Where do I stand with repayments on a work loan

[josh142]

Hi everyone,

Hopefully some knowledgeable people can help me.

Last year I took out a loan from my boss for £2600, we verbally agreed that I would pay £25 per week until the loan was fully repayed, the loan was paid direct into my bank account from my employers account.

Both of us didn't sign any agreement, credit agreement or anything at all, we both spoke about the loan and he showed me the terms and conditions on a word document from his computer.

He stated that if I leave I would have to repay the remainder of the loan off within 3 months of leaving, so at the beginning of December I handed in my notice, we spoke about the loan and we both verbally agreed that if I work one months notice I could still repay the loan by £25 per week because I was being fair with him, he was going to be fair with me.

After leaving his wife/company accountant emailed me basically saying I agreed that I would pay the loan off within three months of leaving, the sum being £157 per week but they offered a more realistic sum of £100 per week to be paid.

At the time I was annoyed with the company and didn't dispute our agreement of repaying £25 per week so I said I would start repaying him/the business £100 per week.

So far I have paid £250 but I am slightly annoyed at the fact that he has gone back on his word allowing me to carry on paying back £25 per week and instead just asked for me repay £100 per week and I honestly don't know why I didn't question our previous agreement of £25 per week if I worked the extended notice before the £100 per week was agreed upon via email.

Please bare in mind I have taken this loan from the company as agreed in our meeting, we didn't sign a single piece of paper and am I right in saying if he/the business isn't FCA regulated then he/the company is classed as a load shark?

I have no issues with repaying him but at £100 per week it is very hard, before leaving work I moved out which he knew about so my circumstances changed after the loan was paid direct to me and after quite some time of repaying weekly whilst working for him.

[Tools]

Re: Where do I stand with repayments on a work loan

Evening and welcome to the forum

The agreement is an informal loan, no interest and no contractual terms as such. He does not need to be FCA registered, however for tax purposes you may be liable in some respect from memory.

I agree that the change to what was agreed may be annoying and he has restricted rights to enforce it.

How much of the original £2600 has been repayed , you say you have no problem repaying at £100/week, no financial difficulties in doing this, just annoyed with the change of heart?

It sounds to me as if his wife/accountant has swayed him for being a lenient with you, but you were fair on working notice period.

If you can afford to repay at this level then I would just let it go, not worth the stress of arguing or risking a demand for repayment in full forthwith.

[Tools]

Re: Where do I stand with repayments on a work loan

Found the information on employee loans for you, knew I had it somewhere

https://www.gov.uk/expenses-and-bene...d-to-employees

[R0b]

Re: Where do I stand with repayments on a work loan

Well, whether he needs to be authorised depends on a couple of things including what the purpose of the loan was for and whether or not loans are made on an irregular basis or regular to other employees. If the former then business is exempt but if the latter then will need a licence

[josh142]

Re: Where do I stand with repayments on a work loan

Evening and welcome to the forum

The agreement is an informal loan, no interest and no contractual terms as such. He does not need to be FCA registered, however for tax purposes you may be liable in some respect from memory.

I agree that the change to what was agreed may be annoying and he has restricted rights to enforce it.

How much of the original £2600 has been repayed , you say you have no problem repaying at £100/week, no financial difficulties in doing this, just annoyed with the change of heart?

It sounds to me as if his wife/accountant has swayed him for being a lenient with you, but you were fair on working notice period.

If you can afford to repay at this level then I would just let it go, not worth the stress of arguing or risking a demand for repayment in full forthwith.

Hi,

Thank you for your reply.

When you say I may be liable what am I liable for?

I'm annoyed because of the history and reason for leaving and more so that I am left with £165 spare per month, this spare money has to be spent on food, fuel and fags and I simply can't live off this because the rest of my money is paying bills that I can't afford to miss and unfortunately can't stop.

The reason I was happy to leave work was because I was under the impression that I would repay at the same rate as agreed when I handed in my notice so I could work elsewhere for the same wage, less hours and no longer have to manage two young girls that had no interest in working or behaving but when I took my issues to him he wasn't bothered in resolving the issues because one of these girls mothers (who also works there) had a lot of dirt on him and to be honest the whole company new each others business especially the MD's.

- - - Updated - - -

Well, whether he needs to be authorised depends on a couple of things including what the purpose of the loan was for and whether or not loans are made on an irregular basis or regular to other employees. If the former then business is exempt but if the latter then will need a licence

Hi,

Thank you for your reply.

