As is known to all, the current PRC Employment Contract Law (effective as January 1, 2008) empowers the employer such management right to enter into service bond agreement with employees if the employer provides professional technical training or undertakes professional training fee for its employees. However in actual practice, certain employers tend to broaden the scope of such training so as to execute service period agreement with its employee. Accordingly, the effectiveness and enforcement of such service bond agreement are questioned a lot in judicial practice. Therefore it is of great reference and practical significance to research and define the concept of professional technical training.

Currently relevant rules governing “professional technical training” in PRC laws can be found mainly in the Labor Contract Law (effective on January 1, 2008), the Implementation Regulations for the Labor Contract Law (effective on September 18, 2008) and the Shanghai Labor Contract Rules (effective on May 1, 2002). Article 22 of the Labor Contract Law stipulates that “where an employer pays special training expenses for special technical training of his employees, the employer may enter an agreement with his employees to specify their service time period”. Article 16 of the Implementation Regulations for the Labor Contract Law expressly provides that the aforementioned training expenses include training expenses, travel expenses, and any other direct expenses. Additionally, Article 14 of theShanghai Municipality Labor Contract Rules stipulates similarly as above. Current PRC legislation relating to special technical trainings is relatively simple and general, focused on emphasizing a company’s right to enter into service period agreements with employees on special technical training. There is, however, no specific direction on the recognition of special technical training. On this account, this article discusses and analyzes the recognition of special technical training based on prior experience and judicial practice.

According to practical experience and case research, special technical training generally refers to professional training provided by an employer with additional expenses to its employees for the purpose of raising specific vocational skills, work quality, professional knowledge etc. It can be off-the-job, partly off-the-job or in special circumstances, entirely on-the-job. Such training can be conducted by a third-party or an affiliate. The training location can be domestic or overseas. In practice, the following aspects will be considered in determining a professional technical training:

First aspect is the content and purpose of the training. Trainings can be classified as regular positional training and professional technical training from this aspect. Regular positional training generally refers to essential skills training provided by the employer to the employee, including pre-employment training, training on routine matters, company SOP training, etc., the purpose of which is to equip the employee with the skills necessary for the functions of the position and usually will not be considered professional technical training. Professional technical training refers to training complementary to the nature of the employee’s work, the content of which relates to vocational skills and professional knowledge. The purpose of such training is usually to enable employees to better perform their duties and even to take up higher positions. Trainings higher than the basic requirements of the employee’s job (e.g. enrolling a low-level manager in an MBA course) will be more readily recognized as professional technical training. For example, the Shanghai Second Middle People’s Court heard a labor dispute case and the trial judge found that the contents of the two trainings are the work process management and operating system, both of which are essential positional skills training instead of professional technical training, and thus the company cannot ask for liquidated damages.

Second aspect is the form of training. As stated before, professional technical trainings take on diverse forms. In situations when the training is off-the-job or partly off-the-job, and the employer pays the employee contractual salary and further provides the employee with training time, it is more likely to be considered professional technical training. Situations when the training is conducted in classrooms at independent venues, without contribution to the business of the employer will also be readily treated as professional technical training. However, when it comes to a positional practical training, different circumstances need considering: (1) if the training provides specifications and materials, and the process is purely academic with guiders, it will be more easily categorized as professional technical training; (2) if the employee continues contributing to the business of the employer or its affiliates, it will be hard to categorize the training as professional technical training.

Thirdly, the training period also matters. The period of professional technical training should be reasonably stable and sustainable. A training spanning merely one business day or weekend will not be considered professional technical training.

Fourthly goes the training provider. If the training is provided by an independent third party organization, it will be more likely to be categorized as professional technical training. If the training is provided by affiliates, other factors (such as the training content and incurrence of training expenses) must be taken into consideration. If such training is provided by an internal staff or trainer of the employer, it will be more likely to be viewed as an internal training.

Also worthy of notice is training expense. It's imperative to identify if any specific fee occurs during the training in any way. If the employer paid for the training fees, living allowance and other expenses which could be proved by invoices and records, it will aid the affirmation of professional technical training. If the training was provided by an affiliate, and there is a training agreement, fees arrangement, and the transactions were really concluded, it will aid also the affirmation. Conversely, the training may not be considered professional technical training if it did not cause any real expense to the employer. Internal training is hard to be proven by external invoices, and is very difficult to gain judicial support if entering into a service period obligation with an employee under such circumstance. For example, Shanghai First Middle People’s Court heard a labor dispute and acknowledged that the employer provided off-the-job overseas warehouse operations training and burdened expenses for airfare, accommodation, living subsidy etc. The training was found to be a professional technical training.

Furthermore, a service period agreement with a clear and detailed description of the nature of the training should also be taken into account: First, the signed agreement demonstrates that the employer had fulfilled its obligation of informing, and that the employee has expressed acknowledgment to the nature of the training. Further, such professional technical training agreement should expressly stipulate the content, duration, expenses, service period and other important rights and obligations of both parties. The employer should make specific provisions for each of these previous four factors, since they are integral to determination of professional technical training.

Lastly, there are other factors at play as well. As stated above, many other changing factors affect the determination due to certain simplicity in the legislation. E.g. (1) if the employee held a working visa while away on an overseas training, it could be a bit difficult to prove professional technical training; (2) if the employer allows the employee to revise for a certification off the job with pay, and provide incentive awards after the certificate is awarded, this will not be considered special technical training since both parties lack the express intention to conduct training.

In conclusion, should an employer wish to provide its employees with professional technical training, it should try its best to fulfill the following four aspects:  First, a professional technical training agreement must be signed with the content expressly stipulating the nature, content, duration, expenses, service period, other rights and obligations of each party, etc. Second, the contents of the training should complement the nature of the employee’s position and should involve vocational skills and professional knowledge. The purpose of the training should be to enable employees to better perform their duties and even take up higher positions. Third, should the employer appoint a third party to conduct the training, a training agreement should be signed with the third party, clearly stipulating the specific fees and details of the training. If the employer provides funding, in the form of fees subsidy or other expenses, towards the employee’s courses, it should retain all documentary evidence relating to matters such as student recruitment, academic content, study plan and school fees. Last, in the actual conduct of the training, detailed evidence of all relevant training and related expenses and transaction records should be retained as much as possible. Legal advice should be obtained if the employer is unable to determine a professional technical training.

There is currently no explicit statutory definition of professional technical training. The above analysis is constructed on our understanding of the legislative intent, with reference to present judicial practice. The discretion might appear if other factors are involved. As such, we advise companies to operate on a cautious level and concurrently pay close attention to judicial trends.