Employee training costs is one of the costs related to human resource development in the enterprise. This is an investment that helps improve the skills, professional knowledge and work performance of employees. Manage and optimize training costs Help businesses balance their budgets effectively, while improving the capacity of their human resources.
In the article below, let's learn about employee training costs with Bizzi.
What is the cost of employee training?
Training Costs is the total cost that a business must spend to improve the skills, knowledge and productivity of its employees. This is an important investment to improve performance, reduce errors and increase the competitiveness of the business.
– Define training costs according to Clause 3, Article 62 of the 2019 Labor Code.
- Payments for teachers, learning materials, schools, classes, machines, equipment, and practice materials.
- Support costs for learners.
- Salary, social insurance, health insurance, unemployment insurance for students during their study period.
- For overseas training: travel expenses, living expenses.
– The role of employee training costs:
- Improve skills & work performance.
- Reduce errors, optimize operating processes.
- Increase employee satisfaction & retention.
- Improve business competitiveness.
The main factor of employee training costs
- Number of employees participating in training: The size of the participants directly affects the total cost incurred. The more participants, the higher the cost. This can increase lost opportunity cost of training, because some of the resources and time were spent on training instead of the main job.
- Training budget: Level business investment costs pay for training activities. Without proper budget planning, training costs can exceed expectations, affecting impact on revenue of the company, when resources are not allocated efficiently.
- Type of training: Includes internal training, external training, online or in-person. Each type of training has different cost characteristics. In particular, inappropriate training programs can lead to cost of maintaining knowledge ineffective, reducing the ability to apply to practical work.
- Training time: The longer the training time, the higher the cost (instructor rental, location, support tools…). However, if the training time is optimized, it can be minimized. lost opportunity cost of training and increase efficiency for both employees and businesses.
- Effectiveness after training: Measured through productivity, new skill adoption, and employee retention. Attrition rate after training is an important factor to consider. If the turnover rate is high, the business may lose what it has invested in training costs, reducing the effectiveness of this strategy.
Types of employee training costs
– Direct costs are expenses that are clear and can be measured immediately, including:
- Cost of hiring lecturers and training experts (if using external resources).
- Cost of training materials, textbooks, and software.
- Cost of renting location and equipment for training (if not training at the company)
- Technology costs (E-learning software, internal training platforms).
– Indirect costs are costs that are not immediately visible but still affect the business:
- Employee salary in training time (employees attend training instead of working).
- Internal instructor salary (if using experienced staff for training).
- Opportunity cost (time spent training instead of focusing on the main job).
– Hidden & long term costs are some of the costs that may arise during the training process:
- Cost of ongoing training support (workshops, new skills updates).
- Cost of retaining employees after training (if employees leave after training, the business loses this investment).
- Retraining costs (if any) Training content ineffective or not applicable by staff).
Regulations on employee training costs
– Are training costs deductible when calculating corporate income tax (CIT)?
According to Article 4, Circular 96/2015/TT-BTC, businesses are allowed to deduct all expenses if they meet the following conditions:
- Actual expenses incurred related to production and business activities.
- Expenditures have sufficient legal invoices and documents as prescribed by law.
- Expenses for purchasing goods and services from VND 20,000,000 or more (including VAT) must have non-cash payment documents.
– Expenses for vocational education and training activities for employees are deductible:
- Costs of paying instructors, materials, equipment, practice materials, and other support costs.
- Training costs for employees recruited to work at the enterprise.
– Documents required to include training costs in reasonable costs:
- Document issuing decision for employees to participate in training.
- Signed employment contract.
- Commitment to continue working after completing the training program.
- Tuition invoice and related payment documents (bank transfer if over 20,000,000 VND).
- Clearly stipulate sending employees to study in the company's salary and bonus regulations.
- Training costs incurred prior to the establishment of the business may be gradually allocated to business expenses over a maximum period of 3 years.
– Are training costs subject to personal income tax (PIT)?
