The Labour Court is the competent one to hear a claim for an amount presented by a company against an employee, for the amount of the unpaid bank loan that, as a guarantor, it had to pay to the bank, even though the employee had been previously dismissed, as established by the Supreme Court in a ruling of 12th December 2019.

The reporting judge, Judge Garcia Paredes, establishes that it is the condition of employment in the  company that creates the loan granted by a third party to be guaranteed by the company.

Alfredo Aspra, partner in charge of the Employment area of Andersen Tax & Legal, explains that: if the condition of the borrower was obtained because he is an employee of the plaintiff and the condition of guarantor because he is a worker and a businessman linked by the employment contract, the action of repetition that the guarantor businessman has against the former worker and is guaranteed, brings about the employment bond.

It also states that the Supreme Court establishes that with the guarantee provided, the lender is guaranteed the total payment of the loan in the face of certain contingencies, such as that which the borrower may have in the event of loss of employment and, consequently, of his ordinary source of income, such as the salary paid by the guaranteeing employer.

You can read the full article in El Economista