Commission clawbacks: how they work, with a policy you can copy
By Mustafa Ebiclioglu, Founder of CompSlate · · 11 min read
A customer signs, your AE gets paid, and two months later the customer cancels. Most founders meet the clawback question this way, after the money has gone out, which is the worst time to write the rule.
This guide covers what a commission clawback is, what should trigger one, how long the window should be, how to do the math when accelerators and ramps are involved, and what happens to a balance when a rep leaves. It ends with a clawback policy you can paste into your plan. The examples use the same AE as the other guides, Ana: $150K OTE at a 60/40 split, a $600K annual quota measured quarterly, and 1.5x above 100%. That's $15,000 of target commission on a $150,000 quarterly quota, a normal rate of 10%.
What a commission clawback is
A clawback takes back commission already paid on a deal that didn't stick: the customer cancelled, never paid or got a refund within a set window after the deal closed. It's usually recovered from the rep's next commission payments, not paid back in cash. Some teams call it a chargeback. It's the same thing.
Ana closes Northwind for $24,000 on February 10, and her Q1 commission includes $2,400 for it. Northwind cancels on April 10, 59 days later. Her plan has a 90-day clawback, so the $2,400 comes off her Q2 commission:
| Q1 | Q2 | |
|---|---|---|
| Bookings | $150,000 | $120,000 |
| Commission earned | $15,000 | $12,000 |
| Clawback | −$2,400 | |
| Commission paid | $15,000 | $9,600 |
Q1 isn't reopened. It was paid and it stays paid; the correction lands in the quarter the customer cancelled. Had Northwind cancelled on day 120, outside the window, Ana would keep the $2,400.
Why have a clawback at all
Commission is paid on bookings, before you know whether the customer is real. Without a clawback, a rep earns the same for a customer who stays five years as for one who cancels in week three or never pays the first invoice. Most reps never test that. The clawback is there for the ones who do: the quarter-end deal pushed onto a customer who wasn't ready, the discount promised in a side email, the trial sold as an annual contract.
It matters more in some plans than others:
- AEs: a 90-day clawback is a normal part of the plan.
- Account managers on expansion: the account manager template uses one, so nobody is paid for an upgrade the customer cancels a month later.
- Commission-only closers and contractors: the most important place for one, since they have the least reason to care whether the customer stays.
- SDRs paid on meetings: usually none. Count only meetings that were held and qualified instead.
What should trigger a clawback
Write the triggers as a closed list, so nobody argues later about what counts:
| Event | Clawback? | Notes |
|---|---|---|
| Customer cancels inside the window | Yes | The main case. |
| Invoice unpaid past a set number of days | Yes | Say how many, for example 60 days past due. A deal that's never paid was never revenue. |
| Full refund | Yes | |
| Partial refund or downgrade | In proportion | Take back the commission on the amount refunded. |
| Deal booked by mistake or counted twice | Correct it | A fix, not a clawback, so no window applies. |
| Customer churns after the window | No | That's retention, owned by whoever owns the account. |
| A company decision: price rise, product retired, long outage | Usually no | Reps shouldn't pay for decisions they didn't make. Say so in the plan. |
How long the clawback window should be
The window should end when you'd know the customer is real. Too short, and it misses the deals it exists for. Too long, and the rep is paying for onboarding and support they don't control.
| How the customer pays | A window to start from |
|---|---|
| Monthly, cancel any time | 90 days |
| Annual, paid up front | Until the first invoice is paid, for example 60 days |
| Annual, billed monthly or quarterly | 90 to 180 days |
| Enterprise with a pilot or opt-out | The end of the pilot or the opt-out date in the contract |
90 days is the most common choice for SaaS AEs, because it covers the first invoices and the first real use. Longer than six months is hard to defend: by then, whether a customer stays says more about the product and onboarding than about how the deal was sold.
Count the window from the close date, and say so. "90 days from the close date" is unambiguous; "the first quarter of the contract" isn't.
