurred, pro rata to the period of employment after
completion of instruction or to the period of
employment as the instruction continues. These
situations include for instance a failure to take up
training
without
legitimate
reasons
or
discontinuation of instruction. The period of
employment for working off instruction cannot
exceed 3 years, including the sick leave and child
care leave time but excluding unpaid leave time.
However, the employee is not obligated to reimburse
such costs among others when the employer
terminates the employment (whatever the cause), the
employment relationship is terminated with mutual
agreement of the parties, the employment contract
expires, etc.
Financing by the employer of staff skills
improvement may also involve the option to treat the
costs of employee training incurred as revenue costs
and consequently result in reducing the corporate tax
payable. Yet, not every amount spent by the
employer on employee instruction is an eligible
revenue cost.
The treatment of the employer’s spending on the
improvement of the occupational skills of its staff as
revenue costs is subject to the provisions of general
application. This means that only such costs can be
accounted for as revenue costs that meet
cumulatively several requirements, the most significant of which in these specific circumstances
being the causal link between the instruction
expenditures and the improvement of skills of the
participating employee. Thus, it must be
demonstrated that the training expense will
objectively improve the trainee’s skills, i.e. there
must be a direct link of the subject of instruction
with the job responsibilities of the employee and the
nature of the employer’s business, which in effect
will help the employee to make his or her job better.
Consequently, given existing properly substantiated
staff training expenses, including the cost of training
itself, as well as the cost of travel, accommodation,
etc., the employer is entitled to treat such costs as
revenue costs. For example, the cost of foreign
language instruction for employees is a revenue cost
if their work involves reliance on foreign languages,
which nowadays is true in the majority of cases.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
ul. Nowogrodzka 11
00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Skarbowców 23a
53-125 Wrocław
Tel. +48 71 780-3100
Fax +48 71 780-3101
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary
of certain recent legal developments of selected areas of law. For this reason the information contained in this publication should not form the
basis of any decision as to a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in
individual cases. The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant
legislation or other legal development to the particular facts can be verified.