Employee Loan Agreement
Our Employee Loan Agreement template:
- UK-Solicitor-drafted for accuracy
- Includes full guidance notes
- Suitable for an unsecured loan
- Covered by our money-back guarantee!
How Does It Work?
- 1. Download
- 2. Edit
- 3. Print
- 4. Sign
Our Employee Loan Agreement template is for use by a business that has made a loan, or which wants to make a loan, to one of its employees. The written loan agreement for loans to employees will help you document the terms of the loan and complete details about interest and repayment of the loan by instalments.
This template employee loan agreement has been drafted so that it is easy to edit and covers the most common employee loan situations. For example:
- the loan can make provision for whether interest is being charged on the loan; and
- the loan can make provision for its repayment in full by one lump sum or over a period through paying instalments at a frequency that you can set out.
Please note that this template does not make provision (a) for security to be taken by the employer or (b) for there to be a guarantor of the loan. If you want to take security or have a guarantor to guarantee the repayment of the loan, then you will need to use one of our other loan agreements: secured loan agreement; or loan agreement with guarantor.
There can be a taxable benefit created by a loan to an employee. For details on this, please see: https://www.gov.uk/expenses-and-benefits-loans-provided-to-employees.
Using this Employee Loan Agreement template
Once you buy the loan agreement template, you can download it in Microsoft Word format. Then simply save the template to your computer and edit as needed. Included in the download are our detailed guidance notes that take you through each step of completing the agreement and also explain each clause’s meaning and effect. You will find completing your draft quick and easy to do with our guide.
You can reuse the template whenever you make a loan to an employee, but you need only pay once. Whenever we update the template in the future, we will make the updated template available to you in your account for immediate download at no further expense. You pay only once – just one part of the Legalo advantage.
Guide to our Employee Loan Agreement template
3. Repayment – Here state the date when the first instalment is due and whether instalments are payable weekly or monthly. As set out in clause 3.2, we have presumed that repayment will be made by way of deductions by the employer from the employee’s weekly wage or monthly salary. You would need to make such an arrangement clear, by an express provision in the contract. Otherwise it might constitute an unlawful deduction from wages. The employee could apply to the Employment Tribunal to have it reversed in such a case.
5. Immediate repayment – If there is default by the employee, the loan becomes repayable in full immediately in order to protect the employer’s rights. The clause lists various events of default. They include the employee’s ceasing to be an employee of the employer or another company in the same group.
We have omitted the clause 6 covenants.
We’ve grouped clauses 7 to 11 together as one clause.