In HR and legal terms, a clawback clause allows an employer to recover money or other assets from an employee who has already received payment. It\u2019s often used to recoup losses from fraud, financial mismanagement, or other breaches of contract. In fact, over 90% of S&P 500 companies<\/a> have clawback policies to recover executive compensation when necessary, highlighting their role in corporate governance.”<\/p>\n\n\n\n Clawbacks can also be used to recover compensation in cases of breach of contract, violation of non-compete agreements, or other instances where an employee has received payment or benefits to which they were not entitled. For example, if an employee is granted a performance-based bonus<\/a> but later fails to meet the required standards, the employer may reclaim the bonus\u2014sometimes with an added penalty.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.aihr.com\/wp-content\/uploads\/definition-clawback-1.png\")