Most mercenary units try to avoid actual warfare, preferring to be deployed to patrols, garrisons, and punitive expeditions against peasants. After all, real fighting leads to real dying, and dead mercenaries collect no wages! As a result, the average human mercenary is a 0th level normal man (1-1 HD, attack throw 11+, damage by weapon).
Mercenary units with experience of real war are known as veterans. Veterans will generally be 1st level fighters or explorers. They will have morale scores 1 point higher than the base morale for their troop type. If recruited into a leader’s army, veterans must be paid twice the wages of normal troops of their type. Up to 25% of human mercenaries hired (e.g. 100 out of every 400) may be veterans. (Being 1 HD creatures, elven and dwarven mercenaries are already equivalent to veterans.)
According to the Domains at War rules-as-written (which are, to be fair, still in beta!), there's no way to "train up" to elite status. You have to get there via XP. Here are the applicable rules:
0th Level Characters and Experience from Adventuring
A 0th level character who participates in an adventure will earn experience points. When a 0th level character earns 100 XP from adventuring, he advances to become a 1st level fighter. The character gains the fighter class proficiency, powers, attack throws, and saving throws. The character re-rolls his hit points using his new class’s Hit Die (1d8), keeping either his new hp total or his prior hp total if it was higher. The new 1st level character retains any general proficiencies he already knew. When he advances to 2nd, 3rd, and 4th level, he must remove one of these pre-existing general proficiencies, representing the erosion of his old professional skills over time. When he reaches 4th level, he acquires the Adventuring proficiency. Under normal circumstances, 0th level characters do not advance into classes other than fighters from adventuring XP.
Experience Points from Spoils:
Each participant (whether a commander, a hero, or a creature in a unit) earns 1 XP for each gold piece he collects from the spoils of war. Troops will expect that at least 50% of any spoils captured will be shared on a pro rata basis in relation to their wages. If this does not occur, the Judge should make a morale roll for any unpaid troops.
EXAMPLE: An army consisting of 8 units of 100 heavy infantry and 8 units of 25 heavy cavalry, led by 9th level fighter, has gathered battle loot worth 10,000gp. The leader claims half (5,000gp) for himself and shares the rest of the loot among the men on a pro rata basis in relation to their wages, so that heavy infantry get 3gp each and heavy cavalry get 13gp each. The General earns 5,000XP, each heavy infantryman receives 3 XP and each heavy cavalryman receives 13XP.