SECTION 14: CASH ADVANCE (C/A) POLICY

I. Purpose

This Cash Advance (C/A) Policy establishes clear guidelines on employee eligibility, processing, repayment, and limitations for cash advances at AVCI Veterinary Practice. This policy ensures fairness, financial responsibility, and compliance with Philippine labor laws while maintaining clinic financial stability.

This policy aligns with relevant Philippine laws and regulations, including:
• The Labor Code of the Philippines (PD 442) – Governs salary deductions and employee compensation.
• Republic Act No. 11232 (Revised Corporation Code of the Philippines) – Requires proper financial documentation for businesses.
• Republic Act No. 10963 (TRAIN Law) – Mandates accurate payroll and tax compliance.
• Republic Act No. 9514 (Fire Code of the Philippines) – Ensures safe cash handling and storage.
• Republic Act No. 10173 (Data Privacy Act of 2012) – Protects employee financial data related to payroll and cash advances.

II. Eligibility and General Guidelines

1. Eligibility for Cash Advance (C/A)
◦ Only regular employees who have completed at least six (6) months of continuous service at AVCI are eligible for cash advances.
◦ Probationary, contractual, or part-time employees are not eligible for cash advances.

2. Cash Advance Limit
◦ Employees may request a maximum cash advance of ₱5,000.00 at any given time.
◦ The minimum cash advance that can be requested is ₱500.00.

3. Repayment Terms
◦ Repayment will be automatically deducted from the employee’s salary on a bi-monthly basis (every payday).
◦ The standard repayment rate is ₱500 per payday, starting immediately after the cash advance is received.

4. Processing Time
◦ The requested C/A will be processed and disbursed within 24 to 48 hours after approval.

5. Advance Cash Advance Restrictions
◦ An employee can only request another cash advance if their outstanding debt to the company is at 10% (₱500) or less of the original borrowed amount.

III. Cash Advance Request and Approval Process

To ensure financial accountability, all cash advances must go through a formal approval process before disbursement.

1. Application Procedure
• Employees must submit a written or electronic C/A request using the designated AVCI Payroll and Finance Request Form.
• Requests must be approved by:
   ◦ Immediate Supervisor
   ◦ Practice Manager (Noreen Mae C. Aycardo)
   ◦ Accounting Department

2. Approval Criteria
• Approval is subject to clinic financial capacity and employee financial history (e.g., outstanding debts, previous repayment records).
• Employees who have delinquent payments or unresolved financial obligations may be denied further cash advances.

3. Documentation Requirements
• A Cash Advance Agreement (CAA) will be signed by the employee upon approval, specifying:
   ◦ Loan amount and repayment schedule.
   ◦ Deductions authorization from salary.
   ◦ Agreement to settle unpaid balance in case of employment termination.

📌 Legal Compliance:
• Under Article 113 of the Labor Code, AVCI is allowed to deduct cash advances from employee salaries as long as the deductions do not exceed 20% of the employee’s earnings per payday.

IV. Salary Deductions and Compliance with Labor Laws

1. Automatic Payroll Deduction
◦ The C/A repayment amount will be deducted directly from the employee’s salary every payday until fully repaid.
◦ Deductions must not exceed 20% of an employee’s gross salary to ensure compliance with the Labor Code (Article 113, PD 442).

2. Interest-Free Cash Advance
◦ AVCI does not charge interest on cash advances to employees, ensuring compliance with fair labor practices.

3. Non-Payment and Delinquency
◦ Employees who fail to repay the cash advance on time due to salary deductions falling short will have the balance rolled over to the next payday.
◦ If an employee reaches three (3) missed repayments, the following actions may be taken:
   ▪ A written notice will be issued requiring immediate partial or full repayment.
   ▪ Additional cash advance requests will be denied until the outstanding balance is settled.

4. Cash Advance in Case of Employment Termination
◦ If an employee resigns, is terminated, or is separated from AVCI, any unpaid cash advance will be deducted from their final pay and benefits.
◦ If the remaining balance exceeds the final pay, the employee must settle the outstanding amount before their exit clearance is granted.

📌 Legal Compliance:
• Under Article 110 of the Labor Code, AVCI has the right to prioritize deductions for unpaid debts when processing an employee’s final pay.

V. Restrictions on Cash Advance Usage

To maintain financial discipline, AVCI imposes the following restrictions:

1. Allowed Uses for Cash Advance:
◦ Medical emergencies for self or immediate family.
◦ Sudden personal financial obligations.
◦ Transportation or work-related expenses.
◦ Emergency pet care needs (if applicable).

2. Prohibited Uses for Cash Advance:
◦ Gambling, betting, or lottery expenses.
◦ Business investments or third-party loans.
◦ Personal luxury purchases (e.g., entertainment, non-essential items).
◦ Settling private debts or loans from other employees.

📌 Note: AVCI reserves the right to deny cash advance requests if deemed unnecessary, excessive, or financially irresponsible.

VI. Confidentiality and Data Protection

• All cash advance records will be kept confidential and accessible only to authorized personnel (HR, Accounting, and Management).
• Personal financial data related to cash advances, salary deductions, and repayments will be secured in compliance with RA 10173 (Data Privacy Act of 2012).

📌 Legal Compliance: Any unauthorized disclosure or misuse of an employee’s financial information may result in legal penalties under the Data Privacy Act.

VII. Policy Review and Amendments

• This policy will be reviewed annually to ensure compliance with labor laws, financial best practices, and clinic operations.
• Any amendments will be communicated to all employees and included in the AVCI Employee Handbook.

VIII. Compliance and Disciplinary Actions

Failure to comply with this policy may result in:
• Denial of future cash advance requests.
• Progressive disciplinary action (written warnings, deductions, suspension).
• Legal action if financial misconduct is involved (e.g., fraud, misuse of company funds).

📌 Legal Reference:
• Under Article 297 of the Labor Code, financial fraud or willful breach of trust is grounds for termination.