Clawback

Incentive pay, such as sign-on bonuses or rewards are often commonly affected by clawback provisions. These provisions are used by organizations to protect themselves if an employee doesn't fulfill their obligations or if they defraud the company.

Clawback provisions which are are a non-negotiable part of a contract, are also used in other sectors, such as government and healthcare. Compensation management software is used by human resources and finance professionals to plan salary and merit pay of employees, including complex incentive and commission structures. This software is used by companies to customize their compensation packages to improve employee satisfaction and retention.

Clawback provisions can be customized to the specific industry and needs. However, Purpose, Employees affected, Compensation affected, Triggering events, Period, Penalties and Recovery process are certain components that is included in most clawback provisions.

Insurance companies, Corporations, Government and Medicaid are different types of industries using clawbacks. Organizations include clawback provisions in their contracts to protecting the investment of company in employees, lessen the risk of employee misconduct and protect the reputation of brand.