Employee Promissory Note for the United Kingdom

Employee Promissory Note Template for England and Wales

An Employee Promissory Note is a legally binding document under English and Welsh law that creates a formal promise by an employee to repay a specific sum of money to their employer. The document outlines the terms of repayment, including payment schedule, interest (if applicable), and consequences of default. It is commonly used for salary advances, training cost recovery, or other employment-related financial arrangements.

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What is a Employee Promissory Note?

The Employee Promissory Note serves as a crucial legal instrument in employment relationships where financial obligations arise between employer and employee. It is particularly relevant in situations involving salary advances, training cost recovery, relocation expense reimbursement, or other scenarios where the employer provides financial assistance to the employee. Under English and Welsh law, this document creates a legally enforceable obligation while ensuring compliance with employment legislation and wage protection requirements. The Employee Promissory Note typically includes specific repayment terms, interest provisions if applicable, and default consequences, while maintaining fairness and reasonableness in accordance with UK employment law.

What sections should be included in a Employee Promissory Note?

1. Parties: Identifies the employer and employee with full legal names and addresses

2. Background: Explains the context and reason for the promissory note

3. Definitions: Defines key terms used in the document

4. Promise to Pay: States the amount owed and commitment to repay

5. Payment Terms: Specifies repayment schedule, installments, and payment method

6. Default Provisions: Outlines consequences of failing to make payments

7. Signature Block: Space for parties to execute the document

What sections are optional to include in a Employee Promissory Note?

1. Interest Rate: Details of any applicable interest charges - use when interest is being charged on the principal amount

2. Security: Details of any collateral or security arrangements - use when the note is secured against assets or wages

3. Early Repayment: Terms for early repayment options - use when early repayment is permitted

4. Assignment: Rights to assign the note to third parties - use when assignment rights are relevant

What schedules should be included in a Employee Promissory Note?

1. Repayment Schedule: Detailed breakdown of payment dates and amounts

2. Calculation of Interest: If applicable, detailed interest calculations and methodology

3. Security Details: If applicable, detailed description of security arrangements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Industries

Law of Property (Miscellaneous Provisions) Act 1989: Governs requirements for written documents and formal requirements for creating legally binding obligations in property and contract matters

Consumer Credit Act 1974: Regulates credit agreements and provides regulatory requirements if the promissory note could be construed as a credit arrangement

Employment Rights Act 1996: Covers protection of wages, lawful deductions from wages, and fundamental employee rights and protections

National Minimum Wage Act 1998: Ensures repayment obligations don't reduce earnings below minimum wage and maintains compliance with wage protection requirements

Limitation Act 1980: Establishes time limits for enforcement of the promissory note and relevant statute of limitations considerations

Unfair Contract Terms Act 1977: Ensures terms are fair and reasonable and provides protection against unfair contract terms in agreements

Financial Services and Markets Act 2000: Relevant if the note could be considered a regulated financial instrument under UK financial services regulation

Common Law Contract Principles: Covers fundamental principles of contract formation, doctrine of consideration, undue influence, duress, and capacity to contract

Data Protection Act 2018/GDPR: Ensures compliance with data protection requirements in handling personal information within the agreement

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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