VIC Clawbacks and Sham Contracting by Employer?

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7 August 2015
Hi all,
Please forgive me for my large question but my situation is a big complex. I should start off this question by saying I'm not interested in going after my employer for sham contracting, I just want to be paid what is owed to me and not have clawbacks enforced.

In February last year I started employment with a sales company but had to come onboard as either a sole trader or company structure sales commission only. 100% of my income was from this company, I had business cards, my picture on their website and email address, had performance reviews conducted, all which would suggest I was an employee. I signed a services agreement when I started which changed at the end of 2014 to include some stupid clawbacks but I ended up signing as I had already built up a large amount of sales and commissions which would be paid out over the next 4-6 months and needed the money.

The clause in the contract I have the biggest issue with is the following:

“In addition to the leads allocated to you by the company you are also required to generate referral and self-generated sales by being proactive and following up your existing clients, personal contacts or through the use of the company database. You are expected to achieve a minimum of two referrals or self-generated sales (contracts signed) per quarter.

Failure to meet sales KPIs on referral/self-generated sales for the quarter will result to a deduction from your next commission pay. A deduction in your commission of $2,500 will apply if only one referral/self-generated sale is achieved or $5,000 if you achieve no referral/self-generated sales for the quarter. Please note that should you achieve more than two referral/self-generated sales within the quarter the number achieved above the two sales required to meet your KPIs will be counted as referral/self-generated sales achieved in the following quarter. Any deduction in commission for not achieving KPIs within the quarter will not be paid back, even if numbers are made up the following quarter. This is a necessary measure to ensure that the company is generating profitable sales.”

The reason I have a big issue with it is that so far I have made no extra sales and as a result had $10,000 of my money clawed back despite me being very profitable for their business. I resigned on the 27th of July (less than one full month into the July to September quarter) and received the following email on the 5th of august:

"$1540 plus gst will deducted from your next commission payment, the $1540 is for failing to meet your referral/self-generated KPI’s in the month of July.

As per your contractual agreement with our company you will be paid all commissions as they fall due. Any calls or referrals that you may receive from company clients moving forward must be redirected to the company, should this be breached the company will withhold any outstanding commissions. "

My legal questions are:
- There is no mention in the services agreement between myself and this company of clawbacks or KPI's being prorated. Can they legally pro rata clawbacks despite this not being outlined?

- Is it even legal under employment law for them to impose such clawbacks when I am making them a lot of money? (im guessing because I signed the agreement that it is now)

- What things can I do to combat this and how should I go about it?

Thank you for your time


Well-Known Member
25 April 2014
Hi there,
This is quite a complicated situation and would be best served by getting legal advice from an employment lawyer - see Get Connected with the Right Lawyer for You

You may also wish to contact the Fair Work Ombudsman to see if they have a position on the issues you're seeking to resolve, whether they can assist with the dispute resolution process or if they have further information that can help you: Welcome to the Fair Work Ombudsman website