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Will A Trust Deed Threaten My Continued Employment?

26th March 2013

When people are considering entering into a trust deed they often worry about their job. Debt advisers are therefore frequently asked whether protected trust deeds will jeopardise their client’s employment. In this article we review whether this is a substantial general problem, highlight professions where particular caution is required, and make practical suggestions as to how employees can protect themselves against negative career consequences.

The good news is that most employers are unconcerned specifically about Scottish trust deeds or other debt solutions. Their interest is that their employee is performing their role to the required standard. Where this is the case they often see no good reason to seek out information about the personal finances of their employees.

The starting point to confirm that your job will be unaffected by a trust deed is to look through your contract of employment (and perhaps your employee handbook if you have one). Is there a clause that refers to personal insolvency or protected trust deeds? Most people will find that there isn’t. Without such a clause it would be very difficult for an employer to impose negative consequences on an employee that signed a trust deed. If they did do so they’d likely be very exposed legally. If there is no mention in your contract or handbook (as will be the case for most people) there will almost certainly be no problem for you.

Even if there is an applicable contract clause this may not be the issue that it first seems. Some employers require disclosure of the fact purely in order that a personal insolvency is “out in the open”. This could be part of a risk control process. Some employers think that this minimises the risks of inappropriate behaviour by an employee that they might consider to be vulnerable due to their finances.

If you have access to a trade union speak with them. You may well find out that you have colleagues that have entered trust deeds without any negative consequences for their career. Do you have a trusted contact in your personnel or HR department that you could talk to? Do you have a trusted colleague that might be able to do this for you? Often you’ll find that even employers with apparently strict contract clauses about trust deeds or personal insolvency do not fully enforce them.   

One group of people that might need to exercise additional caution are those that work in the “professions”. For example, lawyers and accountants may find that their professional associations have a position on personal insolvency that they should be very clear about before signing a trust deed. In the professions it may also be more likely that employers have requirements in this respect as well. Significant caution should therefore be exercised.

Another group that should exercise additional caution are those with financial services industry jobs. The access that employees have to funds and/or account details sometimes makes employers within the sector more cautious than others. At Trust-Deed.co.uk we’ve helped plenty of financial services sector staff enter trust deeds without repercussions for their career, but we’ve also spoken with a few people that had to choose alternative options to protect their employment.

We would also like to highlight the group of employees that have roles which require vetting or security checks. Examples might include the armed forces, police officers or prison officers. For most people in jobs of this type signing a Scottish trust deed will not be a career-ending decision. However, there are very likely to be employer expectations about advance notice of the intent to do so.   

Most people will find that their job isn’t at risk if they sign trust deeds, but a safety-first approach makes sense as every situation is unique. As well as following the tips in this article you may wish to discuss the matter with one of our advisers or instead raise the topic in our forum

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Wylie & Bisset Grant Thornton

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