Notes on the practice of compensating for vocational training costs in labor disputes

Labor Dispute

Many businesses invest in training and fostering employees’ qualifications and skills to enhance their quality of products and services and increase their opportunities for business expansion. However, the results of vocational training depend on the commitment made between the employer and employee. In some cases, employees do not want to work for their employers after their training, leading to severe investment loss and benefits to their employers. In those cases, should employers have the right to claim compensation from employees for the full amount of their vocational training costs?

In this article, BLawyers Vietnam describes several issues that employers should pay attention to regarding labor disputes about training costs for employees.

1. Agreement on vocational training between employer and employee

Under the labor law of Vietnam, vocational training is understood as training offered to enhance employees’ qualifications and vocational skills, and retraining either nationally or internationally, paid by employers, including costs sponsored by partners to the employer.

Vocational training is agreed upon by the employee and employer and documented under the formality of a vocational training agreement (the “VTA”). The VTA shall have significant content such as (i) the vocational training profession; (ii) the location, duration, and salary during the training time; (iii) the working commitment term after finishing the vocational training; (iv) the vocational training costs and responsibilities for compensation of vocational training costs; (v) the responsibilities of the employer; and (v) the responsibilities of the employee.

The vocational training cost is an important issue in the agreement of both parties and shall be stipulated clearly, specifically in the VTA. There should be grounds to request compensation of an amount from the employee upon his/her breach of obligations of such agreement. By law, vocational training costs include amounts that have valid documentation for necessary expenses such as costs paid to mentors; learning materials, schools, classes, machinery, equipment, practical materials, and other expenses supporting the learner; the salary; the amount of social insurance; health insurance; unemployment insurance; and travel expenses and living expenses.

2. Conditions for the employer to request compensation for vocational training costs from the employee

The employee has responsibility for compensation for vocational training costs to the employer in the following circumstances:

Circumstance 1: The employee terminates the labor contract (the “LC”) under the law

Though no regulation exists in the labor law on the employee’s responsibility in such circumstances, the Law on Vocational Education 2014 stipulates that the employee shall work for the employer according to the committed term under the VTA after completing the vocational training; and if the employee fails to honor such commitment, they shall reimburse the employer for the vocational training costs. Therefore, employees have the responsibility to compensate the employer for these costs if they breach their obligation to fulfill the working term after the completion of their vocational training.

Circumstance 2: The employee unlawfully terminates the LC

If the termination of the LC is out of the circumstances that the employee has the right to unilaterally terminate the LC by law, it is defined as an action of unlawfully and unilaterally terminating the LC. Accordingly, the employee shall perform the following obligations towards the employee beginning with the date of occurrence of the above event:

  1. Compensating the employer half of the salary according to the LC and an amount corresponding to the salary according to the LC on unannounced days;
  2. Reimbursing vocational training costs for the employer under the VTA signed by both parties; and
  3. Not receiving severance allowance.

The employer should be aware that the employee only has the obligation to compensate the full vocational training costs to the employer if he or she has breached the vocational training agreement. If the employer requests the employee to pay an amount corresponding to fines for violation due to a violation of contractual obligations, this would be unlawful according to the labor law.

Thus, in the event the employer intends to have an amount added to compensation for vocational training costs from the employee, both parties shall have an agreement on a clause about contract violations. Then, the employer has the right to request that the employee pay a fine for the violation of failing to honor his or her commitments under the VTA.

3. Notes on the practice to prove the employee’s obligation to compensate for vocational training costs

When requesting a competent court to settle a dispute about compensation for vocational training costs after an employee has failed to make a commitment about the working term after completion of vocational training, the employer should note that the competent authority conducting the proceedings will re-evaluate the amount that the employer has requested the employee to compensate.

According to our experience, the appropriate compensation amount shall be based on the validity of the agreed contents on vocational training under the LC or VTA or other written agreements between the employer and the employee, and should clarify the following details:

  1. Is there actual vocational training that would give rise to liability for compensation of training costs to the employee?
  2. Compensation shall be based on the actual training time and the training time in the agreement; the committed term to work after training and actual working time; and
  3. Training costs and expenditure items under the agreement and actual circumstances.

Therefore, the employer should pay attention to preparing evidence consistent with the above assessment criteria to prove the employee’s responsibility to compensate for training costs, and to show that the employer’s request for compensation for a specific amount is appropriate to the agreement between both parties and the provisions of law.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at BLawyers Vietnam would love to hear from you.

Date: 7 November 2023

Writer: Uyen Tran


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