Commission clawback policy template
Most clawback clauses are one sentence that says commissions may be recovered if a customer cancels. That leaves the window, the amount, the recovery method, and the departed-rep case to be decided when money is already owed, which is the worst time to decide anything. This template defines each trigger, the recovery calculation, and how it is communicated, so a clawback reads as the plan working instead of the company changing the rules.
Download it
What you get
- A trigger table covering cancellation, non-payment, downgrade, and early termination
- Worked recovery calculations for full and pro-rata clawbacks
- Recovery method rules, including limits per payout and the departed-rep case
- A communication checklist so the rep hears about it before the statement
Who it's for
- Comp admins writing or tightening recovery rules
- Finance teams accruing commission on deals with payment risk
- HR and legal partners reviewing plan terms before rollout
What's inside
5 sections, each listed with its own size. The first is previewed below; the remaining 4 come with the download, with blank rows ready to fill in.
| Section | Size | Previewed |
|---|---|---|
| Clawback triggers | 4 columns, 4 worked example rows | Below |
| Worked recovery examples | 3 columns, 4 worked example rows | In the download |
| Recovery method | 6 fields to complete | In the download |
| Communicating a clawback | 7-point checklist | In the download |
| Legal note and design principles | Guidance notes | In the download |
Preview of section 1
Clawback triggers
| Trigger | Window | Recovery amount | Reinstated if |
|---|---|---|---|
| Customer cancels | Within 90 days of credit date | 100% of commission paid on the deal | Customer re-signs within 30 days |
| Customer does not pay | Invoice unpaid 120 days after issue | 100% of commission paid on the unpaid amount | Payment is later received |
How to use it
1. Tie clawbacks to your earned definition
The cleanest clawback policy follows from a clear definition of when commission is earned (for example, on customer payment). Advances paid before that point are recoverable if the event never happens. Write both definitions in the same plan.
2. Set a window and stick to it
A clawback that can reach back indefinitely makes reps responsible for account management they do not control. Pick a window tied to what the rep influences, such as first payment or the first 90 days.
3. Limit recovery per payout
Recovering a large clawback in one payout can wipe out a rep's variable pay for the month. Spread recovery across payouts with a stated maximum per statement.
4. Have counsel review before rollout
This template is not legal advice. Wage deduction and commission rules differ by state and country, and some US states, including California, have specific requirements for written commission agreements. Recovering from final pay or from former employees is especially sensitive.
Frequently asked questions
What is a commission clawback policy?
A written rule that defines when commission already paid is recovered from a rep, such as early customer cancellation or non-payment, how much is recovered, the time window, and how recovery happens.
How long should a commission clawback period be?
Tie it to what the rep controls. Many plans use the period until first payment or the first few months after signature. Longer windows push post-sale risk onto reps who cannot manage it.
Can a company claw back commission from a former employee?
It depends on the jurisdiction and the written plan terms, and it is the area most likely to cause legal problems. Many companies limit recovery to offsets against commission still owed at separation. Get counsel's advice before adopting any approach.
Is a clawback the same as a chargeback?
The terms are often used interchangeably. Both describe reversing commission already paid when the underlying deal does not hold up. Define the term you use in the plan document.