- According to Clause 2, Article 2, Circular 111/2013/TT-BTC: Payment for training to improve qualifications and skills in accordance with the job or according to the unit's plan is not included in the employee's income.
- Official dispatch 5249/TCT-TNCN dated November 15, 2017 of the General Department of Taxation also affirmed that tuition support appropriate to professional expertise for employees is deductible when determining personal income tax.
– Are training fees deductible for value added tax (VAT)?
- According to Article 14, Circular No. 219/2013/TT-BTC: Input VAT of goods and services used for production and trading of goods and services subject to VAT is fully deductible.
- Important Note as Follows Clause 13, Article 4, Circular No. 219/2013/TT-BTC: Teaching and vocational training according to the law are not subject to VAT.
- Therefore, if the training unit is not subject to VAT, the output invoice will not have VAT, and the enterprise will not have input VAT to deduct. The enterprise only training cost accounting at reasonable cost.
Accounting for employee training costs
Employee training costs can be recorded in a number of ways, depending on the business's accounting policies and purposes. Here's how. Accounting for employee training costs according to normal accounting standards.
– Accounting for training costs for staff serving management activities:
- Debit account 642 (Business management costs): Employee training costs.
- Have accounts 111, 112, 331: Amount paid for training services.
- Illustrative example. Accounting for training costs for direct production staff:
Debit account 627 (Overall production costs): Cost of training workers and production staff.
Have accounts 111, 112, 331: Amount paid for training services.
Illustrative example.Accounting for training costs for sales staff:
- Debit account 641 (Cost of sales): Cost of training sales staff.
- Have accounts 111, 112, 331: Amount paid for training services.
Note: Training costs required full valid documents such as training contracts, invoices, payment documents to be recorded as reasonable expenses.In case of large training costs can be gradual allocation (maximum 3 years):
- Initial note: Debit account 242 (Prepaid expenses), Debit account 133 (if any), Have accounts 111, 112, 331.
- Periodic allocation: Debit account 623, 627, 641, 642, Have account 242.
Notes when accounting for employee training costs
- Determine the correct account: Depending on the training purpose, record the appropriate expense.
- Store valid documents: Invoices, training contracts, and lists of participating employees to avoid risks when settling taxes.
- Tax policy: Some training expenses can be counted as reasonable expenses to reduce corporate income tax (CIT), but must comply with tax authority regulations.
When do employees have to pay for training costs?
Cases where employees do NOT have to compensate for training costs:
- Training is geared towards individual goals and is consensual.
- Change of position or job within the same unit without the employee's consent for health or preference reasons.
- Due to merger, division, dissolution, transfer, or restructuring of the employing organization.
- Training to ensure occupational safety, fire prevention, environmental protection and health.
- Unable to complete or continue work under the training program due to personal reasons within the organization's training plan.
- Pregnant female workers must terminate their apprenticeship or labor contract upon confirmation from a medical facility.
- Enterprises do not sign labor contracts with apprentices after completing their studies.
- The employee terminated the employment contract legally.
Cases where employees MUST compensate for training costs:
- Employees unilaterally terminate their employment contracts during training.
- When the two parties have an agreement on compensation for training costs in the contract.
- Officials, civil servants and public employees who voluntarily quit and do not fully participate in the training process.
- Officials, civil servants and public employees who have not served the required time after training and unilaterally terminate their contracts.
- Employees who quit their jobs or terminate their employment contracts before the end of the agreed training period have completed their training.
- Employees who quit their jobs or terminate their labor contracts after completing the agreed training period but have not completed the required time of employment.
- Employees transfer to work for another unit immediately after completing the training period.
- The employee was fired by the recruiting unit due to violating labor regulations during the training period.
What are the principles and levels of compensation for training costs?
Level training cost compensation depends on the internal policies of the company, the labor contract, the training contract and the legal regulations of each country. Below are the factors that affect the compensation level and how it is calculated.
