Key Words

What is the meaning of:

RECOUPABLE”?

Basically, it means “capable of being taken back.”

In the employment context, “recoupable” is most often used in commission plans, bonus plans, or other compensation plans that pay employees according to their success in bringing in business or revenue. The word “recoupable” means that the Employer is permitted, even after payment
of the compensation to the employee, to demand the payment be repaid, or to withhold other monies due the employee if repayment is not made.

Here’s an example: suppose a salesperson earns a 10% commission on sales. Often the employer will provide the salesperson some money “up front” to give him or her a head start on earnings. This is commonly called an “advance against commissions,” or a “bonus advance.” If it should turn out that, after a period of time the employee does not earn all of the “advance” payments, if the “advance” is a “recoupable” advance, then the employee would have to repay the employer the amount not earned.

So, if the advance is $1,000, and the amount actually earned after the designated period of time is only $800, then the extra $200 is recoupable.

Incidentally, the opposite of “recoupable” is “non-recoupable,” which means just the opposite: any “advance” not earned is kept by the employee, and not required to be paid back to the employer.

If you are the recipient of commissions, bonuses, or other compensation, especially compensation based on financial performance, and if you are
entitled to upfront payments, usually called “advances,” make sure you ask “Are these recoupable, or non-Recoupable.” The answer is important to your financial planning and future.

© 2013 Alan L. Sklover. All Rights Reserved. Commercial Use Strictly Prohibited