Who can borrow
- Which kinds of employment qualify: permanent staff only, or also fixed-term contracts?
- Is there a minimum period of service before someone may borrow?
- Does being on probation, or on a final warning, block a request?
- May someone have more than one loan at a time, and of which kinds?
How much, and for how long
- What is the ceiling: a multiple of gross salary, or a share of take-home pay?
- Is there a different ceiling for different purposes (an emergency advance and a long-term loan are not the same thing)?
- What is the longest repayment term for each kind of loan?
- Is there an overall cap on all deductions from one person's pay, as a share of take-home pay? This protects the borrower and the employer, and it should count every deduction, not just staff loans.
What it costs the borrower
- Is the loan interest-free, or does it carry interest? At what rate, and is the rate fixed or does it follow a reference rate?
- Are there any fees, and are they shown to the borrower before they say yes?
- May the borrower repay early, and does that change the cost?
Approval and payout
- Who approves, and in what order? (See our guide on who should approve staff loans.)
- Are there different chains for different amounts or for different kinds of loan?
- How long may a request wait at each step before it is escalated?
- Who releases the money, and is it a different person from the approvers?
Repayment and trouble
- From which pay cycle does the first deduction start?
- What happens if payroll misses a deduction, or deducts less than it should? Who is told, and when is the shortfall collected?
- What happens when the borrower leaves, by resignation or otherwise? Is the balance taken from final pay, and what is agreed if that is not enough?
- When is a loan written off, and who may decide that?
Records and agreement
- What does the borrower accept, and how is it recorded? The exact terms, the date and who accepted them are worth keeping.
- How long are loan records kept, and who may see an employee's loans?
- Who owns the policy, and when is it reviewed?
Not legal advice
This is a checklist, not legal advice. The law limits what an employer may deduct from an employee's wages and may limit the interest an employer may charge. Those limits, and what your employment contracts say, decide some of the answers above. Check them with your own lawyer before you publish the policy.