Loan Policy and Procedure

People Policy

July 2025

Contents

Purpose

1. The Ministry of Justice (MoJ) recognises the importance of developing and enhancing the skills of its employees. We recognise that loans between government departments are a valuable way to share skills across the Civil Service and help employees with their career development.

2. This policy sets out the process employees need to follow to request a loan and how managers should manage requests. It is supported by a toolkit for employees and managers.

Principles

3. Our policy is underpinned by the following principles:

1. employees must discuss and seek approval from their current (home) department before they apply for a loan

2. managers will carefully consider all loan requests and approve loans wherever possible.

Scope

4. This policy applies to all permanent and fixed-term employees of the MoJ, its Executive Agencies (including His Majesty’s Prison and Probation Service (HMPPS) and His Majesty’s Courts and Tribunals Service (HMCTS) and Arm’s Length Bodies (ALBs). Employees on inward loan to the MoJ are covered by this policy. It does not apply to agency staff or contractors.

5. This policy does not form part of an employee’s contract of employment. However, employees are bound by the provision of this policy, which may be amended from time to time.

6. The use of MoJ in this document means MoJ, including Executive Agencies and ALBs. When referring to moves between MoJ agencies, we will name them individually e.g. moves between MoJ and HMPPS.

Glossary of terms

Policy Statement

7. A loan is the temporary move of a civil servant between:

1. the MoJ and other Civil Service departments

2. the MoJ and HMPPS

3. the MoJ and ALBs or Non-Departmental Public Bodies (NDPBs) that employ civil servants.

8. Loans should not be used to fill roles on a permanent basis.

9. Loans can be used to:

1. fill skills gaps without an extensive recruitment exercise or recruiting permanently

2. resource limited-term projects or urgent pieces of work by allowing departments to recruit more flexibly and offer opportunities as widely as possible.

10. Loans can be lateral moves or on temporary promotion and will normally last up to two years. Loans can be extended by exception, with director level approval. For SCS grades, loan extensions need director general level approval.

11. Loans must have a written agreement which is agreed by all parties before the loan commences.

Terms and Conditions During a Loan

Loans under six months

12. Employees will remain on their home department’s payroll and will be entitled to claim expenses in line with their home department’s policies unless, by exception, the host department agrees to reimburse the employee directly for expenses incurred.

13. For loans under six months, employees will:

1. be covered by the home department’s pay award

2. be entitled to in year or performance rewards of the home department

3. be managed in accordance with the home department’s performance management framework

4. be counted as part of the home department’s headcount

5. be subject to the terms and conditions and other policies of the home department during the period of the loan.

14. Any temporary promotion under six months should be agreed with the home department prior to being offered to the employee, to ensure that the home department can cover the costs within their payroll.

15. Any overtime must be agreed with the home department prior to being offered to the employee, to ensure that the home department can cover the costs within their payroll.

16. Where a loan is extended beyond six months the employee should be transferred to the host payroll in good time (and from the first of the month) for the remainder of the loan period.

17. Where the home department’s finance team decides that the costs are material and both the home and host departments mutually agree, costs may be invoiced. This will need to be evidenced in writing by both departments. If invoicing does take place there should be a single invoice for the period of the loan to avoid excessive administrative effort.

Loans six months and over

18. Departments should follow the process outlined in the central Guidance for civil servants how to move jobs between departments and agencies.

19. Payroll must be transferred to the new department to be effective from day one of the loan. This should be set to the first of the month, at least 4 weeks’ notice should be provided prior to the start date.

20. The transfer date should take into account the respective payroll cut-off dates of the home and host department. This will avoid the risk of payment errors and tax implications for the individual. No recharges can be made for part months or delays in processing.

21. For loans six months or over, during the loan employees will:

1. move on to the payroll of the host department for the period of the loan

2. be covered by the host’s pay award

3. be entitled to in year or performance rewards of the host department

4. be managed in accordance with the host department’s performance management framework

5. be counted as part of the host department’s headcount

6. be subject to the terms and conditions and other policies of the host department during the period of the loan

7. be entitled to expenses in line with the host departments policies.

22. Employees who accept an offer of any permanent role with the host department will transfer to the host department and the loan arrangement will be terminated.

23. On return, employees will revert to their substantive grade and pay, adjusted in line with any applicable pay awards made in the home department. The pay manual (MoJ/HMPPS Prisons/Probation) contain more information.

24. Where the loan is extended, this needs to be agreed with the home department and a revised loan agreement put in place. As the employee has already transferred payroll, no further payroll changes are needed for an extension to loans six months or over.

Allowances

25. Employees’ allowances are not normally kept during loans. They are not consolidated into base pay.

26. The host department will decide on allowances payable to the employee on transfer. Payment of an allowance may include:

1. location

2. specialist professions or skills

3. unsocial hours

4. recruitment and retention

27. The host department must ensure the job advert states the relevant allowances for the role.

28. If the loan role does not have a specialist pay range or allowance, the employee will lose any existing specialist pay or allowances during the loan period.

29. If allowances are kept or agreed as part of the job offer, these will be reviewed by the host department. The host department’s pay, allowance and mark time policies could affect these - employees should discuss this with their host manager.

