VOCATIONAL TRAINING CONTRACTS AND TRAINING COSTS 2025
Topic 4:
VOCATIONAL TRAINING CONTRACTS AND TRAINING COSTS
Senior Lecturer, Dr. Nguyễn Thị Bích
SUMMARY OF THE CASE AND COURT RULING
[Judgment No. 01/2023/LĐ-ST dated January 10, 2023, of the People’s Court of Hải An District, Hai Phong City, regarding a dispute over compensation for training costs and wages upon termination of a labor contract]
Case Summary:
On September 21, 2020, Mr. Hoàng Công and U Co., Ltd. (hereinafter “Company U”) entered into a probationary contract with a duration of 60 days. On October 3, 2020, the parties signed an Agreement on the Provision of Training for the Employee. Article 3 of this Agreement stipulated: “Party B (the employee) commits to continue serving (working) at the Company for two (2) years after returning to Vietnam if they accept training lasting from 3 to 6 months” and “upon completion of the training course, Party B commits to fully reimburse the training costs proportional to the duration of service in the event Party B unilaterally terminates the labor contract.”
On November 20, 2020, the parties executed a labor contract (LC) with a term of 36 months. From October 6, 2020, to April 3, 2021, Mr. Hoàng Công was sent by Company U for vocational training in China, organized by U Shanghai Co., Ltd., the parent company of Company U.
On March 5, 2022, Mr. Hoàng Công expressed his desire to resign for personal reasons, and from March 29, 2022, he ceased reporting to work. Due to Mr. Hoàng Công’s failure to provide the required notice period for unilaterally terminating the LC, which constituted an unlawful termination, and his breach of the training agreement signed on October 3, 2020, Company U initiated a lawsuit against him, demanding full reimbursement of the training costs.
Court Ruling:
The court partially granted Company U’s claims, ordering Mr. Hoàng Công to compensate Company U in the amount of 38,157,347 VND.
COMMENTARY
I. Introduction
In the dynamic context of today’s globally integrated economy, enterprises face the imperative of building a workforce with technical expertise capable of meeting practical demands for skilled labor, thereby ensuring stable development. The adage that “people are the heart of the enterprise” underscores this necessity. This is particularly critical for enterprises in specialized industries requiring high technical proficiency, where training human resources becomes a priority to equip employees with the knowledge, skills, expertise, and experience needed to fulfill job requirements. However, given the time and financial investment involved, employers often seek to ensure that employees remain with the enterprise for a specified period post-training.
To achieve this, employers and employees enter into vocational training contracts, which typically include provisions detailing the obligation to reimburse training costs. Despite such agreements, it remains common for employees to fail to serve the committed duration, with reasons stemming from the employees themselves, the employers, or a mutual unwillingness to continue the labor contract. In such cases, the responsibility to reimburse training costs is determined by legal provisions and the agreements signed between the parties. In this topic, the author will analyze and comment on vocational training contracts, the basis for reimbursing training costs, and the extent of such reimbursement through an examination of real cases adjudicated by courts.
II. Legal Issues
- Vocational Training Contracts
Under Paragraph 1, Article 62 of the 2019 Labor Code, an employer and an employee must enter into a vocational training contract when the employee is sent for training, skill enhancement, or retraining—whether domestically or abroad—funded by the employer, including funds sponsored by a partner of the employer.
The vocational training contract must be executed in writing and include the following key provisions:
a) The occupation or skill to be trained;
b) The training location, duration, and wage during the training period;
c) The duration the employee commits to work for the employer after completing the training;
d) The training costs and the responsibility to reimburse such costs;
e) The responsibilities of the employer;
f) The responsibilities of the employee [Paragraph 2, Article 62 of the 2019 Labor Code].
