Sacked - Employee Loan to Repay.... BUT...

[qazmko]

More questions since I got the boot..

I got a loan from work late last year.

Me and director (at the time*) had agreed terms to repay over 30 months.

*director has since resigned due to a fall out with shareholder! (the shareholder who then came and sacked me the next morning!

In my letter of termination, they say that I am to "repay the company the sum of £xx that was unlawfully loaned to you [me] on xxth xxber 2015 within 14 days. Failure to repay this sum to the company within 14 days will result in legal action being taken against you [me]"

Now, I have a few points to state/ask:

- I don't have the money to repay within 14 days - surely I can stay in line with the repayments that were agreed when issuing..? Can they demand this? What 'legal' action can they put on me? I'm not trying to get out of paying, just don't agree with them putting the 14 days' limit on me..
- I don't have an agreement in writing. I think this was maybe lax/poor admin on director's behalf, and somewhat mine - it was all to 'kick in' for this month's pay (end of Jan)

Speaking to my accountant - I'm about to go self-employed - he said that my reply to the letter should be along the lines of "you state the loan issued to me is 'unlawful' so therefore I wish nothing to do with it" - I suppose the onus then lies back with the director at the time.. Though I think that is a very bold response on my behalf

Help!

[mariefab]

Re: Sacked - Employee Loan to Repay.... BUT...

I'd change the accountant's suggestion to, "You state that the sum issued to me on xx/xx/xx is unlawful and require repayment within 14 days. Before taking the threatened legal action perhaps you could provide me with evidence of the illegality of this payment."

The onus lies with whoever is claiming the sum. His next step would be to get the details of the loan agreement from the ex-director. Then you can re-pay the loan over 30 months just as you planned. You are not obliged to alter the terms of the original agreement on the whim of the (idiot) shareholder.

[nemesis45]

Re: Sacked - Employee Loan to Repay.... BUT...

At guess I would think that " director " was not authorised to make any such loan, an error of judgement on his/her part not having made/issied
a written agreement. Hard to see it as " unlawful".

nem

[teaboy2]

Re: Sacked - Employee Loan to Repay.... BUT...

Regardless as to whether the director was authorised to make the company loan. Why were you sacked is the key question, as you can not be sacked for taking a loan that was offered to you when you were under the belief the company authorised it via its representative (i.e. director).

We need to know why you were sacked, what your contract says, if anything about company loans? whether the loan offer and terms was made in writing? what your employment status was (i.e. employed, contractor)? and duration of your employment? Basically as much info as you can provide really!

Without such info then no one here can really give you any legal advice that would be accurate to your situation and help you in the long term.

Though granted the onus is on the employer to prove the loan was unlawful, though taking you to court for it would be a bad idea as your defense is clear i.e. you had no idea it was unlawful as it was authorized by the company director who was acting as company representative at the time - And therefore the loan was agreed in good faith. Plus you could sue them in a counter claim for breach of contract in regards to your employment being terminated (if sacked as a result of taking the loan)!

[qazmko]

Re: Sacked - Employee Loan to Repay.... BUT...

I'd change the accountant's suggestion to, "You state that the sum issued to me on xx/xx/xx is unlawful and require repayment within 14 days. Before taking the threatened legal action perhaps you could provide me with evidence of the illegality of this payment."

The onus lies with whoever is claiming the sum. His next step would be to get the details of the loan agreement from the ex-director. Then you can re-pay the loan over 30 months just as you planned. You are not obliged to alter the terms of the original agreement on the whim of the (idiot) shareholder.

Thanks for that. I thought my accountant's suggestion was a little bold and thought a re-phrasing of it was required..

I thought this should be the case.

(and agree the shareholder, now signed on director is indeed an idiot!)

[NWHC]

Re: Sacked - Employee Loan to Repay.... BUT...

The first thought I had was that if the loan was illegal then you don't owe anything!

If there was no written agreement , and the director has been sacked , was it not a gift from your employer?

