In the party screen when you click on a troop type that is able to upgrade (troop [1]), and then drag the troop underneath them (which are not eligible to upgrade) to the top, and then click the upgrade button of troop [1], it says the troops are not eligible to upgrade.
(If you then re-select...
I assume the militia spearmen/archers are supposed to upgrade to veteran militia,
and armed trader -> caravan guard -> veteran caravan guard
For the major factions none of these are upgradeable or connected (in encyclopedia) except by their name.
When travelling on the map I ran out of food and was unable to pay my troops wages for a day. I had a lot of soldiers ready to upgrade but was holding off till I had more money. 2 Soldiers defect when I can't pay or feed them for the day and when I go onto my party screen to check who I noticed...
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