Legal Definitions - clawback

Definition: Clawback refers to the act of taking back money that has already been paid out or retrieving tax allowances through additional forms of taxation.

Example 1: A company pays out a bonus to an employee, but later discovers that the employee did not meet the performance criteria for the bonus. The company may then initiate a clawback to retrieve the bonus payment.

Example 2: In some cases, governments may provide tax allowances or incentives to individuals or businesses. However, if it is later discovered that the recipient did not meet the requirements for the allowance, the government may initiate a clawback by imposing additional taxes or penalties.

Both examples illustrate the concept of clawback, which involves taking back money or benefits that were previously paid out. This can occur in various contexts, such as employment contracts, financial transactions, or government policies.