Full, partial or prorated
Full (100%). All the commission on the deal comes back. The simplest rule, and the usual one with a 90-day window.
Partial. A fixed share comes back, often 50%. It accepts that some cancellations aren't the rep's fault. With a 50% clawback, Northwind costs Ana $1,200 instead of $2,400.
Prorated by time. The share falls the longer the customer stayed: a customer who paid 4 months of a 12-month contract returns 8/12 of the commission. It feels fairest and is fiddly to run by hand. It suits longer windows, where a flat 100% in month five would feel harsh.
Pick one and write it down. In CompSlate, a clawback has a window and a share (100%, 50% or anything between); a prorated rule is best kept as a correction you record each time.
Add a 90-day clawback to the AE plan: 100% of the commission on
deals that cancel or go unpaid within 90 days of closing.Which rate to claw back at
This is where clawbacks get argued over. When a deal earned accelerated commission, how much comes back?
Ana books $180,000 in Q1, 120% of quota, and earns $19,500 with her accelerator. Then a $30,000 deal from that quarter cancels. There are two ways to count it:
| Method | Clawed back | How |
|---|---|---|
| The normal rate on the deal | $3,000 | $30,000 × 10% |
| Recompute the quarter without the deal | $4,500 | At 100% she'd have earned $15,000, not $19,500 |
Recomputing is the most precise and the hardest to run. It reopens a paid quarter, changes attainment, and can move anything measured on attainment, like a SPIF for reaching 120%. When several deals sit above quota, it also raises the question of which one was "the" accelerated deal.
The normal rate is easy to explain and the same for every deal. It costs the company a little: Ana keeps $1,500 of accelerator on bookings that went away.
Either is defensible. Saying nothing isn't, because the rep will assume the normal rate and finance will assume a recompute. CompSlate claws back at the normal rate in effect when the deal closed, times the clawback share, and leaves the original quarter's attainment as it was.
Ramped quarters. The normal rate is the one the deal earned when it closed. A ramp lowers quota, not target commission, so a rep earns more per dollar while ramping. In Ana's first quarter on a 25/50/75% ramp, her quota is $75,000 and her rate is 20%. A $10,000 deal from that quarter that cancels takes back $2,000, not $1,000.
How the money comes back
From future commission. The standard way: the clawback comes off the next commission payment, as in the Northwind example.
As a balance, when it's bigger than the next payment. In Q2, Ana earns $9,000, and a $120,000 deal she closed in March cancels in May: $12,000 to claw back. Her Q2 commission is $0, and the $3,000 left over comes off Q3:
| Q2 | Q3 | |
|---|---|---|
| Commission earned | $9,000 | $15,000 |
| Clawback | −$12,000 | |
| Earlier balance recovered | −$3,000 | |
| Commission paid | $0 | $12,000 |
| Balance still owed | $3,000 | $0 |
Never from base salary. Clawbacks come out of commission. Taking them from salary turns a comp rule into a wage deduction, which is where the legal trouble starts.
On a draw. If the rep has a draw, the draw minimum is still paid. Balances are recovered only from commission above it: clawbacks first, then any recoverable draw. CompSlate works this way and never takes a clawback from an MBO bonus.
Show the balance on the rep's statement as soon as it exists. A rep who discovers a $3,000 balance on payday stops trusting every other number in the plan.
When a rep leaves with a balance
Say in the plan what happens to an unrecovered balance when someone leaves. The usual choices:
- Write it off. The most common choice at startups, and the cleanest. The amounts are small next to a dispute with a former employee.
- Net it against commission still owed. If the rep is due commission on deals that closed before they left, subtract the balance from that.
- Ask for repayment. Rarely worth it. Many US states restrict deductions from a final paycheck, and collecting from someone who has left is slow and expensive.
Are commission clawbacks legal?
In the US, generally yes, when the rule is in a written plan the rep agreed to before the deal closed. Three things to get right:
- Put it in writing first. A clawback added after a customer churns is a pay cut. California requires every commission plan for employees there to be in writing, saying how commissions are calculated and paid, with a signed copy for the employee (Labor Code section 2751).
