Many New Zealand employers invest significantly in employee training and development or pay for relocation costs. From formal qualifications and certifications to specialised technical or professional development to relocations from overseas.

Where that training is costly or involves relocation costs, employers often seek to protect their investment through training or bonding arrangements that seek assurances regarding an employee’s commitment and continued service to the employer.

When properly structured, these arrangements can be lawful and enforceable. When poorly drafted, misunderstood, or used unlawfully they can expose employers to unlawful deduction claims, penalties, wage recovery orders, non-compliance, personal grievance claims, along with a range of other adverse legal consequences. Understanding when bonding is permitted – and when it is not – is critical for employers.