EMPLOYEE LOAN AGREEMENT
This Employee Loan Agreement (this "Agreement") is made at __________ on __________.
BETWEEN
__________, of __________, acting through __________, __________ (the "Employer");
AND
__________, employee ID __________, designation __________, PAN __________, of __________ (the "Employee").
The Employer and the Employee are each a "Party" and together the "Parties".
RECITALS
A. The Employee is employed by the Employer as __________.
B. At the Employee’s request, the Employer has agreed to lend the Employee the sum of __________ for the following purpose: __________.
NOW THIS AGREEMENT WITNESSES as follows.
- THE LOAN
1.1 The Employer shall disburse __________ to the Employee on __________, __________.
1.2 The loan is personal to the Employee and is not assignable by the Employee to any other person.
- INTEREST
2.1 __________
2.3 __________ The Parties record this for the purpose of Rule 3(7)(i) of the Income-tax Rules, 1962: where the aggregate outstanding loan from the Employer to the Employee does not exceed Rs 20,000, no perquisite value arises on this loan under s.17(2)(viii) of the Income-tax Act, 1961, whatever the interest position stated in clause 2.1; where it exceeds Rs 20,000 and the loan is interest-free or concessional, a perquisite value arises and the Employer shall compute, report and withhold tax on it through payroll in accordance with law, valued by reference to the State Bank of India’s lending rate for a loan of this type as on the first day of the relevant financial year, reduced by any interest actually charged under clause 2.2.
- RECOVERY
3.1 __________
3.4 The Employee may prepay the outstanding balance in whole or in part at any time without penalty, and a prepayment is applied first to interest accrued and unpaid and then to principal.
- EVIDENCE OF DEDUCTION
4.1 The Employer shall show each deduction made under clause 3.2 separately in the Employee’s salary slip for the month in which it is made, so that the Employee can verify the running balance of the loan at all times.
- ON CESSATION OF EMPLOYMENT
5.1 __________
5.2 Where clause 5.1 permits adjustment against full and final settlement dues, that adjustment remains subject to the deduction limits in s.7(3) of the Payment of Wages Act, 1936 to the extent that Act applies to the sums being settled, and any balance the settlement dues are insufficient to cover remains recoverable from the Employee as an ordinary debt.
- REPRESENTATIONS
6.1 The Employee confirms that the particulars given in this Agreement are true, that the loan is sought for the purpose stated in Recital B, and that the Employee is not restricted by any other agreement from taking this loan or agreeing to the recovery method in clause 3.
- DEFAULT
7.1 If the Employee’s employment ends and clause 5.1 makes the balance immediately due, or if any instalment under clause 3.2 remains unrecovered for reasons other than the Employer’s own error, the Employer may recover the outstanding balance, with interest accrued to date, as a civil debt.
- GUARANTEE
8.1 __________
- STAMP DUTY
9.1 This Agreement is executed in __________. __________ shall bear the stamp duty payable on this Agreement.
- CONFIDENTIALITY
10.1 The terms of this Agreement are confidential between the Parties, save that the Employer may record it in its books of account and payroll records as it is required to for tax and audit purposes.
- NOTICES
11.1 Notices under this Agreement shall be in writing and delivered by hand against acknowledgment, or by registered post or courier with proof of delivery, to the Employer at __________ and to the Employee at __________.
- DISPUTE RESOLUTION AND GOVERNING LAW
12.1 __________
12.2 The seat and venue of any arbitration under this Agreement, and the place of any court proceedings, is __________, and the courts at __________ have exclusive jurisdiction, subject to any arbitration agreed above.
12.3 This Agreement is governed by the laws of India as in force in __________.
- GENERAL
13.1 This Agreement is the entire agreement between the Parties about the loan described in it, and supersedes all prior discussion of it.
13.2 No amendment is effective unless made in writing and signed by the Employer and the Employee.
13.3 This Agreement does not vary the Employee’s terms of employment except as expressly stated in it, and does not itself guarantee continued employment for any period.
13.4 If any provision is held invalid or unenforceable, the rest of this Agreement continues in effect.
IN WITNESS WHEREOF the Parties have executed this Agreement at __________ on __________.
SIGNED AND DELIVERED by the EMPLOYER
__________
Through: __________, __________
Signature: ______________________________
SIGNED AND DELIVERED by the EMPLOYEE
__________
Signature: ______________________________
WITNESSES
- __________
Signature: ______________________________
- __________
Signature: ______________________________