What Is a Clawback Provision

A clawback provision is a clause in your commission agreement that requires you to return some or all of your commission if the client cancels within a specified period. For example, if a client cancels within 90 days, the company might claw back 100 percent of your commission. If they cancel within 180 days, they might claw back 50 percent.

These provisions exist to protect companies from agents who close deals with customers who were never a good fit.

Why They Exist

From the company's perspective, paying a commission on a deal that cancels quickly is a net loss. They invest in onboarding, support, and delivery for a customer who generates no long term revenue. Clawback provisions align the agent's incentives with the company's by encouraging agents to sell to customers who will stick around.

What Is Reasonable

A 30 to 90 day clawback on the full commission is standard and reasonable across most industries. Beyond 90 days, clawback provisions should decrease. A 180 day full clawback is aggressive, and a 12 month full clawback is a red flag that suggests the company is transferring too much risk to the agent.

Review any clawback terms carefully before signing a commission agreement. Understand exactly when your commission is fully earned and protected.

Negotiating Better Clawback Terms

If the standard clawback terms are too aggressive, negotiate. Propose a declining scale: 100 percent clawback in the first 30 days, 50 percent from 30 to 60 days, and no clawback after 60 days. Most companies are open to reasonable proposals if you present them professionally.

You can also negotiate a minimum commission that is protected regardless of clawback, especially for large deals where your upfront investment in the sale was substantial.

Protecting Yourself

The best protection against clawbacks is selling to the right customers. Qualify thoroughly, ensure the client has realistic expectations, and stay engaged during the onboarding period to prevent early cancellations.

Track your clawback exposure across all your agency relationships using Zepys so you know exactly how much of your earned commission is at risk at any given time.

Getting It in Writing

Never accept verbal clawback terms. Insist on clear, written provisions that specify the clawback period, the percentage at each stage, what triggers a clawback (cancellation versus downgrade), and when your commission becomes fully earned.