To retain talent after investing in expensive training, employers often require employees to sign a training contract covering, among other things, work commitment and reimbursement of training costs. In that context, the critical legal question arises if there is a conflict between the provisions of the training contract and the employment contract which of the two will prevail. For example, if an employee exercises their right to terminate the employment contract under the Labor Code, can they disregard the work commitment and avoid reimbursement penalties stipulated in the training contract?

Arguments in favour of the employment contracts

· Various issues under the employment contracts such as termination rights of the employees, employment disciplines and penalties are not only provided in the employment contract but also in the Labour Code. Accordingly, one could argue that in case of conflict between the employment contract and the training contract, the employment contract with the backing of the Labour Code should prevail.

· For example, the Labour Code allows an employee to terminate an employment contract at any time by providing sufficient notice only. The Labor Code generally only requires reimbursement for illegal termination, and keeps silent on reimbursement obligations when the termination is lawful. Accordingly, even if there is an work commitment under the training contract, the employee can still argue that as long as he/she sends a proper notice, the termination is deemed legal and no penalties should be applied.

Arguments in favour of the training contracts

If an employee could rely on the employment contract to get out of work commitment and its related penalties under the training contract then what is the point of the training contract? Therefore, a more reasonable approach is to treat the training contract as an independent civil agreement separate from the employment contract. Such provision constitutes a civil obligation.

Consequently, resigning early, even with proper notice under the Labor Code, can constitute a breach of the civil commitment in the training contract and trigger the relevant penalties. Some public judgements indicate that the courts seem to protect an employer’s right to reclaim its paid training costs if an employee fails to fulfil his/her commitment specified in the training contract.

However, treating all commitment under the training contracts as “civil obligations” could allow the employers to impose restrictions or constraints on the employees which are not permitted under the Labour Code. For example, the employer may impose severe penalties on the employee (e.g., paying penalty of 10 times of the training costs) to prevent him/her from leaving.

Accordingly, the authorities and the courts may have to balance between the training contracts and the employment contracts. In the meantime, employers wishing to strengthen the resilience of their training agreements should consider drafting the vocational training contract as an independent civil agreement, separate from the employment contract. Crucially, the document should explicitly state that it is governed by the Civil Code and that its terms prevail over the employment contract in the event of any inconsistency.

This blog is written by Ha Kieu Anh and edited by Nguyen Quang Vu.

Vietnam Business Law