Employee loan repayment

pollyv

I worked for a company for 6 years, in that time they gave me an interest free loan. I have just scored a better job, more money and better prospects. I handed in my notice and within an hour the company demanded full payment, £3k before I leave. I emailed back saying sorry this isn't possible but I will continue making the weekly payments after I leave. They said no, I need to repay it all in full. Now I don't know what to do.
Some background. When I took the loan, I signed a piece of paper, apparently this had wording on it that loans need to be paid in full before leaving, I don't remember seeing or reading this, but it is possible.
I was never means tested or anything like that before the loan was given.
I feel a little strongarmed and I'm scared about actually leaving now for the better job. I'm quite happy to pay the payments but they won't accept that. Any advice would be great as it's stressing me out.
Thanks Penny x

Ebe_Scrooge

I'm not sure what advice to give, to be honest.  It's pretty much standard practice - certainly for every company that I've ever worked for - that company loans (a travel season ticket loan being a common one) must be repaid immediately if you leave the company voluntarily.

Any chance you might be eligible for a money-transfer credit card with a high enough limit?  There will likely be a fee to pay, but it's one option to explore.

pollyv

So can they sue me or something? I have no options in borrowing to pay it back. All I can offer is to keep paying the repayments. If they say no, do I have to turn the new job down?

Brie

I would ask to see a copy of the loan agreement that has your signature on it - just to check that the wording is right.  

Then I would start to negotiate.  How soon could you pay it back?  Could you do so in 3 months or something?  

Basically I would treat this similarly to being overpaid on salary on leaving - I've had that happen and arranged to pay back the money over X months.

pollyv

I am, like most living day to day. The new job offers the money to be able to pay my bills better but not any time in the foreseeable could I pay a lump some. They are being quite stern with me. I'm torn with just leaving and saying I can't pay it, that's it, but I'll pay installments or just staying with the company. I just don't want to get in trouble if I choose to leave

McKneff

Have you enqured about a bank loan. 
Paying the bank back instead of your company 

pollyv

I wish I could but I'm tapped out

Brie

The problem is that they likely don't have a proper credit agreement with you and the only way they might normally recover money owed by you to them is to deduct it from your salary.  Because you will no longer have a salary being paid by them they are playing it tough and getting "stern".  

I would ask them for a copy of the credit agreement that you signed for the loan.  That way you could see if the agreement is legal and/or what the terms are.  

Then I would go over to the debt board and fill out a statement of accounts to see exactly how good or bad your situation is.  People there may have some more ideas on how you could pay this off.  

There's a way to sort it - it's just a matter of finding that way.

MalMonroe

Hi, I have to say that I agree with what Brie says, above. 

You need to see a copy of what you signed. You said "When I took the loan, I signed a piece of paper, apparently this had wording on it that loans need to be paid in full before leaving, I don't remember seeing or reading this, but it is possible". Although you don't remember much about it, you should have been given a copy of that agreement when you signed it, as it is an important document.

Is there any possibility you can have a word with the person in charge (MD or CEO) and ask if you can come to some agreement for repaying the loan? Maybe Citizens Advice can help?

Info in the following link - https://www.citizensadvice.org.uk/about-us/contact-us/contact-us/contact-us/

herebeme

Agree this is standard practice. But that doesn’t mean you don’t have options. 

What was the loan for? If it was a simple advance on wages then the repayment consequences are different than if it was a loan for something else. 

Have you looked through your emails to see if you were sent a copy of the agreement at the time? Do you have a box where you keep important paperwork, have you looked in that? 

You need to start keeping copies of all emails about this (if on work emails then forward a copy to your personal email address). And keep notes of any phone calls or in person conversations, ideally summarise any meetings in an email afterwards so there’s a record of what was said. 

Are you part of a trade union? Contact them if you are, they can help you come to an agreement with your employer. 

And. Very important. Contact your local citizens advice bureau as soon as you can 
https://www.citizensadvice.org.uk/work/after-leaving-your-job/if-your-employer-says-you-owe-them-money/

My take out from the CAB website:

If loan was an advance on your wages then the employer can deduct it from your wages even without a written agreement. But talk to your employer. 

If it was for something else (training, general perk, season ticket etc) and you signed an agreement that they could use any final wages to repay the loan on end of employment, then they probably can deduct in this situation too. But talk to your employer and CAB. 

If it was for something else and the agreement does not explicitly say they can use final wages to repay, then they cannot keep your final wages to go towards paying it. Know your rights. Talk to CAB and make sure your employer knows you know your rights. 

If your written agreement just says you agree to repay on termination of employment (but nothing about coming from final wages), then they either have to agree to extend the loan repayment period past the end of your employment, or yes, they can take you to court to get a order to repay - which will only be at a rate and amount you can afford so this is not a bad thing. It is cheaper for the employer to avoid using lawyers, so as long as you agree to keep repaying then to some extent it’s in their interests to come to an agreement with you. 

If you are “completely tapped out”… Do go to the debt free wannabe section of this forum and ask for advice about how to manage your debt, there are lots of people there who have been in debt, come through it, and can offer suggestions.  On the debt free wannabe forum there are also links to the 3 free debt charities e.g. Stepchange, that can help. Do get in touch with one of these charities, they will be very busy after Christmas, so contact one of them this week. It sounds like you are at the stage where you need impartial advice and help, and if you do need something like a debt management plan then they can talk to your employer on your behalf (for free).  Never pay for debt advice and never pay for debt management. 

pollyv

Hi, thanks for all your replies.
I will request a copy of the agreement I signed. It was a loan for car repairs, described as an interest free employee loan. I spoke to the MD yesterday who said it is a perk for employees only and needs to be paid in full before leaving. I said I'm sorry I just haven't got it but I honour my debts and will continue the repayments after I've left until fully paid, to which I was told that is unacceptable. 
With the new job it gives me a bit more money but not enough to pay a lump in one hit.
I feel very hurt as I have been an exemplary employee, during COVID I stepped up 2 levels and not only ran but transformed a department and was promised a promotion and payrise but despite continuing to run the dept it was never the right time to give me more money. Hence the going for another job