Costly Travel Loan Error

moombamike

Hello,

I work for a very large company in London and have recently ended a maternity cover role to move back down to an intern contract for the next six months. In doing this I needed to apply for another travel loan for the next six months, which is when the following took place:

In May (when I was on a higher paid contract) I applied for a travel loan to cover my travel up until October that was to be paid back over 5 months. This request was agreed and approved by Payroll and HR.

At the beginning of October I took another travel loan for my next six months of travel (up until the end of my intern contract in May) – to be repaid accordingly. I have since found out that the first loan repayment was erroneously entered as being repayable over 12 months.

So I was contacted by HR to say that I now have 2 loans being taken out of my salary at once because of the error by HR/payroll, the total of which would mean deducting £650 from my, now lower, salary - that is a lot more than half my salary! (An extra of over £1200 over the six months)

I cannot afford to pay that amount on a monthly basis whilst also having enough money for rent, food, and bills – the amounts simply do not add up. I wrongly assumed that the loan would be processed properly and that the correct amount was being taken from my (higher) salary from May to October, this meant that my spending was adjusted to that accordingly. Now I am stuck on a lower salary with a much higher monthly debt – through absolutely no fault of my own besides trusting that the loan was processed correctly. Now, because of one person’s incompetence I am in very real financial trouble for the coming months.

There is simply no way I can pay this amount on my current salary. The only remedy HR keep repeating is to use a mixture of higher monthly payments and a large lump sum at the end of my contract, however these are completely useless as no matter what the payment structure I don't have the money. Payroll had an approved and agreed five months to recoup the travel loan whilst I was on a higher wage and I don't feel it is my responsibility to put myself in financial trouble because of their error.

To exacerbate the situation I was told that I had only 24 hours to make a decision on how I could fix this error that was made because of someone else’s inadequate ability to do their job.

I suggested that the loan be repaid over a period of 12 months - extending to beyond my contract end date, when I would still make payments whilst outside the company.

Today I received a further email from HR after a meeting to discuss options - that resulted in nothing.

"I’ve been told it is strict company policy that we have to recover any loans over the period of your employment, ie. we can’t let someone leave with debt still outstanding. This is even if we agree in writing that you will repay after you’ve left. We can’t make an exception because we need to be consistent in applying the policy across the business, and I’ve checked with our HR counterparts in ****, **** and ** for what they would do.

I would suggest you have a look at your monthly outgoings and how much you can afford to increase your monthly deductions to between November 2012 and April 2013. This will reduce the balance remaining that will be deducted from your final pay. Depending on what you decide for the monthly deductions, hopefully this balance will be covered by your final pay.

I’ve learned that to begin with, you shouldn’t have had the loan approved – the policy is actually that an employee can only take a loan out to the value of their net pay. "

Even if I raised my monthly payments to £500 to cover more of both loans (an amount that may be manageable), I would still then not have enough in my final pay to cover the outstanding lump sum at the end - this would essentially mean that the company would take all of my final pay and then request further money from me after!

I would really appreciate any urgent help you can offer on this as I am in a troubling financial situation with it.

I realise I should have checked my payslip more thoroughly, however the loan error was not of my doing and is a mistake that has really cost me. I was under the impression that in a situation like this (where a company error has put an employee in a detrimental position) both the company and the employee must come to an acceptable agreement for everyone? However, they will not do anything besides saying the debt can be in different structures but only over six months.

Thank you in advance for any advice.

antonic

Please see my comments in RED

moombamike wrote: »

Hello,

I work for a very large company in London and have recently ended a maternity cover role to move back down to an intern contract for the next six months. In doing this I needed to apply for another travel loan for the next six months, which is when the following took place:

In May (when I was on a higher paid contract) I applied for a travel loan to cover my travel up until October that was to be paid back over 5 months. This request was agreed and approved by Payroll and HR. Its your responsibility to check that your payslip is right.

At the beginning of October I took another travel loan for my next six months of travel (up until the end of my intern contract in May) – to be repaid accordingly. I have since found out that the first loan repayment was erroneously entered as being repayable over 12 months.

