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Shortcomings in the applicable Labor Code with respect to training fee repayment

Training is one of the pressing requirements for both employees and employers with an aim at not only enhancing the employee’s skills but also keeping him/her much more tied to his/her job. As usual, there exists an undertaking/agreement signed between the employee and the employer, and accordingly, the employee undertakes to work with the employer for a period of time after his/her training (with or without other conditions), otherwise he/she will have to repay  the actual training fee disbursed by the employer.

The 1994 Labor Code (amended and supplemented in 2002, 2006 and 2007) also regulated: “In the case where the employee unilaterally terminates the labor contract, he/she must compensate for training fees (if any) as stipulated by the Government” (Clause 3 of the Article 41). The question is posed as to what is “the unilateral termination of the labor contract” and only with the regulation of Clause 3 of Article 41 can people understand that the employee must make up for training fees even though he/she unilaterally terminate the labor contract in a lawful fashion according to Article 37 of the Labor Code. Many enterprises have recently had a lot of queries as to this matter.

However, according to Decree No. 44/2003/NĐ-CP of May 09, 2003 detailing and guiding implementation of various articles of the Labor Code with respect to the labor contract (“the Decree 44”) and the Circular No. 21/2003/TT-BLĐTBXH of September 22, 2003 guiding implementation of Decree 44, “the employee, who unilaterally terminates the labor contract, must compensate for training fees (…), except for the case where the labor contract termination is conducted in full and in compliance with the regulations in Article 37 of the Labor Code” (Article 13 of  Decree 44).

As such, Decree 44 lays out all regulations with exception to those concerning training fee compensation which had not been mentioned by  Clause 3 of Article 41 of the Labor Code. It is understandable that the guidelines in Decree 44 stem from protection of the employee’s legal rights and interests and are completely logical in a situation where labor contract termination is either due to an employer’s faults (Points a, b, c, Clause 1, Article 37) or an employee’s health problems (Points e, g, Clause 1, Article 37).

However, in the two remaining cases, there are situations where failure to compensate for training fees proves unfair to the employer or where no consensus is easily reached  (take one situation for example, the employee states that “he/she cannot continue carrying out the contract because of his/her own difficulties or actual familial plights,” but the employer does not agree so. For the case of “being selected into an elective post or nominated into an office in the state apparatus”, the employee will not be liable for compensating for training fees if before engaging in the training, he/she participated in an election or was aware of a future nomination into an office in the state agency and the employer was completely unaware of this, and after completing the training, he/she sends a legal letter of resignation in accordance with Point đ, Clause 1,  Article 37 in the Labor Code.

Even more illogical, the likely events of Points d, đ, Clause 1, Article 37 are illustrated in a case where the employee, under an indefinite labor contract unilaterally terminated their labor contract in compliance with the advance notice term, but fails to mention (Clause 3, Article 37), that they will not be liable for training fee compensation[1]. Suppose for a minute that an employee is still required to repay training fees regardless of whether they provided proper notice for the termination of their labor contract or not. Is that a fair stipulation?  If this is considered from a legal perspective, it is much more likely that the guidelines of Decree 44 will apply rather than that above commitment. This application is further supplemented by a specific decision of MoLISA as of May 2008. And is it rational that the employee either participate in the training held by his/her employer or pay for training fees despite his/hers official notice of labor termination predates such training?

It is due to such shortcomings that many employers waver over conducting labor personnel training. These types of decisions are especially cumbersome when considering issues such as sending employees abroad to study. Obviously such types of costs are justifiable to the company only if the employee intends to work with the company on a long-term basis. On the other hand, it is this hesistation to invest in employees that inevitably deprives them of chances for personal and career development. It is expected that the future Labor Code will straighten out these issues by researching and promulgating more rational amendments and guidelines on training fee repayment. Thus, it is believed that the contents therein of  Decree 44 in conjunction with  MoLISA’s guidelines being perceived as unchanged, at least in the case of termination of employment in accordance with Clause 3, Article 37 of the Labor Code or in the event that the parties reach another written agreement on training commitments (such parties will agree after understanding the commitment contents) and such agreement are implemented, that employers will again be actively interested in training employees, ensuring the legal rights and interests of both parties and improving positive values of such regulations.

[1] The Ministry of Labor, War Invalids, and Social Affairs also put out such guideline on a specific case in the Official Letter No. 2171/LĐTBXH-LĐTL of June 23, 2008, on corporate training fee compensation.