Thus, the law mandates that the parties enter into a vocational training contract when organizing vocational training activities. This contract serves as the basis for determining the rights and obligations of each party during the employee’s training period. Similar to a labor contract (LC), the law respects the parties’ freedom to negotiate the terms of the vocational training contract. Consequently, the employee and employer may freely agree on the terms, provided they include the essential elements outlined in Paragraph 2, Article 62 of the 2019 Labor Code. The more specific and clear the recorded terms, the easier it is for the parties to implement them and resolve any disputes that may arise.
In the case at hand, Mr. Hoàng Công was sent by Company U for training at U Shanghai Co., Ltd., located at No. 501 Long G Road, J Export Processing Zone, Pudong T Street, Shanghai City, China. The training entity, U (Shanghai) Co., Ltd., is the parent company of Company U. The training content covered technical and managerial skills, encompassing both skill enhancement and retraining.
The training process included three days of theoretical instruction, with the remainder primarily devoted to practical training on the production line under the direct guidance of specialized engineers and skilled technicians from U Shanghai Co., Ltd. The purpose of the training was to familiarize the employee with modern machinery and production lines—unavailable in Vietnam—currently in use at U Shanghai Co., Ltd., for subsequent application at Company U in Vietnam (a newly established entity).
The training costs were governed by Company U’s training management policy and the training agreement with the employee. The practical training materials consisted of the factory’s production materials, with the cost of defective products generated during practice factored into the training expenses.
However, the parties did not execute a formal vocational training contract; instead, they signed an “Agreement on the Provision of Training for the Employee” on October 3, 2020. This title does not align with the form required under Article 62 of the 2019 Labor Code. Regarding content, the Agreement on the Provision of Training Services included all requisite elements: the occupation to be trained, the location, duration, and wages during the training period, the committed post-training service duration, the training costs and reimbursement obligations, and the responsibilities of both the employer and the employee. These align with the requirements of Article 62 of the 2019 Labor Code.
- Vocational Training Costs
2.1. Basis for Reimbursement of Vocational Training Costs
Under current labor law, when an employee unlawfully terminates a labor contract (LC) unilaterally (Paragraph 3, Article 40 of the 2019 Labor Code), they are not entitled to severance pay, must compensate the employer, and are also obligated to reimburse vocational training costs. However, the obligation to reimburse training costs does not arise solely from an unlawful unilateral termination by the employee. It must also be assessed based on the terms of the vocational training contract, specifically how the parties agreed on the responsibility to reimburse training costs.
Since this is one of the essential provisions of a vocational training contract, the employer and employee have the freedom to negotiate the conditions under which the reimbursement obligation arises, tailored to their specific circumstances. If the parties agree that the reimbursement obligation applies even when the employee lawfully terminates the LC unilaterally or when the LC ends due to other reasons, resulting in the employee failing to fulfill obligations under the training contract, the reimbursement duty may still be triggered.
In the event of a dispute, the parties and competent authorities will rely on this provision in the vocational training contract to determine the employee’s reimbursement obligation. Absent such an agreement, the employer has no legal basis to demand reimbursement, and the employee bears no responsibility to repay training costs.
In the case of Company U and Mr. Hoàng Công, the court ordered Mr. Hoàng Công to reimburse vocational training costs to Company U based on two key considerations:
First, the court affirmed that Company U’s claim against Mr. Hoàng Công for reimbursement of training costs, stemming from his unlawful unilateral termination of the LC, was well-founded. Mr. Hoàng Công’s resignation letter dated March 5, 2022, cited “personal reasons” and specified his last working day as April 2, 2022. Thus, the court established that the notice of resignation was given on March 5, 2022, and the intended termination date was April 2, 2022.
However, Mr. Hoàng Công admitted to ceasing work on March 29, 2022. On April 3, 2022, Company U issued a decision terminating the LC with Mr. Hoàng Công, fulfilling its obligation to notify him of the termination under Article 45 of the 2019 Labor Code. The issuance of this decision did not signify Company U’s consent to Mr. Hoàng Công’s unilateral termination.
