My employer has built in a clause to its employment contract that if the employment is ended within 12 months by either side, �500 is deducted from the final salary to cover "training expenses".
Yes it is possible to do this - I have made it a condition on someone undertaking particularly costly training that the employee either stays for 18 months or repays back a proportion of the training cost.
It isn't a fine - it is a part of an agreed contractual term of employment. If you are just joining, you could try and negotiate to have it removed - but it rather gives the game away as to your longer term aspirations.
Yes, as buildersmate says it's perfectly legal. I assume you've signed the contract thereby agreeing to it?
It's only fair if the employer is spending time and money training you that they at least get you to stay for a length of time afterwards or to repay some of the cost.
In local government it is advised that departments claim back training course expenses if an employee leaves within 2 years of receiving said training. In practice, it is seldom applied unless the boss doesn't like you.