1. Can the period that the Employee undertakes to spend working for the Employer according to the training contracts be longer than the term of the signed LC?
According to Article 62.2 of the Labour Code, training contracts must include the following main contents: a) The trade in which training is provided; b) Location, period and wages during the training period; c) Time committed to compulsorily work after being trained; d) Training fees and responsibility to refund training fees; dd) Responsibilities of the Employer; e) Responsibilities of Employee. However, the Labour Code and its guiding documents do not provide guidelines on the period that the Employee undertakes to work as compared to the term of the signed LC.
As such, the labour law allows the Employer and the Employee to freely agree on matters in training contracts, including the provision on the period that the Employee undertakes to work for the Employer after being trained. In other words, the parties may agree on a working period in training contracts longer than the term of the signed LC.
2. If yes, is it all right for the Employee not to enter a new LC when his or her LC expires?
According to Article 34.1 of the Labour Code, when the LC expires but the Employer and the Employee cannot reach an agreement on entering the new LC, the two parties may terminate the LC (except for the case the Employee is a member of the leadership of an organisation representing employees in enterprise, while the LC expires, the LC shall be extended to the end of the office term). However, the labour law does not provide particularly for whether the Employee may terminate the LC on the basis that LC has expired and they do not wish to enter into a new LC while the period for which they undertake to work for the Employer under training contracts has not expired. Regarding this matter, there are now two points of view defending the Employer and the Employee as follows:
The first point of view – defending the Employee is based on the perspective that the LC has been signed between the Employer and the Employee. In particular, Article 34.1 of the Labour Code allows the parties to terminate the current LC if they cannot reach agreements on signing a new LC when the current LC has expired (except for the case the Employee is a member of the leadership of an organisation representing employees in enterprise as aforesaid). So, if the Employer and the Employee cannot reach agreements on the regimes for the Employee to enter into the new LC (e.g. properly raising salary, strengthening reasonable benefits for the Employee more than in the expired LC due to years of employment or based on the result of the training) the Employee is fully able to terminate the current LC by law, regardless of there are agreements between the parties on the commitments of the Employee to work for the Employer with the work term more than the term of the signed LC. This will help defend the Employee in case the Employer, for any reason, wanst to keep the current salary unchanged or even to reduce the current salary, to change the working conditions for the Employee which adversely affect the legitimate rights and benefits under the LC of the Employee.
On the other hand, the second point of view – defending the Employer – arguing that the two parties have established a civil relationship through training contracts, so they are obliged to perform the obligations in training contracts, including the commitment on the period of working for the Employer. Accordingly, when the LC has expired, the Employee is obliged to enter into the new LC with the Employer to complete the obligation on the period within which he or she has undertaken to work for the Employer in training contracts, instead of unilaterally requesting pay raises or benefits.
In consideration of the two points of view above and, to minimise legal risks as well as strengthen evidence before Courts in case of disputes with the Employee, the Employer should expressly set forth in training contracts a provision that the Employee is obliged to enter into a new LC when the signed LC expires to ensure compliance with the provision on the period within which the Employee undertakes to work as prescribed in training contracts. In addition, the Employer should also specify the obligation to refund training costs in case the Employee fails to comply with the provision on the committed working period (including the case where the Employee requests to terminate the LC and training contracts for the reason that the LC has expired). The Employer will thereby have a solid ground to defend their right and interest before the Court in case of a dispute with the Employee.
2. Is it correct that the compensation amount must be diminished according to the time that the Employee has spent working after the training course or just a violation will force him or her to pay the whole compensation amount? Can the Employer specify a compensation amount larger than the amount that they have spent on the training course?
According to Article 62.2 of the Labour Code, one of the contents that must be included in training contracts is the Employee’s liability to refund the training costs that the Employer has spent for the Employee. So, there is no regulation on other amounts that the Employer may request the Employee to pay besides the training costs. Since the spirit of labour law is to protect the Employee’s right and interest as a weak party in the labour relationship, if the Employer specifies a provision that the Employee must pay another amount, besides the training costs, for the Employee’s breach of training contract (even larger than the total training costs that the Employer has spent on the training course), this may be considered as not in line with the Labour Code. Then, if the Employee initiates a lawsuit at a competent Court, it is possible that the Court will not accept the Employer’s request for compensation in this case. As such, the Employer should only specify the obligation of refunding training costs in case the Employee breachs the signed training contract.
Concerning the refund of training costs, the applicable labour law does not particularly provide for how much the Employee must refund to the Employer when he or she breaches the training contract. Therefore, this amount will depend on the agreement between the parties in training contracts and the relevant valid invoices or source documents as prescribed by the law on CIT. However, in practice, some enterprises often apply the principle of diminishing the training costs according to the time that the Employee has spent working for the Employer following the training course. For example, the period within which the Employee undertakes to work for the Employer is 24 months, if the Employee resigns between the first month and the twelfth month from the time the training course ends, he or she must refund 75% of the training costs to the Employer. If the Employee resigns between the thirteenth month and the twenty-fourth month from the time the training course ends, he or she must refund 50% of the training costs to the Employer. The calculation method based on percentage is fair for the Employee and also a way to prevent possible disput from the Employee.