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Employee Loan Agreement Philippines: Everything You Need to Know

As an employee in the Philippines, chances are you may need to take out a loan at some point to help with your financial needs. Whether it`s for educational expenses, medical bills, or even personal emergencies, a loan can be a helpful resource. However, before taking out a loan, it`s important that you understand how employee loan agreements work in the country.

In the Philippines, employee loan agreements are regulated by the Labor Code, which stipulates that employers cannot charge any interest on loans given to their employees. This means that if your employer offers you a loan, they cannot charge you any interest or fees for borrowing the money. However, if you borrow money from a bank or other financial institution, interest rates and fees may apply.

To ensure that both parties are protected and that the terms of the loan are clear, it`s best to have a written agreement in place. The employee loan agreement is a legal document that sets out the terms and conditions of the loan, including the amount borrowed, the repayment terms, and any other relevant details. It`s important to read the agreement carefully and ask questions if you`re unsure about any of the terms.

What should be included in the employee loan agreement?

The employee loan agreement should include the following:

1. Loan amount: The total amount of money borrowed should be stated clearly in the agreement.

2. Interest rate: As mentioned earlier, employers are not allowed to charge interest on loans given to employees. However, if you are borrowing from a bank or other financial institution, the interest rate should be specified in the agreement.

3. Repayment terms: The agreement should specify the repayment terms, including the number of installments, the due dates, and the amount of each installment.

4. Late payment fees: If you fail to pay your loan on time, your employer may charge you a late payment fee. This fee should be specified in the agreement.

5. Security: If the loan amount is significant, your employer may require you to provide collateral. The type of collateral should be stated in the agreement.

6. Default: The agreement should specify what will happen if you default on your loan. This may include legal action or the seizure of collateral.

7. Signatures: Both you and your employer should sign the agreement to indicate that you have read and understood the terms.


An employee loan agreement is an important document that protects both you and your employer. By having a written agreement in place, you can avoid any misunderstandings and ensure that the terms of the loan are clear. If you`re unsure about any of the terms, don`t hesitate to ask questions or seek legal advice. Remember, borrowing money is a serious commitment, so make sure you understand the terms before signing on the dotted line.

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