Employer “clawback” of earnings

stokie100

Hi All,

My husband works in sales and his employer is clawing back the commission paid on a big sales deal a year after the client signed and paid the contract. The client cancelled their contract after a year due to the service they received by other teams which have nothing to do with the sale of the product and services my husband completed. His employer is clawing back the full commission and the amount of annual bonus that was affected by the original sale value. They amended his contract 8 months ago to include this new and vague clawback clause and my husband didn’t have a choice and wasn’t asked to sign to the new terms. In addition we now realise they are wanting to take the full commission amount pre-tax which means that he will essentially pay back more than he actually received as he lost 20% of it in tax when it was originally paid.
My husbands queries have been met with contempt to date.

Does anyone know if this is common in sales these days? My husband has been in sales 18 years and never come across this before!

Many thanks in advance

Comms69

short answer: find a new job.


the argument will be about, maybe thousands?; but arguing it will cause a much bigger fall out.


Clawbacks are normal; I worked in commission payments and we did them all the time.


The tax will adjust itself eventually. (unless I've misinterpreted).


BUT your husband did have a choice, he chose to stay. That is one of the risks of sales roles.

steampowered

The first thing to do is to read the clawback terms very carefully.

You say they are vague. If the clawback clause does not clearly permit the employer to clawback in these circumstances, it could be worth challenging.

If the clawback clause does permit clawback in these circumstances, then after 8 months the revised contract terms would be binding on your husband unless he objected at the time. The law is essentially that changes to the employment contract will be deemed accepted by your husband's conduct in continuing to work without raising objection, unless your husband objected at the time.

Presumably the employer deducts the clawback from your husbands salary. If your husband remains in the 20% tax bracket, I think this would mean he pays less tax now than he would have paid on a normal salary? So he shouldn't be out of pocket for tax?