- Define when commission is earned. Many states treat earned commission as wages. The usual approach is to say commission on a deal is an advance until the customer has paid and the window has passed. A clawback then adjusts an advance rather than taking back earned wages.
- Don't deduct from base pay or a final paycheck without checking your state's wage deduction rules.
This is general information, not legal advice. Have an employment lawyer in your state read the plan once, before the first rep signs it.
A clawback policy you can copy
Change the bracketed parts, and have it reviewed with the rest of the plan:
Clawbacks. Commission on a deal is an advance until the customer
has paid its first invoice and [90] days have passed since the
close date. If, within that window, the customer cancels, receives
a full refund, or has an invoice more than [60] days past due,
[Company] will recover [100%] of the commission paid on that deal,
at the base commission rate in effect when the deal closed. A
partial refund is recovered in proportion to the amount refunded.
Recovered amounts are deducted from your future commission
payments, never from your base salary. An amount larger than one
payment carries over to the next. Cancellations caused by a
[Company] decision, such as a price change or a discontinued
product, are not clawed back, and neither are cancellations after
the window. Any balance remaining when your employment ends is
[written off].Clawback mistakes to avoid
- Adding the clawback after the first churn. Put it in the first version of the plan.
- A window so long the rep owns retention. Past six months, you're clawing back for onboarding and product problems.
- Saying nothing about accelerators. Pick the normal rate or a recompute, and write it down.
- Clawing back for your own decisions. If you raise prices and customers leave, that's on you.
- Not tracking it. A clawback finance remembers in month five, as a surprise deduction, does more damage than the lost deal. Record it the day the customer cancels and show it on the rep's statement.
- Taking it from base salary. Commission only.
Run clawbacks without a spreadsheet
The rule is the easy part. The hard part is remembering, months later, which deal closed when, at what rate, inside which window, and what's still owed.
CompSlate keeps track by chat. Set the rule once in its built-in chat (or in Claude or ChatGPT with CompSlate connected), and when a customer cancels, say so:
Northwind cancelled on April 10. Claw it back.It checks the window, takes back the commission at the rate the deal earned, carries any balance forward, and shows it on the rep's live card and in the payout export. Paid periods never change. It's free for 30 days, then $49 a month for the whole team. Start with the quick start, or copy a full plan from the commission plan templates.
Frequently asked questions
What is a commission clawback?
Taking back commission already paid on a deal that didn't stick: the customer cancelled, didn't pay or was refunded within a set window after closing, often 90 days. It's usually deducted from the rep's next commission payments rather than repaid in cash.
What is a typical clawback period for sales commissions?
90 days from the close date is the most common for SaaS AEs. For annual contracts paid up front, the window often runs until the first invoice is paid; for annual contracts billed monthly or quarterly, 90 to 180 days. More than six months is hard to justify.
Are commission clawbacks legal?
In the US, generally yes, when the clawback is in a written plan the rep agreed to before the deal closed. Define commission as an advance until the window passes, recover it only from future commission, and check state wage deduction rules before taking anything from base or final pay. California requires written commission plans. This is not legal advice.
Can a company claw back commission after you leave?
Only if the plan says so, and state wage laws limit how. Most startups write off a small balance, or net it against commission still owed, rather than ask a former employee to repay it.
Do clawbacks take back accelerated commission?
It depends on the plan. Some claw back at the normal rate: a $30,000 deal at a 10% rate returns $3,000. Others recompute the period without the deal, which also takes back the accelerator it earned, $4,500 in the same example. Write down which one your plan uses.
What is the difference between a clawback and a chargeback?
In sales compensation they're the same thing: commission recovered on a deal that was cancelled, refunded or not paid. Chargeback is the more common word in insurance and some sales teams.
Should SDRs have a commission clawback?
Usually not. Pay SDRs only for meetings that were held and qualified, and pay any opportunity bonus once the opportunity is qualified. That removes most of what a clawback would catch.