The LC between Company U and Mr. Hoàng Công had a term of 36 months. As an employee, Mr. Hoàng Công had the right to unilaterally terminate the LC but was required to provide at least 30 days’ notice to the company, pursuant to Point b, Paragraph 1, Article 35 of the 2019 Labor Code. In practice, Mr. Hoàng Công failed to provide the requisite 30-day notice, thereby violating this provision. His unilateral termination was deemed unlawful, obligating him to compensate Company U for wages and training costs under Articles 39 and 40 of the 2019 Labor Code.
Second, based on the Agreement on the Provision of Training for the Employee dated October 3, 2020, along with training program documentation (including the list of participating employees, assessment tests for Mr. Hoàng Công, and evidence of training expenses), the court confirmed that Mr. Hoàng Công was sent by Company U for vocational training at U Shanghai Co., Ltd. in China from October 6, 2020, to April 3, 2021.
Under Article 3 of the Agreement dated October 3, 2020, the parties agreed that: Mr. Hoàng Công committed to working for Company U for two years after returning to Vietnam if he accepted training lasting 3 to 6 months. Upon completing the training, he further committed to reimbursing the full training costs proportional to his service duration if he unilaterally terminated the LC.
These two factors demonstrate that Mr. Hoàng Công breached the vocational training agreement by unlawfully terminating the LC and failing to fulfill the committed service period. Consequently, based on the Agreement on the Provision of Training, the court’s order for Mr. Hoàng Công to reimburse training costs to Company U was well-grounded and consistent with legal provisions.
2.2. Training Costs and the Extent of Reimbursement
Paragraph 3, Article 62 of the 2019 Labor Code stipulates: “Training costs include expenses with valid receipts for payments to instructors, training materials, facilities, classrooms, machinery, equipment, practice materials, other expenses supporting the trainee, and wages, social insurance, health insurance, and unemployment insurance contributions for the trainee during the training period. In cases where the employee is sent abroad for training, training costs also include travel and living expenses during the training period.”
Typically, training costs are mutually agreed upon by the parties and recorded in the vocational training contract, as the law does not provide specific regulations on this matter, respecting the parties’ voluntary agreement. However, these costs must be supported by valid documentation proving their legitimacy. This provision curbs arbitrary cost claims by employers while safeguarding the lawful rights and interests of both parties in the labor relationship (LR).
Regarding the training costs claimed by Company U, they included: travel insurance fees of 578,000 VND, personal accident insurance fees of 2,071,950 VND, Chinese visa service fees of 685,000 VND, airfare costs (evidenced by VAT invoices) of 2,196,500 VND, a 2021 Tet allowance of 875,000 VND, training allowances from October 2020 to March 2021 (supported by accounting records, bank transaction statements, and acknowledged by Mr. Hoàng Công), and quarantine travel costs from China to Vietnam of 4,109,400 VND, totaling 51,174,490 VND. These expenses are supported by valid receipts and comply with Paragraph 3, Article 62 of the 2019 Labor Code.
As for costs related to instructors, training materials, facilities, classrooms, machinery, equipment, practice materials, other support expenses for the trainee, wages, health insurance, and unemployment insurance contributions during Mr. Hoàng Công’s training period, as well as compensation equivalent to wages for the days he failed to provide notice, Company U did not claim these amounts, so they were not considered. Had Company U made such claims and provided supporting documentation, it would have been fully entitled to classify these as training costs.
Regarding the extent of reimbursement for training costs, current labor law does not provide detailed regulations, leaving it to the parties’ discretion to negotiate. In practice, such agreements vary widely and flexibly: some stipulate full (100%) reimbursement of training costs, others specify a percentage or fixed amount, while others determine reimbursement based on a deduction proportional to the time the employee worked for the employer post-training. In the Agreement, the parties did not explicitly stipulate whether Mr. Hoàng Công’s reimbursement for training costs, in cases of lawful or unlawful unilateral termination, would be proportional to his service duration. Consequently, Company U’s assertion that Mr. Hoàng Công’s unlawful unilateral termination precluded proportional reimbursement based on service duration lacks legal basis.
