Company Policy that Restricts the Amount of Employee Loans to Not More than 50% of Monthly Take Home is an Interference in Disposal of Workers Wages
One of the benefits that the company gives its employees is the employee loans. However, it does not take long for employees who lack discipline to be saddled with debt.
HR may look helpless in this situation since it is torn between disapproving the application and seeing the employee without the cash needed to probably buy basic necessities and granting the loan where an employee can fall deeper and deeper in the endless cycle of debt and consumption.
Hence, companies cannot be blamed if one day they decide to put a cap on how much the employee can loan.
For instance, the company may issue a new policy limiting the loanable amount to not more than 50% of employee’s monthly salary. The loan mentioned can cover all types of loan including SSS loans.
In doing so, the company may consider the monthly basic pay, monthly standard and statutory deductions (e.g. tax, SSS contribution, etc.), monthly non-standard deductions (e.g. union p 8,508.76 dues, insurance premium, etc.), monthly net pay, percentage of total deductions over basic pay, and monthly net disposable income before granting or processing the loan.
Thus, a typical calculation may appear like this:
Given the above, the employee may secure a loan from other sources; provided that the monthly amortization does not exceed PhP513.74, considering that any amortization exceeding such net disposable income would exceed the 50% limitation of net take home pay. Stated otherwise, the net take home pay would be less than 50% of the average monthly basic pay if the employee would still be allowed to secure loans from any sources with monthly amortizations exceeding PhP513.74.
Can this be legally done?
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In the case of Coca-Cola Bottlers Philippines, Inc. vs. CCBPI Sta. Rosa Plant Employees Union (G.R. No. 197494. March 25, 2019), the Supreme Court held that with the implementation of the company policy, an employee, who is qualified to avail an SSS salary loan and chooses to dispose of his salary through payment of monthly amortizations, may not be able to do so should such amortizations be over the 50% cap. In carrying out the 50% cap policy, the company effectively limits its employees on the utilization of their salaries when it is apparent that as long as the employee is qualified to avail the same, he/she may apply for an SSS loan.
Hence, the above policy may not be validly enforced so as to affect the statutory rights of employees in the form of SSS benefits or privileges. While the decision in the Coca-Cola case involves a dispute over a CBA provision, the holding of the Court to the extent that said limitation is an interference in the disposal of wages is worth consideration in crafting the HR policies.
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