You will be able to read a sponsorship agreement and work out what it costs if you leave.
When Siti mentioned the part-time master's to her manager, the reply was better than she expected. The company might pay half the fees. Then HR sent over a sponsorship agreement, eight pages long, and her manager said, "It's standard, everyone signs it." Siti wanted to sign it that afternoon. A friend who had once paid back a sponsorship after changing jobs told her to read it slowly first.
Employer sponsorship can make a course affordable that otherwise wouldn't be. It also usually comes with a bond, and the bond decides what the sponsorship really costs. This lesson shows you how to read one. All figures are made up for the example.
A sponsorship bond is a promise, written into the agreement, that you will keep working for the employer for a set period after finishing the course. If you leave before the period ends, you repay some or all of what the employer spent.
The period is often linked to the size of the sponsorship, so a large course may carry a bond of several years. The clock usually starts when you finish the course, not when you start it. A two-year part-time course with a two-year bond can therefore tie you to the company for about four years from the day you sign.
Siti's draft agreement says the company will pay half her fees, S$21,000 in total, and that she must stay for two years after completing the course.
This is the clause to read most carefully. Agreements differ a great deal.
Some reduce the amount owed over time. A common form is pro-rating by months served: if you leave halfway through the bond, you repay half of the sponsorship. Others reduce in steps, such as full repayment if you leave in the first year and half in the second. Some require full repayment whenever you leave before the end. A few add a multiple, asking for more than the amount sponsored, or add the salary paid during any study leave.
Siti's draft uses monthly pro-rating. If she leaves 12 months into her 24-month bond, she repays S$21,000 times 12 divided by 24, which is S$10,500.
Compare what a different clause would mean. Under a full-repayment clause, leaving at the same point would cost S$21,000. Under a clause with a multiple of 1.5 and pro-rating, it would cost S$15,750. Same course, same sponsorship, same date of leaving, and the cost ranges from S$10,500 to S$21,000 depending on one paragraph.
Also check what counts as the sponsorship. Some agreements include only the fees. Others include exam fees, materials, travel, or the salary for days off to attend classes.
Read what happens in situations you don't plan for.
If the company restructures and your role is made redundant, are you still liable? Some agreements release you if the employer ends your employment for reasons other than misconduct, but not all say so clearly. If the agreement is silent, ask for it in writing.
If you fail a module or need to repeat a semester, who pays for the repeat, and does the bond get longer? Some agreements make you repay the sponsorship if you don't complete the course at all.
If you transfer to a related company in the same group, does that count as leaving? And if you want to take unpaid leave, for example after a child is born as in module 6, does the bond pause or keep running?
Siti's draft releases her if she is retrenched, but says she must repay the full sponsorship if she fails to complete the course. She decides to ask HR whether a repeated module would also count.
The useful comparison is between two prices: what the bond would cost you if you left early, and what the course would cost if you paid for it yourself.
If Siti pays the fees herself, her share rises by S$21,000, money she would have to save first. With sponsorship, she pays nothing extra if she stays, and S$10,500 if she leaves halfway through the bond. If she is fairly sure she will stay for the bond period, the sponsorship is clearly worth taking. If she might leave, say for a strategy role elsewhere, which is the reason she wants the degree, she should treat a share of the bond's cost as a likely expense and plan for it.
A bond is not a bad deal by nature. It is a price for flexibility, and you can only judge the price if you have read the clause that sets it.
For the activity, you'll need the agreement itself, or a sample from your HR team, and a calculator.
Write a one-line summary of a sponsorship bond, real or sample, stating length, repayment rule and the cost of leaving at the halfway point.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).