I fully understand that it may be that if you were unfairly dismissed any award would be r than the outstanding debt and you may not wish to rock the boat . Remember as well that Tribunals are now difficult places and expensive to boot

I was looking at average unfair dismissal payouts recently and they are not great, about £4000 I think

[NWHC]

Re: Sacked - Employee Loan to Repay.... BUT...

Just read your other post

Have you had your final salary?

If so I would be inclined to tell them that you thank them for the gift -not sure of the legalities of that

[teaboy2]

Re: Sacked - Employee Loan to Repay.... BUT...

Having read the other posts, at the time the loan was made, the current director was merely a shareholder, and i assume was not a member of the board of directors and therefore would have had not legal say in the matter of the loan, as they only became a director afterwards! SO the director at the time made a perfectly legal decision to loan the money to you from the company, subject to him having that power to make such decisions in company policy!

Is there anyway you can contact the director that made the loan to you and ask him for his side of things regarding the legality of the whole loan. As it does sound to me like it was perfectly legal and the shareholder simply didn't like it and you have simply been caught up as piggy in the middle between the shareholder and previous director that clearly have a history!

[qazmko]

Re: Sacked - Employee Loan to Repay.... BUT...

Definitely caught in the middle..

I'll write to them and question their claim of unlawfulness and see what they say back.

I'll happily stick to the terms I agreed to repay when the loan was taken - think it's a bit of a piss take that they want to put the frighteners on me as they've had a fall out.. Swines

[teaboy2]

Re: Sacked - Employee Loan to Repay.... BUT...

Definitely caught in the middle..

I'll write to them and question their claim of unlawfulness and see what they say back.

I'll happily stick to the terms I agreed to repay when the loan was taken - think it's a bit of a piss take that they want to put the frighteners on me as they've had a fall out.. Swines

Yes definitely tell them, that your sticking to the terms and conditions. Also state that as the Director (mr xxxx) was the Director of the company at the time when he agreed to the loan and that MR xxxx (shareholder and new director) was merely a shareholder and not a member of the board of directors, then the loan was for all intend and purposess lawful and the terms and conditions are legally binding upon them and yourself. Also as its clear that MR xxxxx, the then shareholder and now new director dismissed you as a direct result of accepting the loan from the company as offered by previous director Mr xxxx, then such dismissal is wrongful dismissal, this is confunded in the fact that no disciplinary process was carried out prior to dismissal, which clearly makes the dismissal a retalition against you for being a party to a perfectly legal loan agreement with the company, whom the previous director Mr xxxx was acting on behalf off in his capacity of company director!

Therefore if their is to be any legal action will involve the Company and New Director Mr xxxx answering to wrongful dismissal claim/counter claim!

Also point out that if MR xxxx (new director) refuses to accept that the loan is lawful, and therefore the company is legally bound to the terms and conditions of the loan, including the repayment terms. Then the onus is on him to prove that the loan was unlawful and that in your capacity as an employee, you knew such loan would not be lawful - Which given such employer-employee loans are discretionary, then such loans are no different to any other loan that is lawful.

Also if they have not already done so - Remind them they are still required to pay you in lieu of notice, and for any occured holiday pay regardless as to the dispute about the loan. As failure to make such payment to you amounts to being an unlawful deduction from your wages which is a breach of the employment rights act 1996, which would also give grounds for you to take legal action against the company along with a wrongful dismissal claim!


Note you can take wrongful dismissal claims to tribunal (two year employment requirement does not apply to wrongful dismissal claims) or county court! Wrongful dismissal claims are brought under claims for breach of contract, and disciplinary proedures are a contract obligation on employers, so failing to follow their disciplinary procedure amounts to a breach of contract and is therefore referred to as wrongful dismissal!

[qazmko]

Re: Sacked - Employee Loan to Repay.... BUT...

I emailed them to question how the loan was 'unlawful' and also to state that I had agreed terms with director at the time - not 14 days as they are now claiming.

Got a letter back which didn't actually give any response to my question..

It was headed 'Re: Pre-court action'.....!

