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The clawback clause
Key points
- Clawback could be used on salary and benefits but usually applies only to bonuses.
- The difference between malus and clawback.
- The Martin case established that repayment of a bonus may be subject to relief.
- The calculation in ITEPA 2003 s 11.
- Examples of clawback calculations and relief.
- There is no equivalent relief for National Insurance contributions.
It is a busy time for anyone working in reward and compensation. Many clients will be finalising accounts and calculating the monetary pool they can afford to pay to employees as a discretionary ‘bonus’ on top of salary and benefits. Some clients will have awarded bonuses that are subject to deferral arrangements and perhaps even clawback provisions which allow an employer to demand repayment of a bonus in some circumstances. Employers using clawback will be looking at performance and behaviour in 2020 and deciding whether these provisions should be used. Given some...
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