Clawbacks have long been used by employers as a way to safeguard their interests.
A bird in hand is worth two in the bush, so the proverb goes. This may be true in most situations, but woe betide any employee who thinks their bonus is safe once the money has been deposited into their bank account.
In April 2023, a Singapore company sued a former employee for the return of a “variable incentive”, which was essentially a discretionary bonus. The company had declared a bonus, ostensibly because it had done well and its success was due, in part, to the employee’s contributions. After the bonus was announced but before it was paid, the employee tendered his resignation. The bonus was subsequently paid while the employee was serving out his notice period.
In court, the issue turned on whether the company had a right to claw back the bonus. The company’s case rested on a clause in the Employee Handbook, which stated that employees who received bonuses had to continue in service for a minimum length of time. If they resigned before the end of that period, the company could recover the full amount of the bonus paid out.
The employee countered by arguing that he was unaware of such a clause and that, in any event, the clause in the Employee Handbook was not binding on him as the terms of his employment were strictly confined to the clauses in the employment contract.
Unfortunately for the employee, the court did not accept these arguments. His purported ignorance of the Employee...
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