So I was contacted by HR to say that I now have 2 loans being taken out of my salary at once because of the error by HR/payroll, the total of which would mean deducting £650 from my, now lower, salary - that is a lot more than half my salary! (An extra of over £1200 over the six months)

I cannot afford to pay that amount on a monthly basis whilst also having enough money for rent, food, and bills – the amounts simply do not add up. I wrongly assumed that the loan would be processed properly and that the correct amount was being taken from my (higher) salary from May to October, this meant that my spending was adjusted to that accordingly. Now I am stuck on a lower salary with a much higher monthly debt – through absolutely no fault of my own besides trusting that the loan was processed correctly. Now, because of one person’s incompetence I am in very real financial trouble for the coming months.

There is simply no way I can pay this amount on my current salary. The only remedy HR keep repeating is to use a mixture of higher monthly payments and a large lump sum at the end of my contract, however these are completely useless as no matter what the payment structure I don't have the money. Payroll had an approved and agreed five months to recoup the travel loan whilst I was on a higher wage and I don't feel it is my responsibility to put myself in financial trouble because of their error.

To exacerbate the situation I was told that I had only 24 hours to make a decision on how I could fix this error that was made because of someone else’s inadequate ability to do their job.

I suggested that the loan be repaid over a period of 12 months - extending to beyond my contract end date, when I would still make payments whilst outside the company.

Today I received a further email from HR after a meeting to discuss options - that resulted in nothing.

"I’ve been told it is strict company policy that we have to recover any loans over the period of your employment, ie. we can’t let someone leave with debt still outstanding. This is even if we agree in writing that you will repay after you’ve left. We can’t make an exception because we need to be consistent in applying the policy across the business, and I’ve checked with our HR counterparts in ****, **** and ** for what they would do. I take out an interest free loan with my employer each year to buy a travel ticket and it explicitly states that if I was to leave BEFORE the end of the 12 month period and outstanding balance will be taken from my final months salary - after all you need to look at it from there point of view, if you leave *promising* to pay after you left and dont, the only way they can get the money back is through the small claims court.

I would suggest you have a look at your monthly outgoings and how much you can afford to increase your monthly deductions to between November 2012 and April 2013. This will reduce the balance remaining that will be deducted from your final pay. Depending on what you decide for the monthly deductions, hopefully this balance will be covered by your final pay.

I’ve learned that to begin with, you shouldn’t have had the loan approved – the policy is actually that an employee can only take a loan out to the value of their net pay. "

Even if I raised my monthly payments to £500 to cover more of both loans (an amount that may be manageable), I would still then not have enough in my final pay to cover the outstanding lump sum at the end - this would essentially mean that the company would take all of my final pay and then request further money from me after!

I would really appreciate any urgent help you can offer on this as I am in a troubling financial situation with it.

I realise I should have checked my payslip more thoroughly, however the loan error was not of my doing and is a mistake that has really cost me. I was under the impression that in a situation like this (where a company error has put an employee in a detrimental position) both the company and the employee must come to an acceptable agreement for everyone? However, they will not do anything besides saying the debt can be in different structures but only over six months. Its actually an error by both of you, and I would recommend that you acknowledge your error in not spotting it straight away but emphasise that the bigger error was made by your employer in inputting the 6 month loan as a 12 month loan, and try to negotiate a reduction in what you have to repay and try to act in a conciliatory manner because you want to resolve this matter amicably.

If you dont , as you have said, you may find that you dont get paid for the last month as they take your pay to clear the debt.

Thank you in advance for any advice.

tygr

Do you have any credit cards that offer a 0% money transfer rate? It's not ideal but you can then transfer the debt to another lender without paying interest (except a transfer fee) and then budget to pay it off over a longer period. Martin has written a good guide on the credit cards section of the site.

You're still left with the same debt but longer to pay it off.

Fire_Fox

Are you a member of a union? Have you checked if you can claim any state benefits such as hardship payments? Have you contacted the debt charities CCCS or Payplan to see if they can negotiate an affordable monthly payment with your employers? Could you take out a 0% credit card? Can you take this higher than HR?

heretolearn_2

The loan repayment deducted would have been half what you were expecting and I think that the firm may feel it's stretching the realms of possibility that you didn't notice this at the time, especially if it is itemised on your payslips. If your loan was £2400, then you knew the monthly repayments over 6 months were going to be £400, but only £200 was deducted. that's a big difference not to notice. This may be unfair as ok, it was a genuine mistake on your part as well as theirs, but as an employer to be honest my cynical gland would flare up and think 'hmmm, I wouldn't be surprised if they noticed the mistake but decided to keep shtumm in the hopes of only paying back £1200'. I'm not saying this is what you did, but lots of people would, and it may make your employer less sympathetic.

I think a 0% credit card is your best option here.