Refund of Training Costs Upon Termination of Employment: Detailed Legal Regulations

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Refund of training costs upon termination of employment is one of the important regulations protecting the rights and interests of employers. When an employee receives training financed by the company to upgrade their professional skills, but subsequently unlawfully unilaterally terminates their employment contract, are they required to refund all of these costs? The article below will provide a detailed analysis of the current legal provisions on this matter.

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Circumstances requiring refund of training costs upon contract termination

According to the 2019 Labor Code, Clause 3 of Article 40 clearly provides:

An employee must refund training costs as specified in Article 62 of this Code to the employer.

This applies only in the case where an employee unlawfully unilaterally terminates their employment contract. That is, an employee must bear responsibility for refunding training costs when they:

• Fail to comply with the required notice period
• Unilaterally terminate the contract without justifiable reasons recognized by law
• Breach the committed period of work following the completion of training

This does not apply in cases where an employee terminates the contract for justifiable reasons (such as the employer breaching the contract, failing to pay full wages, abandoning work without cause) or where the employer terminates the contract.

What does training cost include?

To clearly understand the scope of training cost refunds, it is necessary to understand the legal definition of training costs. Clause 3 of Article 62 of the 2019 Labor Code provides detailed specifications:

Training costs include expenditures with valid documentation for payments to instructors, learning materials, schools, classes, machines, equipment, practice materials, other expenses supporting learners, and wages, social insurance contributions, health insurance, unemployment insurance for learners during the training period. When an employee is sent for training abroad, training costs also include travel expenses and living expenses during the training period.

Training costs include:

Cost Type	Details
Labor costs	Instructor fees, trainee wages, insurance contributions (social insurance, health insurance, unemployment insurance)
Materials & facilities costs	Learning materials, school/class fees, machines, equipment, practice materials
Other support costs	Other expenses supporting learners
Overseas training costs	Travel expenses, living expenses (if training is conducted abroad)

Important principle: All costs must be supported by valid documentation, not estimated or self-calculated expenses. This is a mandatory condition for the company to be able to request refunds.

Vocational training contract: Prerequisite condition

Clause 1 of Article 62 of the 2019 Labor Code provides:

The parties must execute a vocational training contract in cases where an employee receives training to upgrade their professional level, skills, or receives retraining within the country or abroad financed by the employer, including financing contributed by sponsors to the employer.

For an employer to be able to request refund of training costs, a written vocational training contract must be executed between the parties. This contract must include the following main content:

• Specific vocational training subject
• Training location, duration, and wages during the training period
• Committed period of work following completion of training
• Training costs and responsibility for cost refund
• Employer's responsibilities
• Employee's responsibilities

If the company does not execute a training contract before sending an employee for training, the company will lose the legal basis to request refund of training costs. This is a legal mistake many companies make.

Other compensation obligations when unlawfully unilaterally terminating the contract

When an employee unlawfully terminates the contract, in addition to refunding training costs, they must bear other compensation obligations under Clauses 1 and 2 of Article 40 of the 2019 Labor Code:

• Not entitled to severance allowance from the company
• Must compensate half a month's salary according to the employment contract
• Must compensate wages for days without prior notice or for failing to comply with the notice period

Therefore, employees need to carefully consider before deciding to leave their job early, as they may have to pay multiple compensation amounts simultaneously.

Calculation method and determination of training cost refund amount

The law does not provide a formula for calculating the gradual reduction of refundable costs over the time worked after training completion. However, in practice, training contracts often provide:

• If the employee leaves during the commitment period → refund all training costs
• If the contract provides for gradual reduction → refund according to percentage ratio depending on the work time after training completion
• If there is no specific provision → according to principle, must refund all costs with valid documentation

It is important that costs be calculated based on actual documentation, not estimated figures or self-generated amounts.

Rights and responsibilities of both parties

Although the provision on refund of training costs aims to protect the employer's interests, the law also recognizes the employee's rights:

• The employer has the right to request refund of training costs but must provide evidence of these costs (invoices, training contracts, certificates).
• The employee has the right to dispute the refund amount if they believe the company charged invalid or excessive costs.
• If an employee terminates the contract for justifiable reasons (employer breach, non-payment of wages...), they are exempt from refunding training costs.

Legal considerations when executing a training contract

To avoid disputes regarding training cost refunds, both the company and the employee should:

• Execute a written training contract before sending the employee for training
• Clearly specify the commitment period of work after training completion (for example: 3 years, 2 years...)
• List specific training costs with valid documentation (invoices, receipts...)
• Determine the calculation method for gradual reduction if the employee leaves during the commitment period
• Preserve all relevant evidence regarding costs to have basis for requesting refund

Without a training contract or with unclear content, the company will face difficulties in proving training costs when disputes or complaints arise.

A&D Law Firm is a business legal advisory firm specializing in labor law matters. If your enterprise needs assistance in drafting, modifying training contracts or requires advice on rights when employees terminate their contracts, please contact us for timely support.

This article is for general legal reference purposes only and does not substitute for specific legal advice tailored to your particular circumstances. Each legal situation has unique characteristics. To receive accurate advice on training cost refunds or labor disputes, please contact a lawyer or legal advisory organization directly for detailed assistance.

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