Question 1: I worked in a private company for four years. Last year, I asked my employer for a loan. He gave me the loan at an interest rate of 10 per cent. Last month, he fired me without a cause or warning.
I stopped paying the loan instalment, and my employer is currently in the process of filing a lawsuit demanding the value of the loan. Is the employer legally entitled to give me a loan at the said interest rate and do I have the legal right to refrain from paying the loan because the employer is the one who fired me and I do not have an income to repay the loan?
Answer 1: The employer doesn’t have the right to give you a loan on interest as Labour Law No. 33 Of 2021 specifies the procedures for the worker to repay the loan he obtains from the employer, and in this regard, Article 25 mentions that no amount of money shall be deducted from the worker’s wage except in specific cases, including but not limited to recovering the loans granted to the worker, within the maximum monthly deduction rate from the wage stipulated in this article, after obtaining the worker’s written consent and without any interest.
But this matter differs if the employer has taken a loan from an outside source on interest, on your behalf. In such a case, the court has to decide what needs to be done.
Being fired by the employer doesn’t give you the legal right to refrain from paying the loan at the agreed time and date. According to Article 720 of the Civil Transactions Law, the borrower is bound, upon expiry of the loan period, to restitute a thing equal in amount, kind and quality, at the agreed time and place, regardless of whatever change may occur to its value. Moreover, if the condition regarding the interest is void, the contract shall be valid and applied as per Article 714 of the same Civil Law. If the loan contract is conditioned upon paying a benefit that exceeds the contract requirements, other than guaranteeing the borrower’s right, the condition is void, but the contract is valid.