It asks that I provide a copy of the 'alleged loan agreement which details the terms of the payment made to me bla bla..'

Follows saying that 'given that you are no longer employed by the company and in the absence of any agreement to the contrary........ we require immediate repayment.... Failure to repay this sum in full within 7 days will result in legal proceedings for recovery of the money with out further notice... Also legal costs and interests would be sought.'

So all of that seems like they are not taking on board what I have questioned + said and still trying to pressure me into paying back..

Then the icing on the cake -

'We are continuing to investigate the company accounts and have discovered numerous irregularities. We reserve the right to make further claims against you and/or report you to the relevant authorities as appropriate'

!!! - I'm not sure what it is I'm supposed to have done here! This seems very threatening (especially teamed with the above lot) and I think they are plain out of order.

They have an argument with previous director (my director at the time) and they seem to be lashing out/threatening me.

What a joke.

[ostell]

Re: Sacked - Employee Loan to Repay.... BUT...

This sounds like threats and blackmail. I think you upset him with a request for pay in lieu of notice ! Good !! Suggest that they supply a copy the agreement they have for the acknowledged loan.

[Amethyst]

Re: Sacked - Employee Loan to Repay.... BUT...

Repay the loan as originally agreed. You should stick to the terms that you agreed with the company ( via the ex-director).

The loan was made to you by the company and authorised by a director of the company.

That is all that is important to you. It is not of your concern that the director acted without obtaining authorisation from his fellow directors.

If they bring court action you can rely on the terms which were agreed at the time of the loan and they will have to evidence otherwise. I do not see any point playing letter tennis about a non existent written agreement.

I'd respond to them someting along the lines of;

On xxxxx a loan of £xxxxx was agreed between myself and XXX companyname xxxx and a verbal contract entered into with the company through Mr XXXXXX (Director). The terms of this loan were that it would be repaid at a rate of £xxxx per calendar month with the first payment being made on XX January 2016 until XX whenever 2017. Payments will be made as agreed and should any court action be taken against me in respect of this loan the claim will be strongly contested.

[teaboy2]

Re: Sacked - Employee Loan to Repay.... BUT...

Repay the loan as originally agreed. You should stick to the terms that you agreed with the company ( via the ex-director).

The loan was made to you by the company and authorised by a director of the company.

That is all that is important to you. It is not of your concern that the director acted without obtaining authorisation from his fellow directors.

If they bring court action you can rely on the terms which were agreed at the time of the loan and they will have to evidence otherwise. I do not see any point playing letter tennis about a non existent written agreement.

I'd respond to them someting along the lines of;

On xxxxx a loan of £xxxxx was agreed between myself and XXX companyname xxxx and a verbal contract entered into with the company through Mr XXXXXX (Director). The terms of this loan were that it would be repaid at a rate of £xxxx per calendar month with the first payment being made on XX January 2016 until XX whenever 2017. Payments will be made as agreed and should any court action be taken against me in respect of this loan the claim will be strongly contested. Not only that, but should court action be taken against me, i shall call upon Mr (Previous Director) whom the agreement was made with as a witness in my defence against your claim!

Add the bit in red that i have added too. As you will be able to call upon the previous director as a witness should this go to court. And once they read that bit, it will more or less put a spanner in the works for them, as clearly the previous director is going to confirm everything you have said, and spill the beans of why he left i.e. argument with the shareholder / New director, whom immediately dismissed you as a result of the loan. Which would also probably win you your counter claim for unfair/wrongful dismissal against them!

Also add that if payment in lieu of notice and for accured holidays and any other monies outstanding are not paid to you within 14 days then you will subtract the amounts owed from the total balance of the loan!

[mariefab]

Re: Sacked - Employee Loan to Repay.... BUT...

While you're here again can I ask a question?
Was there an association between the Company that you were recently dismissed from and the Company you worked at before them?
I ask because you mentioned moving over to the new Company in your phone thread and, if the 2 employers are associated, it may be relevant to the length of your continuity of service.