The Trial Panel determined that Mr. Hoàng Công’s obligation to reimburse training costs should align with the original terms agreed upon in the Agreement on the Provision of Training. Thus, requiring Mr. Hoàng Công to reimburse training costs proportional to his service duration is well-founded and fully consistent with Article 4 of the 2019 Labor Code. After completing the training, Mr. Hoàng Công worked for Company U from April 4, 2021, to April 2, 2022—a total of 364 days. Therefore, his reimbursement obligation, calculated proportionally to his service duration, is: [(730 days (2 years) – 364 days) / 730 days] × 51,174,490 VND = 25,657,347 VND.
In another analogous case (Judgment No. 09/2022/LĐ-ST dated September 16, 2022, of the People’s Court of Quy Nhơn City, Bình Định Province, concerning a dispute over vocational training and apprenticeship), Ms. Nguyễn Thị and Company K signed Vocational Training Contract No. 07/2021/HDĐTN on May 24, 2021.
The contract stipulated that if Ms. Nguyễn Thị failed to comply with its terms—specifically, not working for the company for a minimum of 36 months—she would be required to reimburse the training costs (set at 110 million VND in the contract’s appendix) and bear legal responsibility. In this case, since Ms. Nguyễn Thị did not report to work at Company K, the company filed a lawsuit demanding reimbursement of the training costs.
Company K provided evidence proving that Ms. Nguyễn Thị participated in 20 training courses (each costing 5 million VND), totaling 100 million VND. Consequently, the court ordered Ms. Nguyễn Thị to fully reimburse 100 million VND, equivalent to 100% of the training costs for the 20 courses.
From these two cases, it is evident that judicial practice reflects varying perspectives on this issue. Some courts mandate full reimbursement of training costs as stipulated in the training contract or commitment [e.g., Judgment No. 15/2013/LĐ-ST dated August 14, 2013, of the People’s Court of Tân Bình District, Ho Chi Minh City], while others determine that the reimbursement amount should be reduced based on the duration the employee worked for the employer [e.g., Judgment No. 781/2014/LĐ-PT dated June 19, 2014, of the People’s Court of Ho Chi Minh City].
From the perspective of prosecutorial oversight in resolving labor disputes related to training cost reimbursement, Guideline No. 33/HD-VKSNDTC dated November 8, 2022, issued by the Supreme People’s Procuracy, advises: “If an employee breaches the commitment regarding post-training service duration, compensation for damages must be based on the actual training duration compared to the agreed training duration; the committed post-training service duration versus the actual service duration; the training costs and their components, thereby accurately determining the appropriate compensation amount.”
Thus, the Supreme People’s Procuracy’s stance is that reimbursement levels should not solely rely on the training agreement’s terms but must also consider the actual versus agreed training duration and the actual versus committed service duration to calculate the reimbursement amount. However, if the initial vocational training contract lacks detailed provisions on this matter, disputes may arise over determining a reasonable reimbursement ratio when actual service time is involved.
Given these practical resolutions in recent years, challenges and inconsistencies persist for competent authorities in adjudicating labor disputes concerning vocational training costs. Moving forward, the law should provide specific guidance to standardize resolutions or expedite the development and selection of legal precedents to ensure uniformity in judicial approaches.
III. Conclusion
Amid advancements in science and technology and the ongoing industrialization and modernization process, training to enhance workforce quality is an inevitable societal need. The State has implemented various policies to support and encourage employers to develop training programs to improve employees’ skills and expertise. Concurrently, legal provisions regulate vocational training to foster employee accountability and curb “brain drain,” a pressing concern for enterprises investing heavily in their workforce. Parties to labor relationships must thoroughly understand and comply with legal regulations to safeguard their lawful rights and interests, as well as those of society, thereby contributing to harmonious and stable labor relationships.
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