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How do employer-employee loans work? Can your employer charge interest on a loan? What about employers charging ridiculously high interest rates? Scorpion Legal Protection takes a look at what the National Credit Act (NCA) allows.
While it might be convenient to have your boss lend you money, there are a number of laws and regulations that need to be followed for these kinds of loans to be legal. For example, there are cases of staff borrowing money from their employer and because their employer is charging such high interest rates, they work but go home with no pay because their entire pay is being taken by the employer for the loan. AZIKHIPHI! That’s not on!
Any person or organisation that loans money and charges any kind of fee or interest will have to comply with the National Credit Act. In the above example, this means that the employer will have to register as a credit provider with the National Credit Regulator and comply with all their provisions, including doing credit assessments and providing detailed pre-agreement disclosures.
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* This is only basic advice and cannot be relied on solely. This is not financial advice. The information is correct at the time of being sent to publishing.
Date added: 10 November 2020
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