Principles of compensation for training costs
– Enterprises have the right to request employees to compensate for training costs if:
- Employees are sponsored by the company for training but quit job before the committed date.
- Have training contract or binding terms in employment contract.
- The company has invested significant costs in employee training.
– Enterprises cannot claim compensation if:
- There is no commitment agreement prior to training.
- Training is mandatory according to company regulations without any binding conditions on working time.
- Employees quit due to the company's fault (unjustified dismissal, company breach of contract, etc.).
Legal regulations on compensation for training costs in Vietnam
– According to the 2019 Labor Code (Article 62):
- If the company and employee have a training contract that includes a commitment to work for a certain period of time, then when the employee leaves early, they must compensate for the training costs according to the agreement.
Without a training contract, the business cannot claim compensation.
– According to Circular 10/2020/TT-BLDTBXH:
- Enterprises are not allowed to keep employees' degrees and certificates to force compensation.
- In case of dispute, the compensation level will be decided by the court based on the training contract and legal regulations.
Compensation calculation formula (S):
- S = F/T1 x (T1 – T2)
- F: Total actual training costs are paid by the agency or unit.
- T1: Time required to work after training (in rounded months).
- T2: Time served after training (in rounded months).
Note: Compensation not to exceed the amount paid for employees during their employment at the previous employer.
Employee training methods help optimize costs for businesses
Employee training costs are an important investment but can be optimized to reduce budgets while still ensuring training quality. Here are some training method and tools to help businesses Optimize training costs effectively
- Building an internal training system (LMS – Learning Management System): Enterprises build their own learning materials warehouse, saving on external training costs.
- Apply blended learning model: Combine direct + online training to save costs, help employees learn flexibly, and reduce work interruptions.
- Using AI & Chatbot to support training: Chatbot can guide the process, answer questions 24/7, thereby saving costs for lecturers and reducing pressure on the HR department.
- Building an internal training culture (Peer-to-Peer Learning): Save costs on hiring experts, train with good employees; help employees learn from each other, improve team spirit.
- Take advantage of external training support policies: Cooperate with universities and professional associations for training.
During the operation of a business, common costs often arise, related to many units (departments, projects, stores, etc.). Bizzi helps users allocate total costs into smaller costs corresponding to each department and specific project, helping to accurately determine the actual expenditure and remaining budget of the business units.
Conclude
Employee training costs are an important investment for businesses, but they also need to comply with legal regulations and internal policies. Particular attention must be paid to Labor Law, Corporate Income Tax Law (Circular 96/2015/TT-BTC), as well as Training contract (Article 62 of the 2019 Labor Code).
Training costs may include: Tuition fees for courses, seminars, certificates; Travel and accommodation costs (if any); Costs for documents, textbooks, supporting software; Salaries for employees during training (if required). The larger the enterprise, the more complicated these training costs are, not to mention other costs related to production and operation.
Bizzi is proud to offer solutions comprehensive cost management, helping businesses optimize employee-related budgets, from business expenses to internal expenses. With Bizzi, businesses can control and allocate budgets appropriately, ensuring transparency and improving operational efficiency.
Flexible budget management, tight spending control
- Plan budgets for each department, project or employee.
- Automatically monitor and alert when costs exceed expectations.
- Update budget overview and spending by employee via intuitive dashboard.
Support for managing all human resource costs reasonably and transparently
- Cost of work: Air tickets, hotels, food, transportation…
- Working costs: Stationery, support equipment…
- Guest cost: Food, entertainment, gifts…
Automatically collect and aggregate cost data
- Automatically extract information from Electronic invoice, receipts, emails…
- Flexible connection with accounting software, mobile applications help manage costs easier.
- The system synchronizes data for each employee, helping businesses grasp costs accurately and quickly.
In addition, Bizzi offers many service packages with the most suitable and competitive prices on the market compared to the needs of each business such as Receiving both electronic invoices & receipts, Financing with corporate credit cards, etc.
- Registration Try Bizzi Expense Management for free today!
Read more: