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How taking voluntary redundancy affects repaying training loan

February 24, 2017

 

 The Privy Council has decided that an employee who took voluntary redundancy was required to repay a monthly living allowance loan. There was no implied term that repayment was not required.

 

The employee received the allowance while he undertook a degree, subject to a repayment clause. If he worked for the employer for five years following completion of his degree, the requirement to repay would be waived. Eighteen months after returning to work, he successfully applied for voluntary redundancy. His employer deducted the loan payments from his redundancy payment, leaving him with nothing. The Privy Council concluded that there was an implied term that repayment would be waived if the employer prevented the employee from completing his five years' service. However, on the facts of this case, the employee had not been so prevented; he freely chose to apply for redundancy.

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