Work-Back To The Future: Securing Tomorrow's Talent Today

In the coming years, Gen Z will dominate the world's workforce. Employers looking to draw in and retain future talent are fast discovering that their old methods may no longer be effective for this future generation of workers.

Often dubbed "Generation Quit," Gen Z shows a greater tendency to leave jobs than previous generations. Unlike Baby Boomers and Gen X, who valued job stability and traditional career paths, Gen Zs seek workplaces that align with their modern-day values and expectations.

Interestingly, a 2022 market study jointly conducted by Workplace Intelligence and Amazon found that 74% of Millennial and Gen Z employees will likely quit within the next year due to a lack of skills development opportunities. Additionally, PWC's recent report titled, 'Productivity in a Personalised Age of Employment' highlights that employees, especially younger generations, highly value personalised career development, continuous learning opportunities and a supportive work environment aligned with their personal values and well-being.

Understanding and catering to these changing preferences is crucial for attracting and retaining talent in the modern workforce. Whilst the cost of accommodating Gen Z only for them to leave may seem unattractive, employers will need to look at creative ways of balancing out their risk. In the context of providing expensive training, tuition and career development courses, work-back agreements offer a valuable way for employers to invest in their workforce while minimising the financial risk of employees leaving before delivering a return on the investment.

Back to Basics: What are Workback agreements?

A workback agreement is exactly as the name suggests – an arrangement to 'workback' or repay something through continued employment. Typically, these are agreements which regulate the provision of certain benefits to the employee on the condition that the employee remains in the employ of the employer for a set period. Common benefits covered by these agreements are the provision of training fees, tuition costs, maternity leave benefits, or other similar ex gratia payments.

What makes workback agreements effective is the inclusion of a clause stating that if the employee resigns during the specified period, they must repay the employer either the full amount of the benefit they received or a pro-rata portion of it. This clause aims to deter employees from leaving and take whatever benefit (and any acquired skills) with them to a new employer

What is important to include in Workback agreements?

Because workback agreements are not statutorily regulated and require the parties to agree on their terms, they are only as good as the paper on which they are written. This means that employers need to ensure that, where they are wanting to use them to retain whatever benefit they have provided to employees, they are enforceable and achieve the purpose for which they are drafted.

Below are a few important tips for employers wanting to implement workback agreements. Workback agreements should:

• be reduced to writing and the terms should be specific to the employee and the benefit they will receive;
• be concluded and signed before any payment is made or any benefit is provided; and
• clearly outline –
  • the amount provided to the employee;
  • the conditions on which the amount is provided (ie maintenance of a prescribed minimum grade or completion of the course within a specific period) and the duration of the workback period;
  • the repayment triggers (ie types of terminations that trigger repayment – in certain instances, employers may not want to recover the amount, such as where the employee is retrenched);
  • the manner in which the amount repayable will be calculated if the repayment will not be in full (ie a prorated portion linked to the length of time the employee has already worked back);
  • the timing of the repayment (ie immediate or in instalments); and
  • the recovery method (ie deductions from final salary or leave pay).

Importantly, on recovery methods, should an employer wish to deduct money owing under the agreement from the employee's final remuneration, regard must be had to section 34 of the Basic Conditions of Employment Act, 1997 ("BCEA"). Section 34 of the BCEA allows employers to deduct money from an employee's remuneration if the employee agrees in writing and, in the context of a reimbursement for loss or damage, under certain conditions. One such condition is that the deduction cannot exceed one-quarter of the employee's remuneration.

Recently, in the case of Holtzhausen v Grandmark International (Pty) Ltd, an employee challenged the lawfulness of a deduction made by the employer after she breached her obligations under a workback agreement. The employer deducted money owing under the agreement from the employee's final salary. She argued, amongst other things, that she had not agreed to the deductions, the deductions exceeded the permissible statutory limit of 25% and she should have been allowed to work out her three-month notice period to spread the deductions over time. Whilst the Labour Court dismissed her application based on the fact that she could not make out a case for urgent interdictory relief, the Court acknowledged that the employee had agreed in writing to the deductions as part of her employment contract and related agreements in line with section 34 of the BCEA.

Another important lesson that has arisen from our courts recently arose in the context of the High Court case, Nissan South Africa (Proprietary) Limited v Senyatsi. In this case, the employee entered into a workback agreement in respect of overseas studies the cost of which the employer covered. The employee resigned before the completion of the workback period and sought to challenge the enforceability of the workback agreement on the basis that she had signed a subsequent employment agreement with her employer on her return from her studies. The employee relied on a clause in the workback agreement that stated that the agreement would become null and void upon completion of the programme and the conclusion of a new agreement. Having considered the overall purpose and context of the workback agreement, though, the High Court found that the obligations in the workback agreement survived the signing of the new employment contract, notwithstanding the poor wording of the agreement.

Employees are often keen to receive benefits, such as overseas study, from their employers and are willing to sign workback agreements prior to receiving the opportunity. However, when it comes to repayment, this is when employees are likely to put up a fight. Accordingly, it is important for employers not to create any opportunities for employees to challenge the enforceability of these agreements. It is easy to focus on the essential terms of the agreement while overlooking the ancillary and boilerplate clauses that may cause potential pitfalls.

In summary, by having well-drafted workback agreements in place, employers can meet the future generation of workers halfway – giving them what they want while also protecting their investment and minimising the risk of unnecessary enforcement challenges.