30. Departments have different location pay areas. Employees may not receive the same location pay or allowance, even if their location stays the same

Applying for an Outward Loan

Eligibility

31. To be eligible for a loan you must have:

1. been recruited in line with the Civil Service Commission's Recruitment Principles (appointment based on merit through fair and open competition)

2. successfully completed your probationary period

3. demonstrated acceptable performance and attendance levels

4. no immigration visa restriction specifying a particular place of work

5. have received written confirmation that your request to go out on loan has been approved.

Loans on Promotion

32. You can apply for loan opportunities that are advertised at a higher grade than your current substantive grade.

33. If you are successful, this promotion will be temporary, and you will revert to your substantive grade upon return to the MoJ. This must be reflected in the written loan agreement.

34. If you are successful, you and your line manager must ensure that your loan agreement contains the correct information about loans on promotion. This will usually be referenced in section 11.3-11.4 of the host department’s loan agreement.

35. You must update the loan agreement to include the MoJ position on loans on promotion:

If the employee is temporarily promoted for the duration of the loan or is temporarily promoted by the host department during the loan, on returning to the home department the employee will revert to the substantive grade on which they were employed before the loan began.

If the employee is permanently promoted by the host department during the loan, the loan will normally end when the employee takes up the post on promotion, and the employee will be treated as permanently transferring to the host department. If, however, it is not possible for a permanent transfer to take place, the home department may treat them as having been substantively promoted but only where they have been party to the decision to promote, (and clause 1.2 will be read accordingly).

Consecutive loans

36. If you are already on loan from the MoJ to another department and wish to take up another loan opportunity, you must seek approval from your line manager in the MoJ before applying for the new loan opportunity.

Employees on fixed-term appointments

37. If you were appointed on a fixed-term appointment (FTA) and want to apply for a loan, the loan can only be agreed for the remaining period of the FTA or less. Before agreeing to a loan your manager will need to consider the decision alongside the business benefit in relation to:

1. FTA employees are usually recruited to undertake a specific piece of work

2. there may be limited opportunities for you to bring skills back to the department.

Further considerations for SCS Loans

38. SCS loans must be agreed in principle by your director general, with your line manager being responsible for signing off the loan agreement. Performance management and pay award arrangements should be agreed from the outset and clearly set out in the loan agreement. SCSHR are available to support and should be engaged throughout the process. A copy of the signed loan agreement must be shared with SCSHR.

39. Loans into MoJ will be covered by adherence to the SCS recruitment business case process.

Decision making

40. As a manager, you should approve requests for loans wherever possible. When deciding whether to approve or refuse the loan, you should consider both the business needs and the employee’s development needs.

41. You should only reject a loan request in exceptional circumstances such as losing specialist or business critical skills, or where backfilling is not possible within a reasonable amount of time.

42. If you agree to the loan, you will need to consider how you will fill the employee’s role while they are away. (Further advice can be found in the toolkit). You may choose to fill their role permanently depending on the type of post and length of the loan. The following options can also be considered:

1. offering the role to an employee on a development programme

2. advertising the role as a loan or fixed-term appointment.

43. There may be occasions when an employee’s specific role should be retained for them, for example where they have gone on loan to bring back specific skills to the business.

Communicating decisions

44. You should provide clear reasons and rationale for any decisions in writing, particularly where the loan is refused. If the loan is refused, you should consider other ways in which the employee could be further developed.

Advertising a loan opportunity

45. This section covers the steps managers must follow to offer a loan opportunity.

46. Loans can be filled by advertising or direct placement into a role.

47. When filling a loan opportunity, you will need to carefully consider what criteria are needed for the role. Assessing candidates against a range of criteria will give a rounded picture and help select the most suitable applicant.

48. You will need to go through the usual vacancy approval routes before you can offer a loan opportunity.

Advertising

49. Loans can be advertised through Justice Jobs, Civil Service Jobs, professional networks or communities relevant to the type of role. The campaign preparation advice page provides more information.

Direct placement

50. Loans may also be filled by direct placement. You can use direct placement when:

1. an employee is involved in a particular project which requires a move to another department e.g. developing a new cross Civil Service system

2. there is a pre-existing ‘exchange’ arrangement between the MoJ and another government department or professions as part of a recognised scheme

3. the role would support the employee in meeting a particular development need which forms part of their personal development plan

4. highly specialised skills are required and there are few suitable, qualified employees.

Loan agreements

51. A loan should always be under-pinned by a loan agreement. Having an agreement in place, which all parties understand is a vital part of ensuring a successful loan process.

52. The written agreement will normally be that of the host department, as they will have responsibility for the employee during the loan. However, this must be amended to reflect the MoJ’s position relating to the ending of temporary promotion on return to the department.

53. The loan agreement must include the MoJ position on loans on promotion. This will usually be referenced in section 11.3-11.4 of the host department’s loan agreement.

54. Loan agreements must be signed by all parties. A template loan agreement can be found at Annex C (loans six months and over) or Annex D (loans under six months) within the Loan Toolkit.

Policy updates

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