Originally Posted by wiki

Pets gain experience and level up from combat, to a maximum level of 20. They will gain experience in this way even while dead, regardless of the distance to the dying foes, but the party screen will only update the level when the pet is within radar distance of the master. Pets do not gain experience from quest rewards or mission completion, and are unaffected by experience scrolls. The whole of pets are considered as another party, thus, the experience earned by your pet decreases proportionnally to the number of pets in the alliance. The amount of experience they have to earn to level-up is the same as the players.