Train Fair Loan

[tmorterlaing]

Hi there, I hope this is a good place to put this question.

Long and short of it:

I was offered a season ticket loan which has been paid out of my salary each month. I am now leaving my employment on (until now) good terms. There's approx. 3 month left on my season ticket loan.

I have asked to pay the remainder back via standing order over the remaining 3 months to make it manageable. I asked on the 8th June.

I received a response on the 22nd saying the following (I've 'anonymised' the email, and rounded the monetary figures to the nearest £5 for anonymity as well.):

 

Sorry not to have got back sooner.

I've talked this through with *Accountant X* and *Accountant Y*, and unfortunately the company cannot agree to defer the payment of your season ticket loan beyond your leaving date of 26 June and we are required to deduct the balance due from your final salary. To do so would change the character of the loan to a benefit in kind, which *The Company* doesn't offer, and which would require you to be taxed on the benefit so that it is no longer a cost neutral loan.

The upshot is that after deduction from your salary of the outstanding balance due to *The Company* you still owe the company £ 160. To mitigate this we could,with your agreement, not pay the employer pension contribution due to your pension pot for June. This amounts to £70 which would reduce the amount owed to £95. If you agree to waive the employer pension contribution then we will agree to waive payment of the outstanding balance of £95.

Can you let me know if you are happy to waive the June pension contribution from *The Company*?

Do let me know if anything is unclear or if you have any questions.

 

Some other factors:

1) I never signed any documentation regarding the above loan

2) This will leave me without salary for 2 months

3) I've considered the option of getting a refund on my season ticket from the train company and use that money to pay my employer back. However - because of how the train company sorts discounts I wouldn't be refunded the full amount, so would be out of pocket by at least a few hundred and, more importantly: I know from my partner getting a refund recently, the train company can take as long as six weeks to sort out the money back. As such, not only would I be without a train ticket for a month and have to find MORE money for travel to London, I'd still have no salary for living/bills etc. So that's not really an option.

 

If they deduct my salary in the above mentioned way, it will leave me in a situation of substantial hardship. Am I able to do anything? I'd be very grateful for any help!

[Emmzzi]

Very confused - why don't you just agree to waive the pension contribution? Then you get to keep / refund the season ticket *and* owe nothing.

[tmorterlaing]

Very confused - why don't you just agree to waive the pension contribution? Then you get to keep / refund the season ticket *and* owe nothing.

 

The issue isn't the pension contribution. Even if I waive that they'll be deducting MY ENTIRE SALARY for the month. In other words, I get NO salary for the month. Which means I will have NO money for two months. Not a penny; simply because they're demanding I repay the entire thing in one hit out of my salary - which is my entire salary for the month PLUS a pension contribution.

[Emmzzi]

Ah, ok... so still taking wages and waiving the extra bit.

 

What does your employee handbook say about loans?

 

And what was the application process? I presume you applied somehow?

[tmorterlaing]

Ah, ok... so still taking wages and waiving the extra bit.

 

What does your employee handbook say about loans?

 

And what was the application process? I presume you applied somehow?

 

Thanks for the response

I've never received an employee handbook. Come to think of it, since I started I've never signed or been supplied a revised contract, despite me having apparently been promoted and having two or three pay rises.

There was no official application process, just a request through emails: It was mentioned verbally, and then followed up with email correspondence with the company accountant and company secretary. This email correspondence highlighted only that it would be paid back over 12 months.The most formal bit was an email from the accountant to the secretary saying "I have spoken to *me* and agreed that I will add the amount on to his season ticket loan and he will replay the full amount on a monthly basis over twelve months. I hope this is okay with you, *Me* seems to be happy with it"

 

I suppose my question is, do I have a legal leg to stand on in saying its unreasonable for the company to take away my entire salary for the month (and more!) when I've offered a (subjectively) reasonable three month solution? I don't know what to do here because I need at least some salary to survive until my next paycheck...

[Emmzzi]

Well, they can't pay you less than NMW. The loan will still be recoverable. But they will need to accept it in some other way.

 

So the size of the problem depends on how much you are paid over and above NMW.

 

Your problem is that if they decide to be arsey your route is a very drawn out court process.

[tmorterlaing]

Well, they can't pay you less than NMW. The loan will still be recoverable. But they will need to accept it in some other way.

 

So the size of the problem depends on how much you are paid over and above NMW.

 

Your problem is that if they decide to be arsey your route is a very drawn out court process.

 

Good point Re NMW.Is that per month though or considered over the year? Because based on a 37.5 hour week they have to pay me 975 ish is that right? So they can only take me down to that after the deduction?

If I've been earning roughly 1250 after my 490 train fair loan for the last 9 months so I'm not sure how the minimum wage works in that instance?

[ericsbrother]

Your season ticket will still have some time to run so cash that back in or arrange its return so the company can. Then arrange to pay the balance back by the end of 2 months and there will be no benefit in kind to get up the accountants nose as it is essentially free travel after you leave that is bothering them.