The purpose of the loan was so I could repay my overdraft and credit card in full and no longer pay interest on them because I could pay him/the business instead which was a very kind offer.
I know of two other members of staff that 100% had loans from him, both close to £10k each and I know this because they both told me but instead of taking the money out of their wage packet before being paid they were paying by direct debit.

[Tools]

Re: Where do I stand with repayments on a work loan

If you are struggling to repay (spending money on fags doesn't stand you in good stead btw- and yes, I'm a smoker and have been in the same situation so not personally judging) then inform him/them of this, stating that you are still willing to repay the loan in full but would like to reduce the weekly amount - even if it's until you have more spare cash.

[josh142]

Re: Where do I stand with repayments on a work loan

If you are struggling to repay (spending money on fags doesn't stand you in good stead btw- and yes, I'm a smoker and have been in the same situation so not personally judging) then inform him/them of this, stating that you are still willing to repay the loan in full but would like to reduce the weekly amount - even if it's until you have more spare cash.

If I propose to him a smaller weekly amount and he or she doesn't accept the new amount where do I stand, is this loan enforceable, is it actually an informal loan because it was paid into my account from the company and what could I be liable for?

The way everything is worded online is going over my head and not making sense because everything seems to either contradict each other or I'm just not smart enough to understand the wording.

[Tools]

Re: Where do I stand with repayments on a work loan

A copy of the agreement would help us if that's possible?

[josh142]

Re: Where do I stand with repayments on a work loan

A copy of the agreement would help us if that's possible?

Well there isn't as such an agreement, he presented a word document with a few bullet points which stated the amount I would lend £2600, my repayment method which is £25 per week then another bullet point saying if I leave Ii have three months to pay the outstanding balance.

When his wife emailed me she basically presented an agreement which follows,

Original loan £2600.00

The balance of your loan with (COMPANY NAME WAS HERE) is £1850.00 as of week 41 w/e 9/1/2016

As agreed with XXXX XXXX week 11 13/06/2015 if at any time you left our employment the balance would be paid over a three month period.
Amount payable would be £154 weekly, we understand that this is a large amount therefore we are willing to accept a minimum payment of £100 per week via Direct payment into our bank.

To avoid any future unpleasant proceedings having to be taken, please set up a weekly Direct Debit to our bank account (details below) by the end of January 2016.

[Tools]

Re: Where do I stand with repayments on a work loan

How much are you comfortably able to repay each week, genuinely, not just becauseof the principle

[josh142]

Re: Where do I stand with repayments on a work loan

I'd be happy to pay £25 per week, like the original agreement and just like the second agreement in our meeting when I handed in my notice because he wouldn't resolve the issue I had with two members of staff, bearing in mind I found my direct colleague setting up his own business in direct competition with us so I helped stop the progressing growth of a direct customer who was stealing information, images, suppliers etc. etc. from us, followed by taking the average monthly GP from £33k to £46k per month, this was a direct 12 month comparison.

I'm frustrated because I made the company a substantial amount of gross profit when I moved departments, found another member of staff breaching contract agreements and stealing from us and carried on putting up with two members of staff that were an obvious disruption to more than just my working day and I'm extremely grateful for his help but I was put down in that company to many times by other members of staff and him, especially for going back on his word after I left.

If by law I could offer £5 per week I would but that's why I came here, so I could repay him in a very small amount because I was screwed over there more than once.

[Tools]

Re: Where do I stand with repayments on a work loan

As for tax liabilities, it was less than £10,000 and interest free so is exempt from your employer having to report it to HMRC, so no need to worry about that angle.

[wales01man]

Re: Where do I stand with repayments on a work loan

Offer them what you CAN afford that's the best you can do

[Tools]

Re: Where do I stand with repayments on a work loan

OK I guess I didn't make myself clear. In theory, if a court were to find in his favour, disregarding your spend on non essentials (fags being one of those) what can you reasonably afford to repay each week. A court would look at your disposable income after deduction of essentials.

NOT what you want to pay him because of the principles or circumstances around you leaving or any previous verbal agreement you may have had.

[josh142]

Re: Where do I stand with repayments on a work loan

Offer them what you CAN afford that's the best you can do

Hi, it's an option but this was the reply I was sent after telling them that I could only pay £50 last week.

Good afternoon Josh,
I am sorry to hear this as the £100 a week was a generous compromise which we had all agreed upon.
Please adhere to our agreement for the following weeks.
Regards
XXXX