ARTICLE · 26 OCTOBER 2021

Clawback Clauses In The Netherlands Can Be A Risky Business

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"Clawback clauses" state that employees must refund all or part of their variable bonus if it is determined that the bonus should not have been paid out in the first place.

NetherlandsEmployment and HR

Sander Theunisson

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"Clawback clauses" state that employees must refund all or part of their variable bonus if it is determined that the bonus should not have been paid out in the first place. An example might be an employee who lands a lucrative contract and is paid a bonus for doing so, only for the customer then to go bust so that the employer loses the revenue from that contract. A clawback clause can ensure that the employee has to pay back the bonus.

There are statutory rules governing clawback clauses in certain cases. Employers and employees are free to agree to clawback arrangements, for instance in a bonus agreement.

Statutory clawbacks

Dutch law sets out a clawback provision for directors under a company's articles of association; the company can reclaim a bonus, or part of it, if the director gives incorrect information about the achievement of targets underlying the bonus or the other circumstances on which the bonus depended.

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